…the further they fall

Elsa Tower 55

Continuing in the vein of our previous post, last August the weekly magazine Shukan Gendai ran an article that revealed an “unwritten” belief among real estate agents in the Tokyo metropolitan area that says tower condos will start to “fall into ruin” starting in 2022. The choice of terminology is interesting here and, apparently, quite literal in that the towers themselves will start to deteriorate in ways that will make it difficult to maintain these buildings for many years into the future. The article describes in credible detail how tower condos differ from other condos, in terms of both structural design and real estate value, and how these differences manifest over time.

Gendai starts out with a profile of a tower condo that was built 15 years ago, or around the time that tower condos were making their debut in Tokyo and surrounding areas. Unfortunately, the article doesn’t say exactly where the condo is, but it contains 400 units, of which only 30 percent are occupied at the time the article was written. The facade is riddled with cracks and the entrance to the building is surrounded by overgrown weeds. The building also has a gym, which apparently has been closed for several years already. The current residents are described as people who have “nowhere to go,” thus implying they would like to move if they could, but the value of their properties has dropped so low that even if they were able to sell their apartments they wouldn’t receive enough money to cover a down payment on another condo. And yet, as the article attempts to point out, the overall popularity of tower condos in Tokyo is currently peaking.

As we previously wrote, tower condos are defined as collective housing complexes of at least 20 floors. Between 2008 and 2017, 341 new tower complexes were built in the Tokyo metropolitan area comprising 111,722 units. It was, according to Gendai, a phenomenon that “no one could have imagined” and, in fact, may have been too good to be true. Realtors have always been suspicious of the tower boom, since there was the obvious danger of oversupply, but to developers towers were the geese that just kept laying golden eggs, so they kept building them. Presently, they are still being erected in the Tokyo harborfront area on landfill, and in suburbs that are conveniently situated for easy access to the city center, such as Kawaguchi in Saitama Prefecture and Musashi Kosugi, which was described in our previous post. Now, some ambitious developers are eyeing certain areas of Tokyo for “redevelopment” with tower condos, such as Tsukishima, which is filled with older low-rise buildings. Read More

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

Sky’s No Limit

Last week the government released population figures for 2017 and to nobody’s surprise the Tokyo metropolitan area was the only region that saw any increases. Given that Japan’s overall population is dropping, it was notable that the three prefectures surrounding the capital saw increases, even if they were very slight.

It would be interesting to know how much of these increases were attributable to the construction boom in so-called tower mansions, or high-rise condos. Two weeks ago, NHK aired a look at the boom that attempted to weigh the merits of high-rise living with the demerits. Until recently, most of the tower condos, which the program defines as a building of at least 20 floors, or 60 meters, were being built on the Tokyo waterfront, but now they are popping up like spring bamboo in satellite cities like Kawasaki, Saitama, and Kashiwa, because local governments are encouraging developers to build them with subsidies. In 1999, the year before national building regulations were eased, there were only 150 tower condos nationwide, but by 2016 there were about 800.

The NHK show was particularly interesting to us, not only because we once lived in a high-rish in the shitamachi district of Tokyo (we rented, though), but also in the past resided in the two cities that were profiled in the report, Kawasaki and Saitama. In the case of the latter, when we lived there it was before the merger of Urawa and Omiya, and there were no tower condos near Omiya station, one of the biggest transporation hubs on the Kanto plain. Now, within walking distance of the station, there are 2,700 relatively new condo units in skyscrapers, and they’re very popular, it seems. A new building that recently opened has 776 units and they all sold out almost immediately. NHK visited one couple with two kids who bought their 3LDK, just four minutes from the station, for ¥50 million two years ago, which is about ¥10-20 million cheaper than such a place would cost in Tokyo. The wife works in Takadanobaba and the husband in northern Saitama prefecture, so their home is right in the middle. The say they are “100 percent” satisified with their purchase, and NHK attributed the popularity of tower condos to the kind of facilities they offer. This particular building included a gymnasium, a theater room, a music room, hotel rooms for guests, a dance studio, and lots of amenities. Read More