Help the rich

The Japanese government expects 40 million foreign tourists in 2020, which would be a new record. Obviously, many of these people will be coming for the Olympics, but the government seems to think this wave with money to spend is going to be a regular and permanent thing, and they want to be prepared for a future where such people feel welcome. Legalizing casinos is part of this vision, but that plan was mostly formulated before the current foreign tourist boom was confirmed, and, in a real sense, the so-called integrated resorts that are being planned as excuses to allow casino gambling may not be as necessary as they once seemed, but it’s too late to stop now.

You can’t have too much for rich people to do, so the latest plan, reportedly the brainchild of Chief Cabinet Secretary Yoshihide Suga, is to build 50 luxury hotels by the mid-2020s. Why luxury hotels and not just regular hotels? Why 50? So far, nobody has really clarified the reasoning behind this ambitious scheme, but in the end the biggest unasked question is: Why the government? Japan is a resolutely capitalist country, reverent to the invisible hand of the market. And while Japan has been jokingly called the most socialist liberal democracy in the world owing to its schemes to game the economy through elaborate spending plans (which invariably help political vested interests), the idea that they would blatantly come up with such a concept to lure rich foreigners seems almost funny.

Some media are saying the scheme was suggested by David Atkinson, a former Goldman Sachs analyst and advisor to the Japan National Tourism Organization who has been promoting inbound tourism for years as a solution to Japan’s fiscal woes. In the interviews Atkinson has given over the years, he doesn’t mention luxury hotels exclusively. He mainly says that Japan needs more rooms of a less traditional sort—fewer ryokan and onsen inns and more conventional Western style hotels where foreign guests can feel comfortable and make their own plans. The trouble with traditional Japanese accommodations is that they tend to take the guesswork out of everything. You eat what they serve you when they serve you and even tell you when to go to bed. Read More

We’re on Twitter!

We recently opened a Twitter account under the catforehead moniker. The Twitter handle is @catforehead1. We will use it to tweet links to English or Japanese articles and other items on the internet related to housing in Japan. Please follow us and tell your friends about it. Part of the reason for starting a Twitter account is to attract more attention to this site as we look for a publisher for our book. If anyone could help us in that department, please feel free to contact us through this blog or through the Twitter account. Thanks.

Notes from underground

One of the older neighborhoods in Inzai without utility poles.

In recent weeks, we heard that the city where we live, Inzai in Chiba Prefecture, has become notorious for something. This has happened before; in fact, it’s happened several times. Though Inzai is about as nondescript as a Tokyo suburb can be, it occasionally pops up on the news for some reason or another. Earlier this year we were the butt of jokes because of a PR video produced by the city that had gone semi-viral because of its conflation of the name “Inzai” with the word “Indo,” which is the Japanese pronunciation of India. The video, fashioned after a low-budget Bollywood production, featured Indian tourists supposedly flocking to Inzai because they somehow mistook the city for their home country. Yeah, it deserved all the derision it attracted, and not just for the bad humor. More often, however, Inzai gets cited as one of the most “livable” cities in Japan for reasons we’ve talked about before and don’t need to get into again.

This latest blast of fame apparently originated on the prime time TBS information program “Newscaster,” which ran a mini-feature during its “7 Days” weekly review segment in September about all the homes on the Boso peninsula that had lost electric power during and following Typhoon Faxai. The main problem was that the strong winds blew over utility poles, many of which were in poor condition due to neglect. Because of all the work involved in getting utility lines back up, some sections of Chiba Prefecture didn’t have power for more than two weeks. In order to illustrate what could be done in the future to avoid such disasters, TBS visited Inzai, where a lot of new single-home construction is currently taking place. They went to one development near Inzai Makinohara Station on the Hokuso Line, the same station we use, because this neighborhood did not have utility poles. All the electrical cables are underground. Burying cables is the norm for most of the developed world, but Japan is way behind. In Tokyo only 8 percent of cables are buried; in Osaka only 6. In Hong Kong, London, and Paris all the cables are underground. Read More

Heirs? Apparently

This land is your land?: Property marker in the middle of a residential street

An ongoing headache for the government, in particular the land and justice ministries, is all the land in Japan whose titleholders are only vaguely determined. The reason this is a problem, of course, is that the central and local tax authorities don’t know to whom they should send property tax bills, but also when public works projects are being planned that involve the appropriation of land the relevant authorities don’t know whom to deal with. For a more detailed discussion of this problem see here, but suffice to say that the volume of property nationwide with undetermined owners amounts to a piece of land the size of Kyushu.

The reason for this confusion has to do with inheritance laws. When a title holder dies, if no formal transfer of the property has taken place, their property automatically passes to their heirs, meaning spouse first and then children. If those heirs never properly register the land in their names, then it then passes on to all their heirs when they die, and so on. According to a Nov. 18 article in the Nihon Keizai Shimbun, there is one piece of land—location undisclosed—that has up to 700 potential titleholders since the land has not been re-registered since the registered titleholder died many years ago. The amount of money and resuources needed to sort out these matters is beyond the ability of local governments. Of course, in most cases, the land is worth probably nothing to the family—maybe it’s on the top of a mountain or in a remote forest—and they simply don’t want to be taxed for it. However, a good portion is located in already developed areas. In any case, the local government or maybe a developer may want to exploit that land someday. The central government would like to have everything properly registered.

The Civil Code states that the titleholder must be consulted in order to dispose of the land or any portion of it, so if the government really wants to solve this problem it should amend the law, and that seems to be the plan. The Nikkei article says the government is now considering an amendment to the law that will allow the sale of plots of land or any portions of it if a certain number of heirs agree to the sale. At present, all titleholders must agree to such disposal. The land and law ministries plan to send this bill to the Diet in 2020, and are currently carrying out research that will better define vague property lines. As of 2017, about 16 percent of the land in 80,000 “locations” classifed as “urban,” meaning designated for residences and commercial businesses, does not have a definite titleholder in accordance with existing records. The portion of undetermined land is probably more, since the 16 percent mainly represents lots that are being disputed for some reason—either neighbors want to buy the land for expansion or local governments want to use it for parks and other public facilities or a developer wants to build a condominium on it. None of these entities have the money to negotiate with all the heirs, and according to most local laws any property line disputes have to be mediated through the consultation of surveyors and other experts, and those services have to be paid for by the parties involved.

On the surface, passing such a law should be easy. All the government has to do is specify the problem and how many of the identifiable heirs or titleholders must be located in order to dispose of the land. But because Japan has such a weak concept of eminent domain, it’s likely there will still be limitations to what the government can do unilaterally. And it’s apparent that people who have rights to a piece of land but are coy about being located have a reason for being coy. The main obstacle will be defining how much work should be involved in “notifying” all the interested parties. They must also determine if unpaid back taxes can be waived. One solution, according to Nikkei, would be a condition that the land in question must be sorted out within a certain timeframe due to health or safety concerns, and while that may sound like a limiting condition itself, the government has never been averse to bending such laws when it serves them.

…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