The higher they are…

Tower condos in Musashi Kosugi

When Typhoon Hagibis roared through the Kanto Plain Oct. 12, three homeless individuals were turned away from an emergency evacuation center in Tokyo’s Taito Ward because they could not prove they were registered as residents in the ward. The incident gave rise to a lot of soul searching on the part of the authorities, but there were also quite a few people on social media who felt the staff of the evacuation center didn’t do anything wrong. To these people, the homeless really are on their own and shouldn’t expect any help from the rest of society.

As it turns out, there is a corollary to this attitude that applies to the rich. As everyone knows, the Tama River overflowed its banks during the typhoon, causing flooding in parts of Setagaya and Ota Wards. The waters didn’t inundate the other side of the river, which lines the city of Kawasaki. However, the rising waters did cause sewage lines to back up, thus resulting in what is called “internal flooding” that inundated train stations and the basements of some condominium and apartment buildings. This problem was totally unexpected by both the authorities and residents of the area. The neighborhood that was hit the worst was the one surrounding Musashi Kosugi station, which services several train lines and is thus extremely popular. There are at least ten tower condominiums surrounding the station, and as we reported in an earlier post, apartments in these buildings are quite expensive. It’s one of the few areas in the Tokyo metropolitan area where used residences are increasing in price because they are in such demand. New condos in the area go for about ¥70 million, so only the affluent can afford them. Read More

Yen for Living: Houses As (non-)Assets

For sale? Good luck.

The following article was submitted as the July entry in our Yen for Living column for the Japan Times. However, it was rejected by the editors.

One of the issues facing voters in this month’s Upper House election is the national pension system. The government received criticism after the Financial Services Agency announced that a couple would need at least ¥20 million in savings when they retire to supplement their pensions. Opposition parties are using this figure to point out flaws in the pension system, and the ruling Liberal Democratic Party is challenging the FSA, saying that current pension benefits are adequate to support people after they retire.

In a letter published in the Asahi Shimbun on July 1, a 63-year-old dentist wrote about the ¥20 million figure, saying that when he was 30 he started saving for his old age. As a self-employed person he knew a public pension would not be enough when he retired, and so he joined a cooperative that, in return for monthly premiums, guaranteed a one-time payment when he reached a certain age. Over the course of 30 years, he paid a total of ¥18 million into the fund in the belief that he would receive ¥40 million in the end. But he received only ¥20 million. He also paid into a private pension plan, convinced that when he turned 60 he would start receiving ¥280,000 a month for a limited time. As it turns out, he is only getting ¥120,000, because interest rates have plummetted since he was 30. When he’s 65, he will start receiving benefits from his national pension, but since he belongs to the kokumin nenkin system for the self-employed and others who weren’t employed by large companies, he will only receive ¥65,000 a month. So even though he basically “invested” in private plans and paid his obligatory national pension premiums, he is not going to have as much income in his retirement as he once thought he would receive. Read More

Suckered

Recently, we were near Gotanda Station on the Yamanote Line and decided to check out an abandoned property that’s been in the news lately. This piece of land, which still has an old-style Japanese inn (ryokan) sitting on it unused, is about five minutes by foot from the station, overgrown with weeds and other vegetation. It covers 600 tsubo, or almost 2,000 square meters, and thus is worth a lot of money. Many developers would love to get their hands on it. One, Sekisui House, thought it had. Almost 2 years ago it signed a contract with a company that claimed it represented the owners, and Sekisui transferred ¥6.3 billion to the company before finding out that the company did not represent the real owners. Since then there have been arrests and stories in the media about this particular instance of jimenshi (real estate swindle), but so far the money itself has not been recovered, and some of the main players may have gotten away.

In the past few months, the story seems to have died down. When we walked around the property, which is surrounded by a deteriorating mortar wall and a makeshift fence, we came upon a dozen or more people assembled around a standing ashtray, smoking, on the street that lies between the property and the river, at the base of a bridge that crosses the river. At first we thought it was a strange place to put an ashtray since there weren’t any office buildings right there. These days, many companies don’t allow smoking in their offices and so employees who do smoke have to go outside. But then we realized that these people were not workers at nearby companies. Most seemed to be reporters who were hanging around just in case something happened at the property. Obviously, the story is not dead, though we had to wonder what the reporters were actually waiting for. Read More

Inzai as the future of Japan

New housing going up in the Inzai portion of Chiba New Town

It was a little odd to open the Japan Times this morning and find a feature about the city we live in, Inzai; odd in the sense that for as long as we’ve lived here whenever we tell people our address, in almost every case they’ve never heard of Inzai, which is the city just to the west of Narita in Chiba Prefecture. The article, written by Elaine Lies of Reuters, uses Inzai as a model for future growth in Japan, which is seeing its population shrink and age. For this purpose, the article compares Inzai’s situation with that of its neighbor to the south, Sakura, which is aging much more rapidly. The reason for Inzai’s good fortune is what Reuters sees as its aggressively pro-growth outlook. Inzai is one of the three cities that are part of the Chiba New Town development project, while Sakura is a typical suburban bedroom community that was developed in the 70s-80s during the lead-up to the Japanese bubble period. Though it includes some neighborhoods, like Yurigaoka, which was planned around an offshoot of the Keisei Main Line, that continue to attract young families, for the most part Sakura is made up of isolated housing subdivisions that no one is really interested in any more, probably because most of them are far from train lines. Inzai, on the other hand—or, at least, the part of Inzai that Reuters was covering—is built along the Hokuso Line, which also happens to follow Route 464, a major road that goes from the edge of Tokyo almost to Narita airport. In fact, the first item in the article that raised any eyebrows on our part was the factoid that says Inzai is 40 minutes from the airport. Actually, if you take the Airport Access train from either of Inzai’s two express stops, it’s only about 20 minutes, so we suspect the reporter got her information from someone who drives to Narita. As of now, 464 doesn’t reach as far as the airport. After it gets to the town of Sakae, you have to take back roads to get there.

And in a sense, this ironic lack of ready automobile access to the area’s most prominent feature is what makes Inzai less progressive than the article makes it out to be. Interestingly, Lies does not mention one feature of Inzai that the local government plays up constantly—that it has been named multiple times as Japan’s most livable city by the business magazine Toyo Keizai. The reasons have to do with things like affluence, green spaces, and convenience. Inzai’s tax base, as Lies implies, is quite sturdy owing mainly to the fact that new housing developments are booming along the 464 corridor. After we moved here in 2011, much of the land that had been put aside for the Chiba New Town project was opened up for development by UR, the semi-public housing corporation that managed the land. Because the land had been held for so long in the hopes that it would someday regain the value it had at the end of the 1980s (it never did), and UR was losing money in the process, the central government had for years been pressuring the corporation to liquidate it, and finally gave them a deadline. So they mostly sold it to developers and housing companies at prices far below those they’d paid, and all at the same time. The most valuable properties in the New Town area, those immediately adjacent to 464 and the Hokuso Line, were originally slated for commercial development, either for retail businesses or office buildings, and while Inzai did manage to attract a fair amount of commercial interests, it wasn’t nearly as much as Reuters seems to think. There are at least three shopping malls within 15-minute bike rides from our home and two of them are only half-occupied, despite the huge amount of residential development taking place. And as far as office buildings go, most were built two decades ago around the Chiba New Town Chuo Station. For the most part they are data centers for banks and other major financial institutions. Inzai is built on bedrock, so in the event of a major earthquake the records of these companies should be safe. As far as new commercial facilities go, the only things we’ve noticed is more logistics centers, which take advantage of Inzai’s proximity to Narita Airport. Read More

Make mine maglev (1)

In December, four of Japan’s biggest general contractors were accused of bid-rigging with regards to their involvement in the construction of Japan’s maglev shinkansen, vernacularly referred to as the “linear motor car.” Bid-rigging is a fairly common practice among Japanese general contractors, and so far two have owned up to the charges. They will be fined, executives will be shuffled around in a bid for self-reflection, and everyone will get back to work, because the ¥8 trillion project is too important to be sidelined by a mere money scandal.

In terms of media coverage, the scandal provided a kind of shade that was necessary so that the press couldn’t be accused of avoiding other, deeper, more problematic issues regarding the maglev project, which involves building a line between Tokyo and Nagoya by 2027. In fact, the scandal is probably the best news that JR Tokai, the arm of Japan Railways that is building the maglev, ostensibly with its own money, could have received since it diverts any media attention away from the deep-seated problems that are already plaguing the project. Since construction has already started, it’s too late to cancel the thing, but it seems likely that the company won’t make its deadline owing mainly to the fact that it still hasn’t purchased all the land it needs.

Because of the technology involved and Japan’s peculiar topgraphy, 246 kilometers, or 86 percent, of the initial route between Tokyo and Nagoya will be built underground, thus making it, basically, a very long subway line. Besides the obvious negative ramifications this aspect of the project could have on its appeal as a tourist attraction, the fact that the tracks have to be underground brings up significant logistical issues, and so the central government passed a special law that said space that is at least 60 meters below the surface is not owned by the title-holder of the land on the surface. The law thus allowed JR Tokai to avoid having to negotiate with landowners along the route planned for the tracks, as long as those tracks are located at least 60 meters below the surface.

However, the surface must still be taken into consideration. For instance, all new stations between Tokyo and Nagoya have to be built on the surface, and often surrounding tracts also have to be bought for ancillary purposes (parking lots, retail outlets, etc.). Also, according to the law, underground railways must provide egress to the surface every hundred meters or so in case of emergency, which means the land on the surface where the exits are built must be purchased.

But the most pressing need for land on the surface is for roads on which dump trucks will transport excavated soil and rock. These roads have not been built yet (for that matter, places to deposit the excavated rock and soil haven’t been designated yet, either), because the land has not been secured. According to Hideki Kashida, a journalist who seems to have made it his life’s work to report on the maglev, approximately 5,000 people own the various tracts of land that JR Tokai will need to buy for the construction of the maglev. The cost, they estimate, is about ¥342 billion. However, some of the land owners are not selling, a big problem in a country that doesn’t have eminent domain.

The reasons for not selling are numerous, and most are personal–basically farming families who are loath to give up their legacies. Some, however, are more practical minded. Environmental groups are protesting the transport roads because they will ruin national parks and the natural environment. The tunnels will destroy aquifers, upon which many rural residents rely for their water–several rivers may dry up as a result. Since the maglev uses up to four times the amount of electricity that a conventional shinkansen uses, residents along the route are afraid of electromagnetic fields.

Kashida says that so far several hundred people have filed lawsuits against JR Tokai to stop or restrict construction, and though courts have traditionally backed up large corporations in such suits, the trials could cause delays. They will also increase the cost of the project, but that doesn’t seem to be a big problem because the central government has already stated its interest in completing the maglev, not just to Nagoya by 2027, but to Osaka by 2045. It’s already guaranteed a ¥3 trillion loan to JR Tokai. With the government in the game, public opposition will become meaningless.

In any case, we don’t expect to see the maglev shinkansen completed–at least to Osaka–within our lifetimes, but we will continue to cover the story in this blog as it develops.

Kill Your (Vacation) Landlord

Judging from the amount of coverage it’s received from the domestic and foreign press, Airbnb’s decision to remove 80 percent of the properties from its Japanese listings is a big deal. That wouldn’t be surprising except that previously the Japanese press, at least, didn’t seem overly interested in the house-share service. What makes it news is mainly timing. On June 15, the new Minpaku Law, which regulates the short-time rental of private property, goes into effect, right before the vacation and tourist season starts. Apparently, Airbnb, nervous about a government crackdown, decided not to take any chances and dropped listings of properties that couldn’t prove they had already received permission to operate under the new law. That means people who had made reservations at these properties in the past are out of luck unless their owners can somehow get a license to operate by the time the visitor is scheduled to occupy the room or home. Some people are blaming Airbnb itself for, presumably, not being prepared for this sort of outcome, which has been apparent at least since the beginning of the year. Whether the visitors who made reservations have gotten the message isn’t clear, but it’s likely that, come next month when they show up in Japan after having spent money on air fare and other vacation-related expenses, they may find themselves locked out of the place they thought they would be staying at. One can imagine scores of foreigners wandering the streets of Tokyo and sleeping under bridges. Thank God it’s a safe country.

Seriously, though, the Minpaku Law, regardless of how poorly it was conceived and written, was inevitable, and its purport with regard to Airbnb is hardly limited to Japan. What makes it momentous, and, in the long run, perhaps prescient, is that it adds a layer of national intent to locally enacted rules that weren’t being enforced very strongly before. In other words, Airbnb didn’t take local regulations at face value until the central government said they supported them through the law. Ostensibly, the reason for the stricter definitions is public order–protecting communities where property owners rent out rooms to strangers. Less obviously, the Minpaku Law supports the powerful hotel and innkeepers industry, which has been calling for the banning of peer-to-peer short-term rentals. And even less apparently, but no less potently, the law favors another powerful lobby, the real estate industry, which can use the law to corner whatever market is left of short-term vacation rentals, since many of the rules call for oversight by corporate entities, or, at least, entities that act like corporations.

The Minpaku Law essentially covers two types of properties. The first type is a property that has applied for and received the proper permits, meaning they comply with the hotel law. From the outside, they may look like a regular private residence, but inside they adhere to fire regulations and there is someone who manages the property on site. Minshuku, capsule hotels, and guest houses fall into this category. The second type are properties that heretofore fell into the so-called gray zone, rooms that did not comply to the hotel law but weren’t really breaking any laws–until now. Though fire laws and other related safety regulations will presumably be more strictly enforced for these properties, the main difficulty will be stricter enforcement of zoning laws, which are locally enacted. The main blanket, national rule is the one that says minpaku can only rent out rooms for a maximum of 180 days out of the year. Also, if the property is in a condominium, the owners association must be apprised of the existence of a minpaku and approve of it in writing, which may end up being the most difficult condition to satisfy, even when localities don’t prohibit minpaku from residential zones. Read More