Imposter syndrome

The Japanese media is reporting that monthly fees for condo owners have increased significantly in recent years. We’ve often talked on this blog about these monthly charges, namely building management fees and repair fees, and how in many cases the repair fees were initially set low by developers so as to make them more attractive to buyers. Since these fees go into a fund that will be used down the road for large-scale repairs, often they are insufficient to the task, and when the repairs are finally undertaken there is not enough in the reserve fund and owner-residents have to cough up more money. In a sense, the recent increases in repair fees is a reaction to this reality, since more and more condos are reaching an age when large-scale rapairs are required.

Consequently, the reserve funds for long-term repairs can be quite fat, depending on the size of the building and the number of residents, and with construction companies that specialize in residential buildings losing business because of the decline in population they are eyeing these funds as they expand into renovation. A recent article in the Asahi Shimbun reported on a strange trend that seems to be related. Apparently, non-residents are impersonating residents in order to get into homeowners association meetings so that they can vote on approving plans for repairs, usually earlier than needed. It’s believed these imposters are working for construction companies who want the work.

Asahi cites several cases in the Tokyo metropolitan area. In May, two employees of construction contractors were arrested for “trespassing” after pretending to be residents of a condominium in Kanagawa Prefecture. Since 2024, the two men had attended the condo owners’ association meetings a total of four times using names of real resident-owners. One of the building managers was alerted to the possible imposture and checked one of the names with the real owner, who eventually confessed that he had allowed one of the men to use his family name in exchange for some kind of “reward.” 

The same thing happened at a condo in Chiba Prefecture. A man who did not live in the building attended 10 owners association meetings since July of last year by pretending to be the son of a resident-owner. Another resident who knew the owner in question felt that the “son” looked nothing like the resident and reported their suspicions to police. 

A woman from a different condo who talked to Asahi said that in March of 2024 she received a flyer in her mailbox soliciting “interviewees” for a survey who would be compensated for their participation. She answered the ad and learned that the inquiring company was an Osaka-based marketing firm that was doing undercover work. They needed identities of real people so that they could patronize restaurants and other service providers to check their service. The woman thought it would be her doing the undercover work and thus could get some free meals, but when she met the martketing company liaison in person she found out the real purpose. The liaison said the  service investigation was a ruse, and that their real mission was to check condo management associations to make sure they weren’t wasting or otherwise misusing funds. The liaison asked the woman if he could use her husband’s name to attend meetings. In exchange she would be compensated on a monthly basis. She accepted the offer.

Later, a different man contacted her saying he would impersonate her husband’s brother, and thus needed personal information in order to make the imposture more convincing. He even asked her for a duplicate key so that he could enter the building freely. She did as she was asked. 

Eventually, someone from building management found out and visited the woman. When she tried to contact the marketing company she got no reply and eventually confessed everything to management and later the police, who arrested one of the imposters in early June.

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Condos can be akiya, too

Reviewing our posts on this blog for the past year or so, we noticed that much of our writing is related to akiya, or vacant housing, which has become an increasingly visible problem that the media is finally addressing. However, when we look at the statistics, we notice that akiya are not limited to single-family houses, which is usually how the problem is framed in the press, but, in fact, is mostly comprised of apartments and condominiums. 

The reasons for this lack of coverage may have to do with the fact that the image of apartments is that they are rented out, while the image of akiya is that of abandoned properties, so it’s difficult to imagine an apartment that temporarily does not have a tenant to be permanently vacant. However, condominiums are a different story since they are bought and sold, and for the most part when the press talks about the condo market they only talk about Tokyo, where apartments and condos are still in demand, even used ones.

But we found an article that appeared last spring in the business magazine President that covered vacant condominiums in depth, and, apparently, the situation is as dire as it is for single-family houses, even if the problem isn’t as visible. 

The article quotes a number of experts, including an economics professor, Hiroaki Miyamoto, who says that in ten years one out of every four housing units in Japan will be vacant, and that the majority will be collective housing units, meaning condos or apartments. The main reason will be the lack of funds available to carry out long-term repairs and renovations on older buildings, which, as a result, will fall into disrepair and become not only difficult to sell, but in many cases uninhabitable. 

To the international finance community, Japan is already considered a “pioneer” in the onset of permanently vacant properties, especially after the IMF conducted a study of the phenomenon in 2020. The outcome of the study was that vacant properties bring down property values in the communities where they are, and thus adversely affect regional economies. 

As we’ve noted a number of times, the Japanese government carries out a large-scale survey of the housing and land situation every five years, and according to these surveys the gross number of housing units in Japan continues to increase even as the population has leveled off and started to decrease due to the birth rate. In 2018, the last time a report was released, the number of housing units stood at 62.4 million, while the number of households was 54 million, meaning that there is a 16 percent excess of housing units. 

Until 1963, the number of households in Japan exceeded the number of units, but this ratio reversed in 1968 and ever since the number of units has continually increased in relation to the number of households. 

Moreover, 85.9 percent of households in Japan, or 53. 6 million, contain full-time residents, meaning that 8.79 million units, or 14.1 percent of the total, contain no residents, and almost all of these are defined as “vacant” by the government—8.49 million, or 13.6 percent of all housing units. A property’s “vacant” status depends on how much or often it is used. In that regard, the portion of vacant properties has been increasing since 1988, when the vacancy rate was 9.4 percent. 

President cites the methodology of the National Social Welfare Population Issues Laboratory, which has determined that the number of households in Japan will peak at 54.19 million in 2023, which also happens to be the year when the government releases the results of its latest housing survey. From now on the number of households will drop, and by 2040, the laboratory predicts the number of households will be 50.76 million, or 3.24 million less than it was in 2018. Extrapolating this trend further, the number of akiya will invariably continue to increase at an accelerating rate; that is, unless more properties are demolished.

As it stands, the number of demolished properties is also accelerating. Between 2008 and 2012, the number of homes demolished was 30 percent of the number of new homes that were built. Between 2013 and 2017, this portion increased to 62 percent. Nomura Research used this statistic to predict the vacancy rate for the future. If the 2008-2012 rate of 30 percent is used, the vacancy rate will be 25 percent by 2033 and 31 percent by 2038, but if the tendency shown in the change in the rate through 2017 is used, the vacancy rate will be 18 percent by 2033 and 20.9 percent by 2038. 

So while the vacancy rate will continue to increase, it could slow down if the rate of destruction of superannuated properties increases as well, but that isn’t a given, since new home construction isn’t slowing down appreciably. 

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…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