Posts Tagged ‘condominiums’

Buy now to beat the consumption tax increase … or don’t

Wednesday, September 5th, 2012

Diagram of new Tokyo condo with flowers marking the units that have been sold

Lookin’ rosy: Diagram of new Tokyo condo with flowers marking the units that have been sold

The term kakekomi kounyu means rushing to buy something at the last minute after hesitating for a long time. The implication is that there is some time limit involved. It’s being used a lot now in the media with reference to the consumption tax, which is scheduled to rise from 5 to 8 percent in April 2014, and then again to 10 percent in October 2015. It’s assumed that many consumers will try to buy big-ticket items before the increase goes into effect in order to save money, and that a good portion will wait until the last minute.

Some economists are advising people to not wait too long, especially if they’re thinking about buying a new home. Recent articles in both the Asahi Shimbun and the weekly magazine Shukan Post say pretty much the same thing on the subject: If you’re thinking about buying a home or a car, you should start planning right now. The Asahi uses the example of a ¥30 million condominium. You can figure that about a third of this is the price of the land, and since land sales are exempt from consumption tax it means you’ll pay tax on ¥20 million.

At present, the tax will come to ¥1 million, but after April 2014 it will go up to ¥1.6 million, and then 18 months later to ¥2 million. If you want to take advantage of this savings, experts say you should move now, because the tax is levied not when you sign the contract for the new home, but when occupancy of the property is “transferred over” (hikiwatashi) into your name, and in most cases the average time between the point when a particular unit goes on sale and the point when the buyer takes possession of it is one year.

So if you want to beat the consumption tax raise you have to start looking now. That’s why so many real estate flyers for new homes stress that “now is the chance.” They really do mean “now,” as in “today.” Moreover, realtors and developers are saying that since there will be a rush to beat the tax, demand will be high and so the longer you wait the less likely it will be that you can find what you want. Prices may even be higher the closer you get to April 2014.

Continue reading about making big purchases before the tax hike →

Back to business as usual for condominium developers?

Friday, November 11th, 2011

Construction activity in the old North Yards near Osaka Station, December 2010

Last month a model room opened for a new condominium complex in Osaka with the revealing name Owner’s Tower. Part of the new Grand Front development project situated in the huge tract of land near Osaka Station that once was home to the Japan National Railways Umeda North Yard cargo terminal, the new residence is a forthrightly upscale facility that targets high-income buyers, in particular foreigners who are looking for a second home in Japan’s second biggest city. The building is 48 stories comprising 525 units, the smallest of which is 90 sq. meters. Prices start at ¥3 million per tsubo (3.3 sq. meters). In the first sales phase, apartments on floors 40 through 48 will be made available at prices ranging from ¥83.5 million to ¥415 million. The projection is that residents will be able to start moving in in August 2013.

The developer Sekisui House emphasizes that Owners Tower is very different from the “family-type” condos that tend to dominate the urban housing market, but in fact central Osaka will soon see a lot of new family-type tower condos going on sale in the coming months. Several buildings are now going up in Kita Ward offering a total of 400 units, and in Tennoji Ward, which is considered the heart of Osaka’s business district, about 260 units are under construction. The average prices are slightly less than ¥2 million per tsubo, or about 30 percent higher than prices in areas outside the city center.

Why are families moving to the center of the city? The main reason seems to be that while these condos are expensive, they are still much cheaper than they were, say, four years ago. Ever since the so-called Lehman shock of 2008, real estate in all the major cities has dropped in value as large companies unloaded properties to raise cash. Those developers that managed to stay in business cut back on new projects, but now they’re taking advantage of the lower land prices and building again.

Continue to read about the return of high-rise condos →

Reality check: Condo repair funds not enough

Tuesday, May 3rd, 2011

Repair work on the exterior of a condominium in Urayasu, Chiba Prefecture

In mid-April, the land ministry announced the results of a study it had carried out with regards to condominium shuzenhi tsumitate-kin (reserve funds for repair costs). The ministry had never researched the matter before and found that throughout Japan money collected from condo owners by housing management companies for repairs is grossly insufficient, and called on developers to be more honest with potential buyers of new condos by outlining the true cost of potential repairs and setting fees accordingly.

When you buy a condo in Japan you take on the burden of certain running costs related to maintaining the building as a whole. This fee, called kanrihi, goes toward things like elevator maintenance and custodial staff. It can run anywhere from several thousand yen a month to almost ¥40,000 a month, depending on the building’s size, location, and amenities. However, there is another burden that owners must assume. Shuzenhi is money that goes into a savings account for future work on the building as a whole, such as exterior painting, structural repairs and replacing superannuated equipment. The land ministry found that in the majority of the 84 cases it studied the reserve fund was not enough to cover this anticipated work. The reason for this insufficiency is that developers set the monthly contribution way too low in order to sell units more easily. Because kanrihi is basically set by management companies contracted to take care of the building, the developers have little control over it. First-time homeowners may be discouraged to find that, in addition to their monthly mortgage payments, they have to cover these non-negotiable charges. Consequently, developers and realtors try to keep the shuzenhi low — ¥10,000 a month seems to be the psychological upper limit. The land ministry, however, is recommending that shuzenhi be doubled in most cases, a suggestion that, if carried out, could put a damper on the already beleaguered new condominium market.

Continue reading about condo repair funds →

What’s in a name when it comes to real estate?

Monday, October 4th, 2010

Are you hip enough?

Are you hip enough?

Eight of Japan’s biggest real estate companies have joined forces to run a website called Major 7 (why 7 and not 8 I have no idea), which features articles about condominiums. Last summer the group conducted its annual survey to find which urban location is the one where people would most like to buy a condo if they could. For the sixth year in a row the number one answer in the Kansai region was Ashiya, which isn’t surprising. Ashiya, in Hyogo Prefecture, has always had a high-class reputation owing to the simple fact that rich people tend to live there and most of the city is located on a hill.

The most popular place in the Tokyo Metro area was Kichijoji, for the third year in a row. (For the record, the next nine preferences in descending order are Jiyugaoka, Yokohama, Futago Tamagawa, Ebisu, Hiroo, Kamakura, Meguro, Kagurazaka and Naka-Meguro) The website doesn’t explain why Kichijoji is popular, but it isn’t difficult to guess. Tokyoites see it as a youth haven filled with trendy retailers. It is also close to a famous park.

The preference is purely aspirational, especially if you look at what’s available. Most units for sale near Kichijoji Station are small, cramped and expensive. You have to go at least 18 minutes from the station before you find something that might be habitable for a family: ¥31 million for a 60 sq. meter 2LDK built in 1976 is a representative property. If you want something new, you’ll pay through the teeth. A new 70 sq. meter apartment will put you back a whopping ¥75 million. The prices are, on average, much higher than comparable units in areas closer to the center of Tokyo.

It’s completely a name thing, and realtors know that. Kichijoji is in Musashino City, and when advertising condos or even rental apartments, many real estate agents list the nearest station to a Musashino property as being Kichijoji, even if it’s much closer to, say, Mitaka. Of course, if you live in Mitaka you can always get off at Kichijoji station and take a bus home. That way you can tell your friends you live in Kichijoji, but sooner or later they’re going to catch on.

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