Harumi Pre-flag

While searching for any news about the current state of the Harumi Flag condo complex in Tokyo’s Chuo Ward, we came across an older related article with detailed information we weren’t aware of. As we’ve written here before, Harumi Flag was originally the athletes village for the 2020 Olympics, after which the apartments were renovated into condo units, many of which had already been sold. Because of the one-year delay for the Games, people who had put down deposits and made plans to move in had to put off those plans for at least an extra year, thus causing a lot of grumbling among the buyers. 

According to a special report that appeared in July 2019 on the Min-IREN website, a consumer advocacy and social justice concern, people who already lived in the Harumi area of Chuo Ward on the waterfront had filed a lawsuit against the Tokyo prefectural government. The reporter was Nobuyuki Kitaoka, who often writes for the muckraking weekly Kinyobi, and he makes the point that the lawsuit had/has similarities to the 2017 scandal surrounding Moritomo Gakuen, the educational company that bought land in Osaka from the central government for a fraction of its assessed value, thus setting off speculation that this special deal was due to the fact that the wife of then prime minister Shinzo Abe was an honorary principal of the elementary school that Moritomo planned to build on the property. Apparently, the developers who would build the athletes village for the Olympics and then redevelop the complex into luxury condominiums also got the land at a fraction of its worth, and existing residents wanted to know why. According to Kitaoka, Moritomo paid only 20 percent of what the land it bought from the central government was worth, while the developers of Harumi Flag paid only 10 percent of the value to the Tokyo prefectural government, which owned it. Located only 3 kilometers from Ginza, the market value of the Harumi land was ¥959,000 per square meter, but Tokyo sold it to a consortium of 11 developers, including Mitsui Fudosan Residential, for only ¥97,000 per square meter. This consortium ended up paying a total of ¥12.96 billion for 133,900 square meters. 

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Til death traps

One of the main themes, if not the central theme, of this blog is that Japanese homes don’t hold their value over time the way they usually do in other developed countries, and while this situation does have a silver lining in that homes are affordable to a larger cross section of people, including young families, in the long run it makes it difficult for retired people to expect much in the way of a return on the investment they made in their home, which is usually the most expensive thing they own by a huge margin. But this feature of Japanese economic life has even broader effects on the quality of life for seniors, as revealed in a June 5 article in the Nihon Keizai Shimbun.

Certainly the main advantage of owning one’s home anywhere is that once the mortgage is paid off no one can kick you out. Regardless of income, a person who owns their home will always have a roof over their head. In Japan, this notion is usually conveyed by referring to the house or condominium as the person’s “final home” in that the person can live there until they die. The theme of the Nikkei article is that even this concept is no longer guaranteed or, at least, not assured in the way that most seniors thought it would be. The main reason is that the cost of renovations for homes has increased by 20 percent over the past ten years on average. This increase, combined with the fact that Japanese people are living longer, makes the possession of homes in Japan more difficult for people on fixed incomes. 

According to a survey conducted by the justice ministry, the home ownership rate of households with two or more members and whose head of household is over 60 is above 90 percent, which is quite an impressive portion and speaks to the success of Japanese housing policy in how it has promoted home ownership over the years. In practical terms, it means the people who live in these households have a “final home” that should remove any economic anxiety from their twilight years, but Nikkei says that isn’t the case. For one thing, standalone houses in Japan tend to need extensive renovation work done on exteriors and roofs every 15 to 30 years, depending on when the house was built—the older the house, the more frequent such renovations are needed, and each time they are carried out they require at least ¥9 million. In the past year alone, costs for renovation have gone up substantially owing to inflation and the world distribution crisis. These costs are not expected to go down.

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High anxiety

Last week, the media was filled with reports on Tokyo’s latest projections regarding what residents could expect if a major earthquake struck the capital. The parameters used for the simulation were a 7.3M quake that occurred directly beneath the prefecture’s 23 wards, with a shindo reading of 6+ for the city center, and shindo 7 for riverbank and coastal areas. It would occur in the wintertime with wind speeds of 8m/second. For the most part, the news was relatively good in that the number of deaths (6,200) and amount of damage (194,000 structures) estimated were less than in past projections—30 percent less, as a matter of fact. 

In detail, 50 percent of the deaths would be caused by collapsed houses, and 40 percent the result of fires. In both cases, the houses involved would be older wooden structures that are densely concentrated, so the prefectural government has said—not for the first time—that it will work harder on providing subsidies for the rebuilding of such houses to make them less vulnerable to earthquakes. 

An important factor in the lower casualty and damage numbers estimated by the report is improved quake-proofing since the last report was compiled. The portion of houses that have been quake-proofed since 2010 increased by 10.8 percent, which means 92 percent of all homes in Tokyo have some form of quake-proofing. In addition, the total area of densely packed wooden houses has decreased by 46 percent since 2012. The government now estimates that 4.53 million workers who live outside the capital would not be able to return home on the day of a major earthquake, and of the city’s residents 2.99 million would have to evacuate their homes. But while these numbers sound high, they are down by 12 percent from the last report. 

However, there is one sector where matters have not improved: high-rise residential apartment buildings. As we’ve written in this blog numerous times in the past, so-called “tower mansions” have unique problems when it comes to earthquakes that have nothing really to do with their ability to withstand the tremor itself. All multi-story buildings in Japan, whether for commercial or residential use, are constructed to the world’s strictest quake-proofing standards, and are expected to maintain their integrity even during a catastrophic temblor. The problems occur after the shaking, and none have been solved in the past decade while at the same time there has been a 30 percent increase in the number of high-rise residential apartment buildings and condos during that time. At present, there are some 600 “tower mansions” in Tokyo, which are defined as multi-residence buildings that are at least 45 meters tall. 

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The Lie of the Land

Here is another chapter from our unpublished book about housing in Japan based on our own experience of trying to buy a home. This one is about residential land usage.

Example of a private road built for a future fukurokoji housing development

“It’s about the size of a cat’s forehead” – proverbial Japanese rejoinder when asked how much land a person owns

The real estate agent picked us up at the train station in a company car with long scratches on the side, probably inflicted during attempts to park in tight, unfamiliar spaces. We drove to the property through dense suburban sprawl overshadowed by pylons and interrupted by small plots of farmland. 

The two-story house had royal blue siding and was sixteen years old. The owner moved out two years ago. The wallpaper was discolored, the laminate wood floors spongey, the second floor “veranda” filled with debris. The price: ¥5.8 million. We estimated it would take at least ¥6 million to make it livable, but ¥12 million for the whole thing seemed too much. Moreover, anyone who bought the house would have to assume the lease for the land, which was ¥38,000 a month.

The agent explained that the same landlord owned the property under the other four houses on the street. The owners all had them built at the same time and paid the same rent. The leases were 50 years, which meant the owner of the blue house was still paying rent even though he didn’t live there any more, and would continue paying rent until he found someone to buy the house and take over the lease. He originally wanted ¥12 million, but had come down to ¥5.8 million about a year ago. We asked what the options were if he couldn’t find a buyer.

“Oh, he could easily rent this place, depending on how much he asked,” the agent said. “Many people in this situation do that.”

This concept of owning a house on rented land, in Japanese called shakuchiken, isn’t uncommon. According to the land ministry, between 1993 and 2007, 35,492 single-family homes and 18,937 condominium units were built on rented land, a trend that peaked in 2001, when many companies in the Tokyo Metropolitan area starting selling off property, fueling a development boom characterized by cheaper condos. When prices rose after 2005, shakuchiken started becoming popular again. The agent said that the number of people building houses on rented land was increasing, “but you don’t see so many for sale.”

As a rule, the value of homes in Japan depreciates rapidly, but land is still expensive, and not just in urban and suburban areas. Because of usage laws that make it difficult to shift land designated for agriculture to residences, even the countryside can be costly. 

We had decided to check out shakuchiken after talking to a friend, also self-employed, who had a house built on rented land seven years earlier. He and his family wanted to live in Kamakura, the trendy center of traditional culture located on the Miura peninsula just south of Tokyo, but were looking to rent since they didn’t think they could afford to buy a house there. A real estate agent directed him to a plot of land being developed by a housing company. The plot was owned by a local Buddhist temple.

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Last Resorts

Here is another draft chapter from our unpublished book about our house-hunting adventure. This one is about second homes and so-called resort mansions. 

Second-home inspecting in Nikko

One late summer morning in 2012 we were on the Tokaido Shinkansen super express and ran into a friend we hadn’t seen in years. He asked us if we were still living in Tokyo and we said we had moved some time ago because of the earthquake. He then asked what we were doing on the bullet train and we said we were on our way to Atami on the Izu Peninsula to look at some properties we might be interested in buying. He gave us a funny look. “That would seem to be the worst place to live if you’re afraid of earthquakes.”

True. Just the day before Japan’s Cabinet Office Disaster Council had updated its projections for a major earthquake occurring in the Nankai Trough, the deep indentation in the sea bed off the Pacific coast, and Shizuoka Prefecture, which contains Izu, was deemed the worst location in terms of projected casualties, though, technically, most of those casualties would be in the western part of the prefecture, not Izu. In any case, we weren’t completely serious about buying a place there. Having been frustrated in our search for a home we could afford, we were entertaining the idea of keeping our rental and buying a cheap old fixer-upper in a location with cooler summers. If our income situation worsened and we had to give up renting, then we would at least have a roof over our heads, and if things continued as they had been then we’d have a weekend/summer place. There are plenty of old dumps in the highlands of Tochigi and Nagano, or in the wilds of Chiba that can be had for under ¥7 million, though they’d require another ¥3-5 million to make livable. And during our search we noticed there were quite a few such places in Izu, too, mainly besso (separate homes), which we had avoided so far. Second homes tend to be built in specially designated developments managed by companies that charge yearly fees. Also, besso are usually impractical for year-round living, but since we weren’t necessarily going to be living in one year-round we thought we’d see what was available. And Izu is, as they say, the “Riviera of Japan.” More to the point, it’s cooler in the summer.

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Harumi Flag Rising

That view!

Renovation work on the Tokyo Olympics Athletes Village that will turn the apartments into condominiums-for-sale won’t commence until after the Paralympics end in September, but already business media are exploring the future of the Harumi Flag residential complex, as it’s been dubbed by lead developer Mitsui Fudosan Residential. In the end, the various buildings will comprise about 4,800 units, and so far a bit less than one-third of those have already been sold. Since the Olympics was postponed in the spring of 2020, the date for moving into the complex has been moved back by at least a year to spring 2023, and there was talk that some buyers were angry because that means considerable added expense for them. Whether they have been offered a refund and an escape for their contracts isn’t clear, but, for sure, matters such as mortgage terms for the new condos and leases on rentals that the buyers may have to extend in the meantime could be serious hits to their bank accounts, especially given the current pandemic-affected economy.

However, those who have already signed contracts should be happy in one regard: the value of their condo seems to have gone up in the meantime, which means they got even more of a bargain than those who will sign contracts in the future. Condo prices in Tokyo have been steadily going up in recent months after dipping a bit last year, and it’s likely these increases will be reflected in the prices of the condos that will be put on sale starting in September. After the pandemic struck, sales activities for Harumi Flag were halted, which now seems like a good decision since Mitsui will likely be able to charge more. According to various real estate web sites, Mitsui will not put all the remaining units on sale at the same time, which would flood the market and bring the prices down. Though nobody seems worried right now that prices will drop over the coming months as more units are put on sale, the idea is to maximize demand as much as possible. As it stands, the units were already cheaper than comparable new condos on the waterfront by 30-40 percent, a situation that reportedly upset neighbors who paid premium prices for their apartments. The reason for the lower prices is that they are being repurposed and that the nearest train station is at least 20 minutes on foot (not counting the time it takes to get from one’s apartment to the ground floor), but also because Tokyo sold the land, which is reclaimed, to Mitsui and its partners at a 10 percent discount just because of the Olympics, a move that has also been criticized since Tokyo can’t really afford such largesse considering the larger-than-expected bill for the Games. 

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Baby you can park my car

We sold our car in 2006 and have never replaced it, despite the fact that in the meantime we moved out of the city and into a suburb where a car is considered essential. Our original reason for getting rid of ours was the cost. We were paying for insurance and biannual inspections and parking just for the privilege of owning a vehicle that we really didn’t use that much. Living where we did we had ready access to several train lines and as we both aged what we once considered the convenience of having a car at our disposal faded, mainly because driving in Japan isn’t very enjoyable, what with the narrow streets, highway tolls, and difficulty with street parking. Though we’ve often thought of buying a car again for emergency use, we keep putting it off because it’s really nice not to have that burden any more. We manage just fine with bicycles and car share services. 

The last place we lived had an underground mechanical parking facility. The space you rented was actually a pallet that moved vertically and horizontally. Parking lots are two-dimensional and thus require a lot of ground space. Mechanical parking garages, what we liked to call “3D parking lots,” used space both above and below the ground level to store cars, thus requiring less real estate. When we wanted to use our car, we went to the carousel assigned to us and, inputting a special code, “retrieved” the pallet by rearranging the other pallets in the carousel in order to place ours right at the front of the gate. This means, of course, that you have to wait for all the pallets to be rearranged properly, and sometimes it took a little time. It was especially troublesome if somebody else who had rented a pallet in your particular carousel was retrieving their car just as you arrived. On a few occasions, we needed our car quickly in order to make it in time for an appointment, and someone was already there getting their car so we had to wait. Fortunately, we never had, like, a medical emergency that required an automobile. The only saving grace was the rent, which was relatively cheap for Tokyo. Before living in that apartment we lived close to the Saitama border and rented a parking space from JR under the railroad tracks. It was unpaved but the tracks protected the vehicles from rain, and we paid ¥23,000 a month. The pallet we rented was ¥18,000 a month, and it was much closer to the center of the city. 

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Big One

To mark the tenth anniversary of the disaster of March 11, 2011, we are posting one of the chapters from the book we are working on about Japanese housing. Some of the following appeared in slightly different form in the anthology known as #quakebook. For those who may be interested, we have been looking for a publisher or agent to handle the book for the last year and so far have had no luck in placing it, so if anyone has advice, connections, etc., let us know. 

On March 11, 2011, the governor of Tokyo was Shintaro Ishihara, who later called the massive earthquake that struck off the coast of northern Japan that day “divine retribution” for some imagined slight to the nation’s soul. Never mind that all of the people who died or were left homeless by the disaster had lived in three northeastern prefectures far from the fleshpots of the capital he oversaw. Ishihara, a popular novelist in addition to being a politician, needed to make some sort of apocalyptic statement. 

No one thought there was anything “divine” about the catastrophe, but we could all appreciate a cosmic joke. The quake hit right in the middle of moving season. The Japanese fiscal year, not to mention the school year, begins April 1, and traditionally many people move house during the month of March because of changing jobs and entering university. Consequently, before, during, and after the quake there were moving trucks parked outside our 38-story apartment building in the Minami Senju area of Tokyo, carrying furniture for people who were settling in. Elevators in Japan are designed to automatically shut down in the event of an earthquake and they can’t be restarted until a technician arrives to turn them on again. Given that the entire city was affected, some buildings had to wait hours or even a day before someone showed up to get the elevators working. Movers were stuck on the street with trucks full of furniture while their customers stood in their new apartments appreciating the view as they swayed back and forth during one of the aftershocks that occurred on an almost hourly basis. Did they regret their decision to move into a high-rise? 

Perhaps not. The disaster helped answer a question: Would all these quake-proofed structures that had been built in the previous decades actually withstand a massive earthquake? Of course, the epicenter of the one we had just experienced was hundreds of kilometers away, but no buildings had collapsed in Sendai, the major city nearest to the quake and one with its own share of high-rises. So the technology seemed to work. But while it saved lives and property, it didn’t solve a more intractable problem: Once you’ve been in a major earthquake in a tall building, you don’t want to be in another one.

We had already been living on the 24th floor of River Harp Tower for more than ten years when the quake struck at 2:46 that afternoon, and had been through a good share of them. They just weren’t as intense. Usually, they started with a jolt followed by a gentle swaying. There are two types of quake-proof technologies for high rises in Japan. One is designed for flexibility: the entire structure absorbs the energy and disperses it more or less evenly throughout the frame, and the higher your floor, the wider and longer the sway. The other type, which is more expensive, involves rubber dampers in the foundation. We lived in the former type. On March 11, we didn’t feel that usual initial jolt but rather a slight rumble from the floor that just kept building until the walls started rattling violently. We knew this was going to be bigger than the usual quake and crouched together under a table. The shaking continued, and then gradually changed to swaying, which was much wider than it had been in the past. But the movement wasn’t as scary as the noise: a massive creaking sound that went on for more than two minutes.

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Go with the flow

Kominka interior. Note roka on the left.

Last week the Wall Street Journal ran a story about how proper ventilation of rooms can help prevent the spread of COVID-19 indoors. Japanese twitter responded in particularly derisive fashion by pointing out that in Japan proper ventilation was considered a pillar of the country’s anti-COVID measures as long ago as February as part of the government’s san-mitsu strategy, which told people to avoid “close” contact with others in “closed” rooms. Generally speaking, this strategy covered commercial, educational, or work spaces, since those were the most problemantic places in terms of keeping people safe from the spread of the virus. The operational logic then and now is that the virus doesn’t survive as long in the open, and so bringing the outdoors inside is a good way of keeping it at bay. For businesses, that means opening windows and/or optimizing ventilation systems to keep air moving through the space.

In Japan, however, greater attention is now being paid to transmission within homes, among family members. Coverage tends toward the inevitability of being infected by a loved one, since there is little you can do about your living situation. However, we would be very interested in seeing a study showing the relationship between intra-household infection rates and specific home layouts and other structural conditions. The first question that comes to mind is whether air conditioning systems help or hinder the spread of the virus. Generally speaking, the virus is in its best element in droplets of saliva expelled while talking or breathing, but scientists also talk about aerosol transmission, meaning the virus itself is carried on air currents. These particles can travel greater distances than droplets because they are much lighter and can still infect others by passing into their lungs when they inhale. Scientists are still debating the scale of infection due to aerosol transmission, but one thing that seems certain is that air currents in closed spaces are instrumental in propelling the virus and keeping it viable for longer periods of time than would happen outdoors or in indoor spaces with air flow passages that connect to the outdoors. Air conditioners are typically heat exchange mechanisms, and the public may misinterpret that to mean they exchange outside air for inside air, but that’s not really the case. Mainly they recirculate inside air and expel the ambient heat through outdoor fans. Consequently, there’s the possibility that if there are virulent particles in the inside air AC units may increase the possibility of causing those particles to enter into the bodies of humans in that space, and this is the main issue, especially in Japan where air conditioning, at least in residences, is a modular affair. Central air conditioning usually comes with filters that may be able to take out virulent particles (though viruses are really, really small). Apparently, some manufacturers have been touting anti-COVID features this summer, but one has to take such claims with a handful of salt. Daikin, to its credit, has been up front about air circulation and says that people should open their windows and use circulators and fans to facilitate ventilation. In other words, don’t count on their air conditioners. Because in the end the cooling efficacy of AC is dependent on how closed the room is and the efficiency of the insulation. That means all windows have to be closed tight and that there be no drafts in order to make full use of your AC. The entire home becomes a closed system, and the potential ventilation advantages of the AC unit-fan relationship is reduced by that much. The thing is, we just don’t really know now how this plays into viral infection rates. Read More

Viral market

Delivery of bathroom fixtures from Asia has been delayed

Since consumption has declined precipitously during the CV19 crisis, it’s no suprise that the real estate market has suffered considerably. The Nihon Keizai Shimbun has obligingly looked into the particulars, which are mostly predictable but worth looking at in detail. The Nikkei reports that people have essentially stopped looking for new homes, though the effect hasn’t been sustained enough to cause prices to fall just yet; and, in a sense, it might be better if prices did fall a bit, since that would encourage people who may be sitting on the fence to jump off and sign a contract.

The main problem at the moment is that people who have already signed contracts are getting cold feet, even if it’s too late at this point. Nikkei says that more than a few realtors it talked to have said they receive requests from customers to “disinfect” the used condos they buy, thus placing the realtors in a difficult position. As one agent told the newspaper, he understood the sentiment but how exactly he was going to convince the customer that he had cleaned the apartment “to their satisfaction” was going to be a problem. For people who had already signed contracts, it wasn’t a primary issue, but for those who were about to sign, the agent’s response could prove to be vital to the sale. A number of realtors said that more than the usual number of price negotiations had broken down since the pandemic developed. Demand is quickly evaporating unless something happens soon to change the situation. Read More