Posts Tagged ‘real estate’

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 →

Annals of cheap: 5manika.com

Friday, December 2nd, 2011

Redecorate your one-room apartment in retro (read: cramped) style!

“Deflation” continues to be the word on everyone’s lips when they talk about Japan’s economic problems, but so far one area has resisted the price-reduction trend: apartment rents. That may be finally changing. According to a recent article in the Tokyo Shimbun, it is now possible to find a one-room apartment with bath and toilet in the 23 wards of Tokyo for less than ¥50,000 a month. Generally speaking, since the mid-’80s the only units in the center of the city that were less than ¥50,000 were those in old wooden apartment buildings with communal toilets and no bath, meaning you had to patronize the local sento (public bath). Tokyo Shimbun credits the rise of the Internet with the reduction in rent, since more real estate companies are publicizing properties on the net and, as a result, apartment-seekers have more of an opportunity to compare prices. Before the Internet, you had to basically visit every real estate office in the area where you wanted to live, which is a time-consuming endeavor.

One young entrepreneur, Kenji Yoshioka, is already profiting from the trend. A former employee for an investment fund who handled real estate, the 33-year-old set up a company called A Power Home last April and launched a website called Yachin Go-man-en Ika that advertises only apartments which are ¥50,000 a month or less. He was responding to the reality that younger full-time workers were less well off than their predecessors, who had bigger benefit packages, more assured salaries and, most importantly, the use of company housing. Young people wanted cheap apartments near their workplaces but didn’t want to give up basic amenities, like a private toilet and bath. Yoshioka decided to collect this information in one easy-to-navigate website. It was an immediate hit and in October he even set up his own real estate company.

In most cases, the cheap apartments that Yoshioka publicizes are “sleeping,” meaning that they’ve been vacant for some time. Normally when people go to realtors and specifically ask for apartments that are less than ¥50,000, the agents turn them away because the commission isn’t really worth the time and effort. Landlords, however, are desperate to rent such places and many have remodeled them to make them more attractive while keeping prices affordable, adding things like sound-proofing and even elevators. Many attempt to attract women tenants (who make up more than 50 percent of single apartment-seekers looking for cheaper units) by allowing pets. Tokyo Shimbun mentions a one-room apartment with a loft, kitchen, unit bath-with-toilet, and even a window only ten minutes walk from Itabashi Station that costs ¥48,000 a month. There are even some properties listed for as low as ¥30,000 that have baths and toilets.

According to the real estate research company Home’s, the average rent for a one-room apartment in Tokyo has decreased by 5.3 percent in the last year alone. In addition, security deposits on such units have decreased by 8 percent and gift money by 11 percent. Since the vacancy rate for apartments in general in Tokyo is more than 10 percent (undoubtedly higher for cheap one-rooms) it’s not likely that rents will go up in the near future.

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 →

Checking out affordable resort condos in Chiba

Monday, January 4th, 2010

The opposite view of resort condos from Onjuku Beach

The opposite view of resort condos from Onjuku Beach

Some of the surest bargains on the real-estate market are so-called besso manshon (resort condos). When most people in Tokyo think of second homes or weekend homes, they think of Karuizawa or the Izu Peninsula or maybe the five lakes area around Mount Fuji, where prices tend to be uniformly expensive. The thing is, second homes almost anywhere else are quite affordable, and I often check resort-net.com, which is run by Recruit, to see what’s available, and one of the most intriguing areas is actually the Boso peninsula, meaning Chiba Prefecture. A few weeks ago on the site I found 73 properties on the Boso Peninsula that were priced at less than 5 million. Though Chiba has a reputation as a bedroom region it’s got lots of hills and forests and Kujukuri sea coast is cleaner and less crowded than the stretch of beach that leads from Shonan in Kanagawa to the tip of Izu. In fact, diehard surfers say Kujukuri has the best waves on the Pacific side of Honshu. More significantly, it’s cooler than Tokyo in the summer and warmer in the winter, sometimes by as much as three degrees.

Consequently, there are a lot of second homes and resort condos on sale in seaside towns like Onjuku and Katsuura for as little as ¥2 million  for about 40 sq. meters. These two resort towns are quaint but large enough to supply all the amenities you’d want in walking distance to wherever you happen to live. Many of the resort condos are close to the main train stations, and both towns are less than 90 minutes from central Tokyo by express. If you don’t have a car this is important, since most second homes tend to be far from central business area and train lines.

Continue reading about buying second homes →

Comparative payoffs

Thursday, October 22nd, 2009

You can have this baby for a song

You can have this baby for a song

The Oct. 10 issue of the weekly financial magazine Toyo Keizai lists the price earnings ratios (PER) of used properties in accordance with their closest railway stations in the Tokyo Metropolitan, Kinki, and Chubu regions. PER is more commonly used to determine the value of stocks. Toyo Keizai uses it to compare housing as an investment, specifically apartments that are bought to generate income in the form of rent. They use the formula PER = condo price / (monthly rent X 12).

PER is an important indicator since more and more people are investing in rental housing. A lower PER essentially means a better return on investment. What Toyo doesn’t mention, however, is that you have to rent the unit out to get any return, and renting isn’t as easy as it sounds.

What’s most interesting to me, since I’m a renter, is the way the PER shows the relationship between the price of an apartment in a given area and its presumed rental value. Kamakura, for instance, has a fairly high PER of 19. This means that properties are relatively expensive in Kamakura while rentals are relatively cheap; and it isn’t difficult to figure out why. Kamakura is a very popular place to live for people who don’t have to commute to Tokyo.

Continue reading about the PER of rental housing →

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