condos & apartments

Community first

Posted on by catforehead

The inability to sell or rent out vacant houses and condominiums is not just a concern for the owners. In many places it’s something that the community as a whole worries about, especially now with all the talk about the erosion of “kizuna” (bonds) and the attendant loss of community-mindedness, which may have been over-stated in Japan, but in any case the atomization of urban life is definitely on the increase. A neighborhood in Chiba Prefecture is actually doing something about the problem in an unusually proactive way.

In a section of Chiba City’s Mihama Ward near Kaihin Makuhari Station, residents have put together a non-profit organization called Chiba Regional Renovation Research, whose job is to rent out vacant properties at less than their market value as a means of “reinforcing communication.” The idea is not simply to find tenants, but to make the neighborhood more viable as a community. A recent article in the Tokyo Shimbun explained that collective housing in the area in question was developed by the prefectural and municipal governments in the 1960s, and now the apartments are superannuated and mostly occupied by elderly people. After last year’s earthquake, even more people moved out of the area over fears of liquefaction, which affected many coastal areas Chiba along Tokyo Bay. The NPO is made up of 107 condominium associations in the area. Their research found that out of 800 units, about 300 were empty. (The vacancy rate for all of Chiba Prefecture is about 15 percent) In most cases, the owners of the units didn’t live there and/or were unable to rent them out, but in some cases, the owners of the units could not be identified or located. Of those empty units whose owners were interviewed–245 in all–30 percent said they wanted to rent or sell but couldn’t, and in the meantime they have to pay monthly management fees and repair fund contributions, not to mention property taxes. Since many are retired, this is a big burden for them.

The condo associations formed the NPO because their membership is so diluted it has become difficult to formulate disaster and anti-crime countermeasures. The purpose of the organization is to act as a bridge between owners and potential tenants. For instance, by offering units for less than market prices they hope to attract students. They also think that some units could be used by younger families as collective daycare centers or leisure facilities for seniors. At the same time, they will promote renovations in terms of both safety and comfort, working with prefectural authorities and the construction ministry.

First-timers

Posted on by catforehead

In real estate parlance, there is a term for people who are buying a home for the first time: ichiji shutokusha. In fact, there are homes that are specially designated for these buyers. Almost all are condominiums, and to qualify for the ichiji shutokusha designation they have to have at least 60 square meters of floor area and cost less than ¥35 million. To put it succinctly, they are designed for families and are cheap.

According to the Asahi Shimbun, in 2010 80,204 brand new condominiums designated for ichiji shotuksha were put on sale in the Tokyo metropolitan area. That’s a little more than 18 percent of all the new condos that went on sale in the area that year and a little more than one percent less than the number put on sale in 2009. In fact, the share of new first-time condos among all new condos in Tokyo and its environs has been dropping since the turn of the millennium. In 2001, they accounted for 38 percent of all new condos, and for the next five years the share remained in the 30 percentile range. In 2007, the share dropped to about 25 percent and has been steadily dropping ever since.

The Asahi article doesn’t analyze why this is happening, though one could get a fairly good idea of why such condominiums would become less popular. The above-mentioned criteria would exclude the vast majority of new condos built within Tokyo proper, which is where most people in the region work. The majority of first-time condos are probably located in the far suburbs on inconvenient train lines, which means that their value depreciates even more quickly than condos in Tokyo or other major cities. They are also more difficult to sell, thus contradicting one of the salient features of a first home–it’s appeal as an investment, as a stepping stone to a larger house down the line. The standard middle class narrative says you buy a first house young and then trade up to something better and larger as your family grows. But if the value of your property shrinks over time, that sort of upward mobility is difficult to achieve, since you’re not going to get as much money as you paid for it; and the longer you hold on to the property, the less it’s worth and the less likely you can use the sale money to buy a “better” place. At least with a detached home, the land value may at least stay the same, but there is very little land value involved in condo sales. And since developers are always building new first-time condos that are more appealing than used ones, it becomes almost a self-fulfilling prophecy.

The farther Japan gets from the bubble period of the late 1980s–the last time when condo owners believed the value of their homes would increase–the more likely first-time condo buyers will opt for something that they think they can live in their whole lives, and that doesn’t necessarily include condos designated for ichiji shutokusha. Or, at least, that’s our analysis.

Last resorts: Izu division

Posted on by catforehead

CI Villa

Last weekend TBS ran a long report on resort condos on the Izu Peninsula, focusing mainly on the Atsukawa Onsen region. The hook for the piece was an advertisement for a ¥20,000 condo. That may not sound like much of a bargain, but we’re talking sale here, not rent. The reporter visited the CI Villa condo, which is only 20 years old and commands a beautiful view of the Pacific. He wasn’t allowed to inspect the unit being advertised but he was able to visit another one of comparable size (43 square meters) and age. In any event, while the sale price turned out to be the real thing there were strings attached. The buyer would also have to pay more than ¥3 million in unpaid management and repair fees that have accumulated during the years since the unit was abandoned by its owner and seized by the authorities. And then, of course, the new owner would have to start paying these fees at a rate of ¥30,000 a month.

As the reporter pointed out after learning all this, the condo is still a bargain. Not only does it come with a view, but the management fees entitle the owner to use the building’s elaborate spa facilities, swimming pools, and other amenities. He thought the place was a steal, but as he started talking to local residents and public officials he came to understand why no one was snatching up these low-priced properties (there were quite a few, and not just in CI Villa). He remembered the TV drama series, “Zeni no Hana,” that aired many years ago and which was set in this particular town. It was a huge hit and sparked a travel boom to Atsukawa and in turn a building craze. About half the residences in the region were built after 1975, with construction peaking during the late 80s bubble period. The average price of a condo in CI Villa when it was new ranged between ¥40 and ¥50 million.

Of course, the end of the bubble also ended all that. One local merchant estimated that the number of tourists who come to the town is about “one-hundredth” of what it was during the peak times. And as more and more businesses who relied on these tourists left, the town fell into disrepair. Many people, it seems, do come down with an eye to buy property, most of which is in good condition, but once they see the boarded up shops and derelict infrastructure they get discouraged. The mayor said that the year-round population has aged even more quickly than the national average, and that welfare costs have increased six-fold since 1990. Because the tax base is so small, the town can’t keep up appearances. It’s a vicious cycle. One solution would be to exploit the region’s hot springs to produce and sell geothermal power. The temperature of the onsen approaches 100 degrees, and since local inns only need 50 degrees, the town thinks it could transform those wasted 50 degrees into revenues. The problem is that inn owners, who constitute the biggest block of business interests, are basically wary of geothermal, mainly because they think, wrongly, that it will sap the long-term onsen capabilities. One told the reporter that he had doubts about the local government’s belief that tourists would flock to the area out of curiosity and a desire to support such an environmentally effective project. Apparently, other onsen regions have had some success with such an endeavor.

Put out

Posted on by catforehead

We recently received a DVD screener of “Sayonara UR,” a video documentary by Yumiko Hayakawa. The doc chronicles the situation of a group of residents of Bldg. 73 of the Takahamadai apartment complex in Hino, Tokyo, which is run by the semi-public housing concern UR. The structure was built in 1971 and Bldg. 73 did not meet earthquake standards that were made mandatory in 1981. The company was going to carry out reinforcement work, but in 2007 it announced that the work would cost too much and everyone was asked to move out. The company would help residents relocate to other UR apartments if they needed it. They would also compensate them in part if they agreed to move out within two years of the announcement. Nevertheless, some residents refused to move, saying that they were simply being made victims of UR’s well-publicized move toward privatization. Bldg. 73 was not profitable and so UR planned to tear it down and sell the land to a developer. The quake-proofing story, according to these tenants, was merely an excuse, and not a particularly believable one since there was no inspection made by third parties, even though the tenants asked for it.

It was a classic eviction tale, and Hayakawa clearly sided with the tenants. As advocacy journalism goes, “Sayonara UR” has its good points. Throughout the doc, she refers to UR as representing “social housing,” something she believes is essential to the well-being of a well-ordered and responsible society. UR, as noted thoroughly in our blog, is semi-public, which means their obligations as a public housing provider are limited, and Hayakawa is careful about this point. She shows how UR still uses a lot of tax money in its operations, and interviews an outspoken professor who describes how UR is a money sink, more than ¥1 trillion in the red. The government has been trying to find ways of setting the company free. One of the main reasons they can’t, as evidenced by this documentary, is that people who rent UR apartments, especially those who have lived there a long time, don’t want the company to be made 100 percent private. There are many reasons for this, including the fact that UR does not follow the extortionary practices private landlords are known for, such as charging extra fees–gift money and contract renewal fees–that have no purpose. Hayakawa doesn’t address these reasons or the lack of laws that would protect tenants, but she does an excellent job of interviewing all sides of the story and giving equal weight to each. However, viewers not familiar with Japan’s housing situation may mistakenly equate social housing with low-income housing, which it is not. It’s a difference Hayakawa neglects to clarify, and because she doesn’t specify how much rent these people pay some will think they are poor, when actually they are quite middle class. In fact, given their economic status and the superannuated state of their abodes (most public apartments built in the 1970s for families are less than 60 square meters), many viewers may wonder why these holdouts aren’t jumping at the chance to move to newer, cleaner apartments that will cost proportionately about the same. She also doesn’t clarify that only ten of the 250 households asked to leave refused to do so by June of 2010, when the topic was covered by TBS. By April of the next year, the number was down to 7. Read More

Now on sale

Posted on by catforehead

It’s fairly well-known that Japanese people like new things, and if their budget allows they prefer buying a brand new house or condo rather than one that’s already been lived in. Half of the almost six million condominiums in Japan were built within the last 15 years, and reportedly the pace of construction is slowing due to the ongoing recession. According to statistics recently released by Reins Tower (East Japan Real Estate), sales of older condos also went down over the past year. Sales contracts were concluded for 1,943 used condos in August in the Tokyo Metropolitan area. That’s a 6 percent drop from the same month last year. However, the 920 sales in Tokyo alone represented a 0.9 percent increase over last year. The suburbs were a bit different, with Chiba seeing a 6.8 percent drop and Kanagawa a whopping 14.1 percent decline.

But that isn’t the whole story. While sales on the whole have gone down slightly, the average prices of the condos sold have gone up, as much as 4.6 percent in Saitama, for instance. What this would seem to indicate is that more newer used condos are being sold, since condominiums lose their value with time on a pretty consistent basis. In Tokyo, the trend is more localized. Sales of used condos in the three central wards (Chiyoda, Chuo, Minato) decreased by 15.4 percent, while those in the eastern portion of the city increased by 8.6 percent. Condos in the center of the capital are, of course, much more expensive that those in the eastern part, even though prices in central Tokyo have dropped 6 percent while those in eastern Tokyo declined only 1.4 percent (for comparison’s sake, prices in the western wards dropped the most, 8.2 percent, while those in the southwest–Meguro, Shinagawa, Ota–lost only 0.6 percent).

All indications point to a buyers market for used condos, which is hardly surprising. The stock is increasing. For the entire Tokyo metropolitan area, the available stock of used condos is 52 percent higher than it was last year, and in central Tokyo it’s gone up by 25 percent (all Tokyo by 35 percent). What this means is that it’s becoming more difficult to sell older condos, even in those areas like central Tokyo where it used to be considered easy to do so.

The awful truth

Posted on by catforehead

We often go out in the field to do research, but it’s always a two-pronged activity. On the one hand we study the housing situation and the market in an up close and personal manner. On the other hand, we’re still thinking about buying property ourselves someday, and though after more than fifteen years of searching off-and-on we haven’t bought anything, it doesn’t mean we never will. Still, the longer this goes on and the more we learn, the more frustrated we become, especially as our income situation remains precarious owing to the ongoing recession. Having a permanent abode that we can’t be kicked out of, regardless of our job circumstances, is a vital consideration, but looking at what we can afford we invariably fall into a funk wondering why we have to settle for such places. Inevitably, you prevaricate: This may be livable.

Our latest subject is old danchi/kodan for sale, which have become semi-popular due to media coverage of “danchi moe,” or fans of old public housing. We’ve written before about enterprising people who’ve bought old apartments in buildings constructed during the 50s-70s and remodeled them as attractive modern spaces, which they often sell for a profit. Because they only cost a few million yen to buy and a few million yen to fix up, they can be had quite cheap in the end, but most of the units that have been covered on TV and in magazines are small; fine for a single person but still a bit cramped for a couple and certainly not big enough for a family, though in all likelihood they were occupied by a family when they were new.

When you get out of the main cities, these danchi and kodan get bigger and even cheaper. And in most cases they’re also newer, which means more amenities. However, they still look like danchi, meaning they’re usually contained in dull concrete buildings of three to five stories without elevators. The fact that they are designed with these parameters in mind means that the apartment layouts tend to be more sensible than those in newer buildings. The classic kodan design has a staircase and apartment entrances on each side of the landings, which means you usually enter at ninety degrees to the length of the apartment. That allows for windows on both ends of the apartment, which means there is not only more sunlight, but cross-ventilation, an important consideration until the 1980s, when air conditioning started to become a fixture of apartment life. It also means the rooms are more practically positioned, unlike modern apartments where the entrances open up to a common outside hallway or light well, which means all the light and air comes from only one direction. In order to maximize space for commercial purposes, the rooms are basically carved out of a boxy shape, thus creating what is often referred to as “kamaboko” living spaces. Kamaboko are those rectangular fish paste loaves that you divide into smaller rectangular pieces.

So discounting the unappetizing exteriors, older danchi, especially when they’ve been fixed up, can be quite desirable, and in this spirit we called a few real estate agents and had them show us some in northern Chiba. Read More

Make mine menshin

Posted on by catforehead

The Asahi Shimbun reports that more and more companies are interested in fortifying their buildings with so-called menshin technology. Menshin involves placing shock absorbers in the foundations to mitigate the vibration accompanying earthquakes. Quite a bit of media attention was directed at the 18-story Sendai MT Building, which not only survived the March 11 earthquake in the largest city of the affected area, but made it through with minimal shaking, according to people who were in the building at the time. Sendaki MT Building is a commercial building run by Mori Trust, and it acted as a kind of makeshift refugee center for office workers who couldn’t get home the night of March 11. Though there were aftershocks all through the night, most people in the building said they didn’t feel them as much as they did in their own office buildings. After the quake, the building’s occupancy rate increased 20 percent and is now almost completely filled.

And it wasn’t just high-rises. The two-story distribution center for Suzuden Logistics in Matsudo is menshin-equipped. None of the goods stored in the building were damaged at all. Another menshin building is the Aizu Central Hospital in Aizu Wakamatsu, Fukushima Prefecture. Though it also underwent 5-plus shaking, the building suffered no damage and regular treatment continued normally. No in-patients had to be moved out or transferred.

The Asahi reports that, while menshin features add between 10 to 20 percent to the cost of construction, major contractors have seen inquiries into the system triple since March 11, and just as many are for factories and warehouses as they are for office buildings.

Sourced

Posted on by catforehead

Masako was used as the framing voice in an article by Hiroko Tabuchi in this morning’s New York Times about the Tokyo high-rise market following the quake. You can read it here, though you may have to register first.

All fall down

Posted on by catforehead

In the months after the March 11 earthquake, a condominium management association conducted a survey of the Tohoku region to find out the damage sustained by multi-resident buildings. Almost all those that were built since 1981, when stricter earthquake-proofing codes went into effect, survived with minimal damage, but there were quite a few built before 1981that didn’t do as well. In fact, the survey found that about 60 structures in Sendai alone had been declared zenkai (“completely damaged”; in other words, legally uninhabitable).

The Asahi Shimbun looked at several of these buildings. One, the somewhat optimistically named Sunny Heights Takasago, was built in 1976 and was actually damaged in 1978 during a large earthquake that struck Sendai. However, the damage wasn’t “complete” and repairs were made. The building was not so lucky this time. The condominium is actually two 14-story buildings positioned in an L-shape. During the initital earthquake the two structures knocked against each other, but afterward inspectors declared them yochui–residents should take caution but they could keep living there. But the condos sustained further damage in the aftershock of April 7: window and door frames deformed, cracks appeared on outside corridors, steel beams were exposed. Even worse, the ground itself was “damaged.” Consequently, the properties were condemned. Read More