20230915 Alchemist Japan Real Estate Seminar was a complete success!!!
With nearly a hundred distinguished guests in attendance, the 2023 Alchemist Japan Real Estate Seminar concluded successfully amidst lively discussions. We are deeply grateful for your support over the years!
The new official website link is as follows: https://alchemist.jp.net/news/30
The average expected selling price of used apartment buildings in the Tokyo metropolitan area increased by 11.6% in 2021.
Tokyo KANTEI compiled data on the average expected selling price of used apartments (70 square meters) in 2021, finding that the metropolitan area (Tokyo, Kanagawa, Saitama, and Chiba prefectures) was 41.66 million yen, an increase of 4.32 million yen (11.6%) from 2020. Prices rose not only in Tokyo but also in surrounding areas like Saitama, pushing up the average price for the entire metropolitan area.
Looking at the regions, Tokyo saw an increase of 5.72 million yen (11.1%) compared to the previous year. Saitama Prefecture saw an average desired selling price of 25.28 million yen, up 2.46 million yen (10.8%). Kanagawa Prefecture (up 8.4%) and Chiba Prefecture (up 8.7%) also saw increases. Due to the COVID-19 pandemic, people are spending more time at home, increasing their desire for comfort and value, driving up prices across regions. Comparing this with historical data, prices rose by 2% in 2019 and only 0.7% in 2020, highlighting the significant increases in 2021.
Regarding the 2022 forecast, Masayuki Takahashi, chief researcher at Tokyo KANTEI, believes that "it won't fall, but the upward trend is likely to slow." Because the prices of used properties in central Tokyo have approached those of new properties, and the number of unsold properties has been gradually increasing since the summer of 2021, significant price increases are unlikely to occur going forward. High prices in surrounding areas such as Kanagawa Prefecture may also cause demand to shift to relatively affordable single-family homes.
(Source: Nikkei)
20220217 Office Demand in Tokyo's 23 Wards: 40% of companies planning to lease new offices plan to expand their space.
Mori Building Co., Ltd. announced the results of its 2021 Tokyo 23 Ward Office Demand Survey. The survey covered 9,831 companies located in the Tokyo 23 Wards (excluding Mori Building's tenants) with the highest capitalization. The survey was conducted from October 6 to 29, 2021, resulting in 1,611 valid samples.
26% of companies plan to lease new offices (compared to 24% in 2020), with 40% planning to expand their space. As for the reason for renting a new office, the newly added item in this survey, "changing workspace to accommodate changing work styles" (30%), ranked first, followed by "moving to a building with lower rent" (29%) and "moving to a building with a better location" (26%). 19% of companies reported a change in rent over the past year, roughly the same as in previous years.
In terms of changes in working methods and workspaces amid the COVID-19 pandemic, the current average attendance rate is 62%, of which 36% of companies have an attendance rate above 80%. As for the estimated attendance rate after the COVID-19 pandemic subsides, the average is 74%.
The biggest issue for employees returning to the office is "how to maintain distance" (42%), followed by "introducing and expanding communication software" (39%) and "improving and renovating the office to attract employees" (33%).
In terms of the use of diversified workspaces, "open meeting space" accounted for 57% (51% in 2020), "dedicated online meeting space" accounted for 51% (40% in 2020), and "personal rooms and work spaces" accounted for 34% (28% in 2020). It can be seen that more and more companies are beginning to enrich the office and remote work environment and strengthen its functions in order to adapt to new working methods.
In terms of the demand for shared equipment in office buildings, the top-ranked items are "staff restaurants, buffets, and lounges" (68%), "leisure spaces" (60%), and "conference rooms" (54%). In addition, there is a certain demand for equipment related to employee health management, such as "exercise spaces" (31%), "nap rooms and meditation rooms" (28%), and "massage rooms" (24%).
In terms of employee benefits, there are "lunch discounts" (63%), "beverage discounts" (48%), "restaurant discounts for company gatherings" (35%), etc., and the demand for discounts on food and beverages is relatively high.
Shinji Takeda, General Manager of the Sales Promotion Department, Office Business Division, Mori Building's Sales Headquarters, stated, "The survey indicates that as economic activity gradually returns to normal, companies are showing signs of improvement, with an increase in new office lease reservations. Furthermore, as demand becomes increasingly diverse, companies are no longer simply comparing rent and floor space when selecting an office space; they are also considering other factors. In this era, office environments must be considered from a multifaceted perspective, such as how to stimulate the creativity needed to launch new businesses. The future of office buildings will see a polarization: those that are highly regarded, including for their services, and those that are less well-regarded."
(Source: Housing News/Sinyi Japan)
20220212 The COVID-19 pandemic has led to a change in investment awareness, with Japanese people increasing their investment in real estate.
Over 50% (55.4%) of all respondents have experienced a change in their investment preferences. Among current investors, over 80% have increased their investment options, with the largest increase being in real estate investments to address the challenges of post-retirement pension shortfalls. While less than 20% (13.6%) of respondents have seen their annual income increase, current investors with an annual income of 6 million yen or more are showing an increase in their investment options, regardless of whether their income has increased or decreased.
(Source: Housing News/Sinyi Japan)
20211205 Store rents in major regions of Japan remain stable, with Ginza still leading the way
The Japan Real Estate Institute (JREI) has released the 2021 Autumn Edition of "Store Rent Trends", which collects and analyzes public store rent data from five areas in Tokyo and eight areas in major cities over the past three years.
Looking at the first-floor rental rankings in the first half of 2021, the top two are the same as in the previous survey. The champion is still "Ginza" (price per tsubo is 71,000 yen/month, up 6% from the previous period), the runner-up is "Shinjuku" (51,500 yen/month, down 6%), and the third place is "Shibuya", which was previously ranked fourth (51,300 yen/month, up 6%), the fourth place is "Omotesando" (49,700 yen/month, down 1%), and the fifth place is "Ikebukuro" (41,200 yen/month, down 7%). The ones worth noting below the sixth place are the ninth place "Sendai" (24,600 yen/month, up 3%), and the tenth place "Fukuoka" (24,500 yen/month, up 10%).
To prevent the spread of the COVID-19 pandemic, governments around the world have implemented numerous regulatory measures, prompting wealthy individuals to shift their travel and overseas expenses toward domestic consumption. This has also led to a recovery in the performance of luxury brands, and rents in key areas of central Tokyo have remained stable. However, areas that rely heavily on foreign tourist demand, as well as those primarily focused on restaurants and entertainment facilities, continue to face challenges. However, an increase in the number of properties being sought in Shinjuku and Sapporo has been observed. While some well-located properties have been able to maintain their original rents and find new tenants, many have required rent reductions to secure properties.
Looking ahead, JREI believes that even after the pandemic ends, attention must still be paid to changes in consumer behavior patterns caused by remote work and the spread of e-commerce, which may promote changes such as the development of physical stores towards showrooms and increased demand for suburban stores.
(Source: REport)
20211129 Store rents in major regions of Japan remain stable, with Ginza still leading the way
Looking at the first-floor rental rankings in the first half of 2021, the top two are the same as in the previous survey. The champion is still "Ginza" (price per tsubo is 71,000 yen/month, up 6% from the previous period), the runner-up is "Shinjuku" (51,500 yen/month, down 6%), and the third place is "Shibuya", which was previously ranked fourth (51,300 yen/month, up 6%), the fourth place is "Omotesando" (49,700 yen/month, down 1%), and the fifth place is "Ikebukuro" (41,200 yen/month, down 7%). The ones worth noting below the sixth place are the ninth place "Sendai" (24,600 yen/month, up 3%), and the tenth place "Fukuoka" (24,500 yen/month, up 10%).
To prevent the spread of the COVID-19 pandemic, governments around the world have implemented numerous regulatory measures, prompting wealthy individuals to shift their travel and overseas expenses toward domestic consumption. This has also led to a recovery in the performance of luxury brands, and rents in key areas of central Tokyo have remained stable. However, areas that rely heavily on foreign tourist demand, as well as those primarily focused on restaurants and entertainment facilities, continue to face challenges. However, an increase in the number of properties being sought in Shinjuku and Sapporo has been observed. While some well-located properties have been able to maintain their original rents and find new tenants, many have required rent reductions to secure properties.
Looking ahead, JREI believes that even after the pandemic ends, attention must still be paid to changes in consumer behavior patterns caused by remote work and the spread of e-commerce, which may promote changes such as the development of physical stores towards showrooms and increased demand for suburban stores.
(Source: REport/Sinyi Realty)
Akasaka-Mitsuke and Nagatacho ranked highest for single-bedroom apartment rents in 2021.
Taniko Livenet Co., Ltd. has released the "2021 Edition of the Tokyo Metropolitan Area Rental Apartment Rental Market Map (THE RENT MARKET RATE)."
The company conducted its own analysis based on data from approximately 50,000 rental transactions in the greater Tokyo area, as well as approximately 350,000 rental requests from January to December 2020. The company categorized the data into three types of apartments: single (1R, 1K, 1DK/standard area of 25 square meters), two-person (1LDK, 2K, 2DK/standard area of 40 square meters), and family (2LDK, 3DK, 3LDK/standard area of 60 square meters), and then analyzed prices based on the station location. The survey covered 92 lines, totaling 1,025 stations.
Looking at average rents by ward, within a 5-kilometer radius centered on the former Tokyo Metropolitan Government Building (now the Tokyo International Forum), Minato Ward has the highest rents for all housing types. Singles are priced around 120,000 yen, couples around 190,000 yen, and families around 290,000 yen. Chiyoda Ward, Shinjuku Ward, and Chuo Ward follow closely behind.
Within a 10-kilometer radius, Shibuya Ward has the highest prices, followed by Shinagawa Ward and Meguro Ward. Within a 20-kilometer radius, Setagaya Ward, Ōta Ward, Nakahara Ward in Kawasaki City, Suginami Ward in Tokyo, Musashino City, and Mitaka City have the highest prices. Within a 30-kilometer radius, the areas centered around northern Yokohama City have the highest prices. Regardless of housing type, Yokohama's Naka and Nishi Wards are the most expensive.
In the ranking of single-person rental prices released simultaneously, Tokyo Metro's Akasaka-Mitsuke and Nagatacho stations in the 23 wards of Tokyo tied for first place at 152,000 yen. Other areas had the highest rents: Kichijoji Station (102,000 yen), located on JR lines, in Tokyo; Motomachi and Chukagai stations on the Minatomirai Line in Kanagawa; Kawaguchi Station in Saitama (88,000 yen); and Maihama Station in Chiba (87,000 yen).
(Source: REport/Sinyi Realty)
20211025 Tokyo Metropolitan Area Used Apartment Building Prices Rise for 17 Consecutive Periods
In September, Tokyo KANTEI released the "Used Apartment Building Price Survey Report" in Japan's three major metropolitan areas in the first half of 2021.
This report sets certain conditions for "age" and "location" that will have a significant impact on prices, homogenizing the target properties before calculating the "market price". The target properties must meet the following conditions: age of 10 years ± 5 years, within a 15-minute walk from the nearest station, the number of second-hand properties must be 3 or more, or the number of second-hand properties must be more than 2% of the total number of households.
The report indicates that in the first half of 2021, prices for used apartments in the Tokyo metropolitan area (per tsubo) increased by 6.6% compared to the previous period, reaching 2.632 million yen, marking the 17th consecutive period of increase. By prefecture, prices in Tokyo increased by 6.5% to 3.174 million yen per tsubo; Kanagawa increased by 4.7% to 2.078 million yen per tsubo; Saitama increased by 6.2% to 1.619 million yen per tsubo; and Chiba increased by 5.8% to 1.506 million yen per tsubo. Prices in all three prefectures increased.
Prices in the Kinki region increased by 3.4% to 1.84 million yen/tsubo, marking a period of sustained growth for over a decade. Among prefectures, Osaka Prefecture saw a 2.9% increase to 1.83 million yen/tsubo; Hyogo Prefecture saw a 3.1% increase to 1.78 million yen/tsubo, marking a period of consistent growth since 2012; and Kyoto Prefecture saw a significant 4.1% increase to 2.29 million yen/tsubo.
Prices in the central region increased by 5.5% from the previous period to 1.434 million yen/tsubo, marking the 17th consecutive period of increase; while prices in Nagoya City rose by 6.1% to 1.663 million yen/tsubo, marking the second period of increase in two periods.
(Source: suumo journal)
20211018 Japan Urban Characteristic Evaluation: Osaka City surpasses Kyoto City to take first place
The Mori Memorial Foundation's Urban Strategy Institute recently announced the results of the "2021 Japan Urban Characteristics Evaluation."
The survey targets 138 cities in Japan, including designated cities, prefectural capitals, and cities with a population of 170,000 or more, as well as the 23 wards of Tokyo. The survey evaluates 86 indicators across six areas, including "Economy and Business," "Research and Development," "Culture and Exchange," "Life and Housing," "Environment," and "Transportation and Connectivity," to quantitatively compare the characteristics of each city. This survey has relaxed the selection criteria for target cities, adding 29 cities, including Kawaguchi City, Tokorozawa City, and Chofu City, primarily in the suburbs of Tokyo. Some indicators, such as digital transformation, carbon dioxide (CO2) emissions, and bicycle promotion, have been adjusted to reflect changes in the social environment. New indicators have also been added, including the "total unemployment rate," "number of patents obtained," and "progress in e-local government."
Kyoto City, which has held the top spot in the overall ranking for the entire survey since its inception in 2018, was surpassed by Osaka City for the first time. Osaka City received high marks for "economic activities" and "receptive environment" for cultural exchange, as well as new indicators such as "ease of using a bicycle" and "progress in the onlineization of local government administrative procedures." Second to fifth place went to Kyoto City, Fukuoka City, Yokohama City, and Nagoya City, respectively.
Among the newly added cities, Mitaka City scored high in the financial strength index, number of researchers, and bus stop density, ranking 26th overall.
Regarding performance in the "ACTOR" category (singles, families, seniors, tourists, business owners, and employees), which evaluates individuals, Fukuoka City took first place in singles and families, and seniors, while Matsumoto City took second place in families and seniors. The ranking of performance in Tokyo's 23 wards was Chiyoda-ku, Minato-ku, and Chuo-ku, unchanged from previous years.
Furthermore, looking at indicators reflecting current social conditions, Mitaka City, Fukuoka City, and Nishinomiya City received high ratings for "living environment satisfaction" amidst the current situation of encouraging remote work, while Bunkyo Ward, Chiyoda Ward, and Minato Ward received high ratings within the Tokyo 23 Wards. The order of "residential area" was Kyoka City, Izumo City, and Joetsu City, while within the Tokyo 23 Wards, it was Katsushika Ward, Setagaya Ward, and Nerima Ward. Regarding "disaster safety," Mitaka City, Atsugi City, and Sagamihara City performed well, while Chiyoda Ward, Bunkyo Ward, and Meguro Ward led the way within the Tokyo 23 Wards. Regarding "resource recovery rate," which reflects the level of attention paid to environmental issues, Kamakura City, Kurashiki City, and Chofu City received high ratings.
This survey, conducted in March 2021, surveyed 300 people living in target cities to understand the status of remote work during the COVID-19 pandemic. The results indicate a significant increase in the proportion of remote work in the greater Tokyo area (particularly the 23 wards of Tokyo), a slight increase in the Kansai region and regional metropolitan areas, and only a slight increase in regional core cities. In other cities, the pandemic has not significantly altered existing employment and schooling patterns.
Regarding the survey results, Hiroo Ichikawa, director of the Mori Memorial Foundation and professor emeritus of Meiji University, explained: "This survey is not intended to evaluate the competitiveness of each city, but rather to clarify the strengths and weaknesses of each city. We hope that it can become an indicator of the direction of urban development in the future."
(Source: REport/Sinyi Realty)
20211011 Prices of new and existing apartment buildings in Tokyo's 23 wards are on the rise
The Japan Real Estate Research Institute released the results of its "2021 First Half Housing Market Index" survey in mid-September. Using data from rental and condominium buildings provided by at home and KEN Corporation, the survey analyzed rents and prices for new and existing (10-year-old) condominiums in Tokyo's 23 wards, categorizing them by size: large (80 square meters or more), standard (40 to under 80 square meters), and small (under 40 square meters).
Per square meter apartment rents for new apartments in the five central wards of Tokyo were ¥6,804 for large units (up 3.4% from the previous month), ¥4,998 for standard units (up 1.4%), and ¥4,566 for small units (up 0.1%). For existing apartments, rents for large units were ¥6,083 (up 3.4%), ¥4,580 for standard units (up 1.3%), and ¥4,297 for small units (unchanged). For both new and existing buildings, rents for large and standard units continued to rise, exceeding previous highs, while rents for small units remained virtually unchanged.
In the 23 wards of Tokyo, the average rent per square meter for large-sized new apartment buildings was 5,826 yen (up 2.8% from the previous period), 3,634 yen for standard-sized buildings (up 2.0%), and 3,847 yen for small-sized buildings (up 0.5%). For existing apartment buildings, the average rent per square meter for large-sized buildings was 5,219 yen (up 2.7%), 3,364 yen for standard-sized buildings (up 2.0%), and 3,628 yen for small-sized buildings (up 0.4%). All types of buildings, both new and existing, continued to rise, setting new record highs.
In terms of the price per square meter of apartments, for new apartments in the five central districts, the price per square meter for large-sized units is 2,167,000 yen (up 7.6% from the previous period), the price per square meter for standard-sized units is 1,617,000 yen (down 0.1%), and the price per square meter for small-sized units is 1,522,000 yen (up 7.6%). For existing apartments, the price per square meter for large-sized units is 1,626,000 yen (down 1.3%), the price per square meter for standard-sized units is 1,251,000 yen (up 2.5%), and the price per square meter for small-sized units is 1,248,000 yen (up 9.6%). Compared with the previous period, the price per square meter of both large and small-sized units of new apartments has increased, while the price per square meter of standard-sized units has remained the same. For existing apartments, the price per square meter of large-sized units has dropped slightly from the previous peak, but the price per square meter of standard and small-sized units has increased, with the small-sized units showing an astonishing increase.
As for the price per square meter in the 23 wards of Tokyo, the price per square meter for large-sized apartments in newly built buildings is 1,944,000 yen (up 8.1% from the previous period), the price per square meter for standard-sized apartments is 1,174,000 yen (up 3.1%), and the price per square meter for small-sized apartments is 1,298,000 yen (up 7.1%). The price per square meter for large-sized apartments in existing buildings is 1,117,000 yen (up 9.2%), the price per square meter for standard-sized apartments is 887,000 yen (up 4.2%), and the price per square meter for small-sized apartments is 981,000 yen (up 6.1%). All types of apartments in both new and existing buildings continue to show an upward trend.
(Source: REport/Sinyi Realty)
September 6, 2021: The vacancy rate for logistics real estate in the Tokyo metropolitan area remains at 1%, with more active development in urban areas.
In early July, real estate services firm Jones Lang LaSalle (JLL) Japan hosted an online seminar focused on logistics real estate. The seminar addressed the latest trends and development needs in the booming logistics real estate sector. The company predicts that the vacancy rate in the greater Tokyo area will remain low, reaching 1.3% in 2023.
JLL defines advanced logistics facilities as leased properties with a total floor area of 50,000 square meters or more (in the Tokyo and Osaka metropolitan areas) completed after 2000. The first day's lecture highlighted the future prospects for advanced logistics facilities.
In the first quarter of 2021, the vacancy rate in the greater Tokyo area (Tokyo, Kanagawa, Chiba, Saitama, and Ibaraki) was 0.9%, up 0.7 percentage points from the previous quarter. Monthly rents (per tsubo, including management fees) were 4,388 yen, up 0.7% from the previous quarter, demonstrating robust growth. JLL analysis indicates that 2.5 million square meters of new space will be available in 2021, 70% of which has been leased, resulting in a vacancy rate of 1.2%.
JLL predicts that approximately 3.5 million square meters of space will be available in 2022 and approximately 3 million square meters in 2023. Assuming convenient development locations and smooth leasing, vacancy rates are expected to fall to 1.4% in 2022 and 1.3% in 2023. Rents are also expected to continue to rise, reaching 4,550 yen in 2023.
Meanwhile, the vacancy rate in the Osaka metropolitan area (Osaka, Kyoto, Hyogo, and Nara) was 2.9%, down 0.5 percentage points from the previous quarter, while rents were 4,007 yen, up 0.5% from the previous quarter. JLL predicts that 90% of the 1.1 million square meters of space available in 2021 have already been signed, resulting in a 3% vacancy rate. The company also forecasts the vacancy rate to fall to 2.5% in 2022 and 2% in 2023. The continued tension between demand and supply is forcing rents to rise, reaching 4,150 yen in 2023.
The increasing importance of power consumption capacity
The second day's seminar focused on these trends. Regarding leasing demand, Ken Tomoda, Senior Director of JLL's Industrial Leasing Department, stated, "As the use of automated warehouses and logistics robots increases, ensuring sufficient power capacity becomes a crucial issue." He also predicted a gradual shift toward automation over the next decade.
Acquiring development land has intensified bidding competition, keeping prices high. Hiroshi Takizawa, Executive Director of the Capital Markets Division, noted, "There has been an increase in cases of actively evaluating urban readjustment areas and farmland. Over the past decade, we've seen successful development across the country, and businesses have accumulated considerable experience." The precedents of development in urban readjustment areas and farmland will make it easier for administrative officials to handle the situation. On the other hand, there are also cases where overdevelopment in urban readjustment areas has led local governments to lower their assessments.
Source: Residential News
20210823 The number of apartment building sales in the Kinki region increased by 58% in the first half of 2021
The Real Estate Economic Research Institute recently released the trends in the Kinki region's apartment building market for the first half of 2021 (January to June) and June.
In the first half of the year, the total number of apartment buildings sold in the Kinki region was 8,373 (an increase of 58% over the same period last year), including 2,963 units in Osaka City (an increase of 22.5%), 1,925 units in other areas of Osaka Prefecture (an increase of 97%), 1,149 units in Kobe City (an increase of 105.5%), 1,187 units in other areas of Hyogo Prefecture (an increase of 145.2%), 690 units in Kyoto City (an increase of 230.1%), 87 units in other areas of Kyoto Prefecture, 51 units in Nara Prefecture (a decrease of 80.1%), 280 units in Shiga Prefecture (an increase of 3.3%), and 41 units in Wakayama Prefecture (a decrease of 67.2%).
The June signing rate was 73% (up 2.5 percentage points from the same period last year), marking the 11th consecutive year that it has exceeded 70%. The average price per unit was 43.6 million yen (up 8.3%), and the average price per square meter rose to 733,000 yen (up 7.8%). 131 units sold out on the first day of sales, representing 1.6% of the total units sold. Approximately 9,500 units are expected to be released in the second half of the year.
The number of units sold in June reached 1,731 (a 23% increase compared to the same month last year), exceeding the same period last year for six consecutive months. The contract signing rate was 73.2% (up 2.8 percentage points). The average price per unit was 45.72 million yen (up 26.7%), marking the second consecutive month of increases. The average price per square meter was 732,000 yen (up 14.4%), marking the third consecutive month of increases.
The five properties in BRANZ Mori Koji, including Phase 2, Blocks 3 and 4, totaling 63 units, sold out on the first day of sales. By the end of the month, the number of unsold units reached 3,484, an increase of 46 units from the previous month.
Source: REport
20210622 Japan's 2021 Housing Market Trends Survey Results Announced
The survey, conducted from April 2019 to March 2020, targeted households moving, rebuilding, or renovating, categorizing them as custom-built homes, condominium homes, existing homes, private rental homes, and renovated homes. This survey marks the 20th annual survey since 2001.
The average purchase price and annual income multiple for existing single-family homes reached 28.94 million yen (up 11.9% from the previous year) and 3.81 times (up 0.22 percentage points), respectively, reaching record highs since the survey began. For contract homes, the average purchase price reached 53.59 million yen (up 5.3%) and 6.67 times (up 0.16 percentage points), for condominiums, 38.26 million yen (down 0.6%) and 5.32 times (down 0.29 percentage points), for condominiums, 46.39 million yen (up 4.0%) and 5.28 times (down 0.31 percentage points), and for existing condominiums, 22.63 million yen (down 17.6%) and 3.29 times (down 0.7 percentage points). While both the purchase price and multiple for existing condominiums declined significantly, other types of housing remained roughly the same as the previous year.
Among households purchasing custom-built homes, the most common reason for choosing a home was "because it's a single-family home" (44.1%). For those purchasing condominiums, the most common reason was "because it's newly built" (64.4%), and for condominiums, the most common reason was "because the location is nice" (69.4%). For those purchasing existing single-family homes and condominiums, the most common reason was "because the price is reasonable" (56.0%) and "because the rent is reasonable" (67.1%). For households living in private rental housing, the most common reason was "because the rent is reasonable" (54.5%).
Source: REport
June 2, 2021: A large-scale urban renewal plan for Uchisaiwaicho 1-chome in Chiyoda-ku, Tokyo, has been announced.
Ten companies (Note), including NTT Urban Development Co., Ltd., Public Works Co., Ltd., Nippon Land & Building Co., Ltd., and Mitsui Real Estate Co., Ltd., announced a joint town development plan for the "Uchisaiwaicho 1-chome Block" in Chiyoda Ward, Tokyo, at the end of March.
The Hibiya and Uchisaiwaicho areas, encompassing the Hibiya and Yurakucho 1-chome blocks, were developed in 2011 under the "Hibiya Area Urban Development Basic Plan" formulated by the Tokyo Metropolitan Government, Chiyoda Ward, and local stakeholders. The area was also designated as a Tokyo Metropolitan Urban Renewal Plan at the 2019 National Strategic Special Regional Meeting.
The town development guidelines include: developing large-scale plazas; creating lively neighborhoods open to surrounding neighborhoods; creating an integrated pedestrian network of stations, neighborhoods, and parks by developing underground and above-ground nodes and parks above the roads connecting to Hibiya Park; and renovating important public facilities in the city center, including electricity, communications facilities, and welcoming functions.
The planned site is approximately 6.5 hectares at 1-1 Uchisaiwaicho, Chiyoda-ku. The northern area (approximately 2.4 hectares) will house the new main building, housing the hotel and banquet hall (expected for completion in 2036), and a complex comprising offices, retail space, and serviced apartments (expected for completion in 2030). The central area (approximately 2.2 hectares) will house offices, retail space, a hotel, and industrial support facilities (expected for completion in 2029). The southern area (approximately 1.9 hectares) will house offices, retail space, a hotel, and health facilities (expected for completion in 2028).
All planned contents are currently scheduled to be completed after 2037.
Note: NTT Development Corporation, Public Buildings Corporation, Dai-ichi Life Insurance Company, Imperial Hotel, Tokyo Center, Tokyo Electric Power Company PowerGrid, Nippon Telegraph and Telephone Corporation, Nippon Land and Building Corporation, Nippon Telegraph and Telephone East Corporation, and Mitsui Fudosan Corporation.
Source: SUUMO JOURNAL
20210511 Why Apartment Buildings Remain Popular Despite No Salary Increases or Bonuses Due to the Pandemic (Part 1)
Real estate transactions in the Tokyo metropolitan area have been brisk recently, and the key lies in the "post-epidemic society."
Reasons for large REITs to merge
In this situation, if some apartment buildings converted from old office buildings are available, they will probably be sold out immediately. There may also be real estate investment funds with residential investment targets that will buy the entire building and then convert it into a rental apartment building for use.
Observing real estate investment trust (REIT) price fluctuations during the COVID-19 pandemic reveals that while commercial facility and office-focused investment funds continue to experience low prices, residential-focused funds are performing well. This price trend reflects the high demand for residential properties in a post-pandemic society, and office-focused funds are also continuing to enter the market through mergers and changes in investment assets.
Mitsubishi Estate's REITs, Japan Retail Commercial Fund Investment Corporation and MCUBS MidCity Investment Corporation, merged in March 2021. Japan Retail Commercial is a retail facility-focused REIT, while MidCity specializes in office buildings. In the post-pandemic era, flexibly combining retail facilities, offices, and residential properties is essential, leading to the merger of these two distinct REITs to create Japan's largest comprehensive REIT. Market expectations for the new investment portfolio are high, and the net asset value (equivalent to the stock price of a typical company) of both funds has surged.
Meanwhile, Mitsui Fudosan sold its Shinjuku Mitsui Building and a portion of GranTokyo Tower to a group REIT. While Mitsui Fudosan's performance wasn't affected by the pandemic, the divestment of these properties will increase its available capital for future business development. The acquisition of these properties was made by Nippon Building Fund, an investment firm competing with Mitsubishi Estate's affiliated funds for the top spot. The fund aims to leverage its size to strengthen its competitiveness.
Endless business opportunities in the real estate market
Real estate trends are not limited to the above introduction. Since the Suga administration decided to actively move towards a low-carbon economy, the demand for zero-emission real estate has also increased rapidly. Hulic, a well-known real estate company, not only promotes energy conservation in its buildings, but also hopes that all electricity used by its properties will be renewable energy by 2050. Other developers such as Yamato House have also expressed the same approach. In the future, office buildings and residential buildings will gradually become an important part of achieving a low-carbon economy. In addition, with the expected rapid popularization of EVs (electric vehicles) in the future, various new technologies and services can be expected to be introduced in terms of the preparation of charging equipment in buildings and residences, and the interconnection of vehicle batteries and building power systems. All of these are related to real estate and represent major business opportunities for the industry.
Although not a major news item, since the second half of 2020, many buildings have been sold to real estate investment funds. Some of these funds are from overseas, which shows that the Japanese real estate market, which is facing changes, is very attractive to foreign investors.
Compared to other countries, Japan's real estate market is relatively closed, with few high-profit, core buildings being sold to foreign investors. However, the COVID-19 pandemic has brought properties that would have previously been closed to the public. Furthermore, Japan's long-term economic slowdown has resulted in significantly lower real estate prices compared to other countries. Naturally, foreign investors are eager to seize this opportunity and are actively seizing the market. While this can be considered a polarized phenomenon, the real race is on for real estate transactions with promising future prospects.
(Source: Business+IT, Author: Economic commentator Keiichi Katani)
20210514 Why Apartment Buildings Remain Popular Despite No Salary Increases or Bonuses Due to the Pandemic (Part 2)
Real estate transactions in the Tokyo metropolitan area have been brisk recently. The key lies in the "post-epidemic society." Although the epidemic still shows no signs of stopping, the real estate industry has begun to move forward in response to the new industrial structure.
Why hasn’t the real estate market fallen even as remote working reduced the need for offices?
When the COVID-19 pandemic first began to spread, many predicted a real estate market crash. Due to the reduced demand for offices caused by remote work and deteriorating corporate performance, many anticipated a wave of office building contract terminations. Furthermore, media reports repeatedly reported that remote work had become the norm, leading to a trend of moving to the suburbs rather than urban areas.
At the outset of the COVID-19 crisis, I predicted that while some companies were beginning to terminate office contracts, the overall real estate market in the greater Tokyo area was unlikely to deteriorate. This prediction has largely held true. The reason COVID-19 hasn't caused a deterioration in the real estate market is that, while the pandemic has impacted the economy, the industry structure is also undergoing a transformation to prepare for a post-pandemic society.
While the pandemic has indeed increased the adoption of remote work by businesses and reduced the need for offices, a PERSOL Research Institute survey found that 24.7% of regular employees engaged in remote work in November of last year, a figure that remains unchanged from April. Therefore, it can be inferred that employees who switched to remote work during the first state of emergency declaration are likely continuing this work style.
While the issuance of a second state of emergency declaration should slightly increase the adoption rate of remote work, observing the flow of people on the streets suggests no significant increase. Considering that a quarter of employees already work remotely, organizations currently implementing remote work will likely actively adopt this approach going forward, leading to a definite decrease in office demand. Recently, prominent companies such as Dentsu and Avex have begun selling their headquarters buildings. While the direct reason is deteriorating performance at these two companies, the reduced employee attendance rate due to remote work also plays a role in driving these decisions. For example, Fujitsu has decided to continue remote work even after the pandemic ends and has proposed a plan to reduce office space by half.
As the above examples show, the deteriorating performance and shift to remote work caused by the COVID-19 pandemic would lead one to believe that demand for offices will continue to decline. However, the real estate market is surprisingly resilient, and this is not the case.
The office market has begun to collide
Indeed, if we look only at office demand, there may be some decline, but this will likely be offset by new apartment construction, keeping the overall market stable, for the reasons explained below.
Because building owners experiencing vacancies will lower rents and compete for tenants with less competitive buildings, vacant units in large buildings will be eliminated. Tenants will begin to challenge the status quo, ultimately making it difficult for less competitive buildings to operate. Previously, even less competitive buildings located in urban areas rarely sought sale, but since the beginning of this year, building sales have become active. This suggests that the real estate market is anticipating tenants' challenges and is making various moves behind the scenes.
Buildings for sale in prime locations may be converted into new office buildings, but less desirable properties are likely to be converted into apartments. Apartment prices have risen to exceptional levels in recent years due to soaring construction material costs. In 2020, the average selling price of a new apartment in the greater Tokyo area exceeded 60 million yen.
Despite such price increases, which are beyond the reach of most people, conveniently located condominiums remain popular as consumers reassess their life plans in anticipation of a post-pandemic society.
While the lifetime employment system is gradually becoming a relic of the past, many companies still maintain a seniority-based pay system with pay increases based on age. However, due to the pandemic, an increasing number of companies are seeking voluntary resignations from employees and deferring salary increases and bonuses, making it impossible to expect age-based pay increases. Without the expectation of continued salary increases, it's natural that more households will take out mortgages while they can.
Furthermore, the prospect of future pension reductions may force many families to work throughout their lives. When rehired after retirement, there's no guarantee they'll be able to work remotely as they do now, and depending on circumstances, they may need to be physically present. Therefore, those who are more cautious about their future prefer not to live far from their workplace. The pandemic has reduced the supply of apartments in high-convenience areas, creating competition for scarce properties, which has prevented prices from falling even during the economic downturn.
(Source: Business+IT, Author: Economic commentator Keiichi Katani)
