For years we have been writing about the future of Japan’s condominiums, which is dire. Though condos continue to sell relatively well in Japan, especially in Tokyo where prices for new ones continue to break records, evidence is ever mounting that the life spans of the buildings themselves are more limited than most people previously thought, if, in fact, they thought of it at all. And while much of this problem is demographic in nature—Japan’s declining population is certainly a factor—the real culprit is everyday economics. The cost of maintaining the buildings so that they will be attractive to future buyers is usually too much for the people who do buy them, and so they aren’t kept up.

Now the Japanese media is finally coming around to this realization in a concerted way, as exemplified by the Japan Times, for which we once wrote a monthly housing column, running a feature about the difficulties being faced by condo owners as their properties slowly fall apart. Soon, they will be abandoned in increasing numbers, just like millions of single-family houses throughout Japan. However, the best coverage of this phenomenon we’ve seen so far was a multi-part series in the Asahi Shimbun about “shukatsu mansion,” with “mansion” being the foreign loan word used for condominiums as promoted by the real estate industry, and “shukatsu” an in-vogue word at the moment representing the increasingly valid idea of the importance of end-of-life planning. In other words, owners of older condominiums are facing the fact that they will be the last owners of their units, because not only will no one want to buy them, but they may not even be inhabitable. 

The Asahi refers to these condos as “time bombs,” and while most are forty years old, a few are newer. One article focuses on a 19-unit, 30-year-old building in Kawasaki that’s a 15-minute walk from a station on the Odakyu Line. The design is terrace-style, which was popular in the 1990s and costs more to maintain and repair than conventional apartment buildings. The original buyers carried out large-scale repair work using funds from their saved shuzenhi (repair fee) contributions in the past, and the present owners say they need to do it again. One member of the homeowners association (HOA) told Asahi that they are thinking of “rebuilding” the whole thing, meaning they would tear down the present building and then construct a new one, hopefully with extra units whose sale can offset some of the rebuilding cost for present owners. However, when they hired a consultant to estimate how much such a rebuilding would cost each owner, they were shocked with the answer: ¥47.4 million. The average age of the present owners is somewhere in the 60s, meaning many are living on fixed incomes, which would make it not only impractical to spend that kind of money but impossible. The main problem is the capacity rate, meaning the amount of condo floor area that can be built in relation to the amount of land the building occupies. When the condo was originally built, it took up the maximum capacity allowed, and the local government has not changed regulations since then (many other local governments have done so in recent years in order to attract more developers). So they can’t add new units to a new building unless they reduce the floor area of all the new units.

Another problem is the 15-minute walk to the station, which in today’s market is considered far. It will become increasingly difficult to sell any of the units to someone who still needs to commute to Tokyo, unless they price the units much lower than what it would cost to build them. Consequently, it will be difficult to get a developer involved in the rebuilding, since there wouldn’t be much profit in it for them. 

As we’ve mentioned a number of times on this blog, the idea of rebuilding old condominiums has been around for a long time, but that very few have actually undergone the process. By the end of 2023, there were more than 7 million condo units in Japan—more than 10 percent of the population lives in one—of which 1.73 million are older than 40 years, 3 times as many as there were in 2013. By 2043, the number of condos over 40 will be 4.64 million. According to the construction ministry, as of April 2024, only 297 condo buildings comprising 24,000 units in Japan have ever opted to rebuild. Asahi says that in order for the rebuilding option to gain any kind of viability, regulations will have to be eased, and the central government is reportedly working on changing the laws with regard to classification of property that will make rebuilding easier, but, in truth, the real problem is economical. As developers continue to focus on new construction, older buildings with aging owners will become redundant more quickly, and the idea of rebuilding will simply become financially unsupportable, according to a condominium research group Asahi interviewed. Until 1996, this group found, the average price of a rebuilt unit to the unit’s owner was only ¥3.44 million. Between 2017 and 2021, that price had increased to ¥19.49 million, but, again, that’s the average nationwide. The price depends greatly on the size of the building (i.e., how many units, since the greater number, the lower the per-unit cost) and the location. 

So the inevitable conclusion is that most of these buildings will be demolished sooner rather than later, because that’s much cheaper than rebuilding or, for that matter, carrying out large-scale repair and maintence, which becomes more expensive as the buildings age. Thus, local governments have to get involved, because vacant condos that fall into disrepair are bad for communities. The problem then becomes: Who will pay for the demolition? Compared to a single-family house, demolishing an apartment building is exponentially more expensive. Moreover, since they are collectively owned, it is difficult to gain consensus for such a monumental undertaking. One solution is for local governments to add a kind of tax, on top of property taxes, for condo owners that can go toward future demolition costs. 

To illustrate this inevitability, in another article in the series Asahi profiles several old condos in Tokyo whose owners have already chosen demolition. One is a 50-year-old building with 95 units near Takashima Daira Station in Itabashi Ward. In 2022, the HOA decided to maintain the building through its 80th year, confident that it was sturdy enough to survive a major earthquake, even though its quake-proofing improvements are not up to current standards. In light of this decision, the HOA also decided to collect funds for demolition after the building reaches its 80th year. No member of the HOA voted against these proposals, probably because in 2020 it also hired a consultant to estimate the cost of rebuilding, which came to ¥2 billion in total, or about ¥20 million per present owner. The cost of tearing down the building is much less, about ¥250 million. The HOA says that it will continue to spend money from the repair funds to maintain the building in good condition every 5 years until the 80th year.

Another 50-year-old building in Itabashi Ward, this one with 52 units, has also opted for demolition after the 80th year, and plans on collecting funds from owners that will eventually amount to ¥92 million, the estimated cost of the demoliton. The head of the HOA told Asahi that he believes such a plan “fulfills our final obligation,” in that they didn’t want to leave a debt of millions of yen per unit to “future generations.” Everything would be settled financially with the destruction of the building. 

In a sense, the ward government made the decision for these two HOAs, because ward regulations mandate that building associations must make an effort to “create long-term maintenance plans” for their structures, including possible rebuilding or demolition. It goes without saying that many HOAs have not actually implemented any such plans, but if more local governments include enforcement with such regulations, HOAs would have to be more proactive. 

The central government is also getting involved. The construction ministry has drafted a bill that would mandate assurances of demolition funds for condos since it is afraid local governments won’t. That’s because local governments would end up paying for demolition of abandoned condos and likely would not be able to afford it. Such a prescription implies that there will be an increasing number of abandoned condos in the future, though exactly how far into the future no one has predicted. The 80-year limit indicated by those two Itabashi condo HOAs actually seems a bit overly optimistic. If the present owners are as old as they sound, they won’t be around 25-30 years from now, which means either their heirs will be responsible or they will have to sell. Since they’re in Tokyo, where used condos still sell though at much lower prices than they used to, there is a market, but who would buy a condo unit that is set to be destroyed by 2050? Not a young person. 

And that’s exactly what Itabashi Ward told Asahi: It’s difficult to actually get HOAs to collect demolition funds because it is the next generation who will inherit the responsibility of tearing down the building. As one consultant added, owners aren’t easily going to consent to demolition because each one’s financial situation is different. The purpose of such regulations is to force the matter, but, as anyone who lives in Japan knows, making regulations and enforcing them are often different matters. At any rate, the consultant adds a kicker: So far, when it comes to the future of condos, only “building and buying” have been the focus, but now “the end of a condo’s life” has become another big issue that needs to be taken seriously. Like people, they’ll die a natural death—that is, if they don’t blow up sooner.