Re/Max Migration Realty Property Invest & Start Business in Japan

In the spring of 2025, Mitsui Fudosan will open a new commercial facility in front of JR Kawaguchi Station, the gateway to Kawaguchi City, Saitama Prefecture.
The former Sogo Kawaguchi building will be renovated and will house approximately 100 stores selling apparel and daily necessities. Kawaguchi City is one of the areas with high housing demand due to its convenient transportation to central Tokyo. The commercial facility will provide services primarily targeting families and single-person households. (From an article in the Nikkei Shimbun 27th Aug.)

In Japan, there is a traditional wooden construction method called the traditional method在来工法. There was an opinion that a new construction method called 2x4 is more earthquake-resistant. However, that is not the correct view.
After the Great Hanshin-Awaji Earthquake in 1995, the Building Standards Act was revised in 2000, and even traditional wooden construction methods became more earthquake-resistant. Traditional construction methods are often used in recent wooden buildings.
And because technology to improve earthquake resistance has also developed, more earthquake-resistant construction methods have been added to traditional construction methods. The traditional method, which is a wooden building centered on pillars and beams, is an excellent construction method that can create beautiful forms, so I hope that it will be passed down in the future.

In Japan, real estate companies are sometimes entrusted with the management of condominiums.
Then what are the recommended items of disaster prevention supplies to be stockpiled by the condominium management association?
It is important to always have equipment such as
Generators
Walkie-talkies
Portable toilets
Helmets and tools
Radios
Flashlights
Towels, bandages, gauze, etc.
which are not familiar in normal life and are often not provided at home.
In addition, it is necessary to stockpile 9 liters per person for drinking water alone.
For a family of two people, a married couple and Mr./Ms. child, about 30 liters are required. It is not thought that many households have a stockpile of 30 liters of drinking water. Therefore, it is necessary to stockpile it at the management association.

There are several reasons why the number of vacant houses in Japan is increasing.
One of them is said to be property tax incentives. This is because the current tax system is more favorable to newly built homes. One of the ways to reduce the number of vacant houses is to revitalize the distribution of second-hand houses. To that end, it may be necessary to review the application of property tax.
What is property tax:
It is paid as municipal tax to the municipality where fixed assets such as land and houses are located. However, if people are within the 23 wards of Tokyo, they will be required to pay tax to the Tokyo Metropolitan Government as a metropolitan tax.
The amount of property tax is basically calculated based on the assessed value of × fixed asset at 1.4%.
The assessed value of fixed assets is calculated according to the asset value of land, houses, and depreciable assets.

The recovery of Japan's leading office districts, Otemachi, Marunouchi, and Yurakucho, is clear. From an article in the Nikkei newspaper dated August 9th
In particular, the vacancy rate in Marunouchi is in the 2% range, and it seems that rents in this area will increase before those in the surrounding areas.
These three areas are said to be the absolute center of office districts in Tokyo.
Due to restrictions imposed by the COVID-19 pandemic, office workers have started working remotely, and the demand for physical offices has decreased.
As a result, the vacancy rate has temporarily increased in office districts.
In addition, the demand for offices in the city center has been sluggish due to the IT industries relocating its headquarters to Shinjuku, Shibuya, Roppongi, and other areas around Tokyo.
However, thanks to the lifting of restrictions due to the pandemic and the redevelopment of the city center, office workers have more opportunities to come to work. As a result, the demand for offices has increased and more companies are renting offices in the city center, which has increased the rental demand in this area.
Nowadays, as long as the internet environment is in place, it makes sense to have an office anywhere. Therefore, there is no strong need to set up an office in the center of Tokyo. However, when considering the employment of staff, the location of the office is an essential factor. This is because not only the geographical convenience but also the image of the place where they work will lead to a psychological favorability for them.

The Real Estate Economic Institute in Tokyo released today that the number of newly built condominiums supplied in the Tokyo metropolitan area (Tokyo, Kanagawa, Saitama, and Chiba prefectures) from January to June 2024 was 9,066, down 14% from the same period last year.
This is the third consecutive year of decline. The market for used condominiums in Tokyo is already somewhat overheated, but purchasing demand will continue to increase, and sales prices will likely rise. Linked to this, rents are also rising.

House for sale in Higashiyama, Kyoto - Unlisted property
A house with a garden in Kyoto that is not an old house.
A two-story wooden building with a tiled roof built less than 60 years ago.
The building and land ownership are currently being used as accommodation.
Price negotiable within 2.5 million USD.
The photo is not of the actual property.

A real estate research firm TOKYO KANTEI announced on July 17th that the rent of condominiums in June was 4,336 yen per square meter in Tokyo's 23 wards.
It was 0.7% higher than the previous month and the highest since January 2004, since the survey began.
It is expected that rents in cities, especially Tokyo, will continue to rise for the time being.
As I have posted many times before, this is not a return to Japan's bubble era.
In other words, price increases are unlikely to suddenly fall off.
However, just because prices are soaring does not mean that now is the perfect time to speculate. If you are not speculating and have a long-term perspective, it is not a bad time to invest in real estate.

“In Tokyo, there is an oversupply of rental housing. They say that too many apartments are being built. And while the number of vacant houses in Tokyo is increasing, the proportion of these vacant houses for rental is also increasing.”
In fact, the above is an opinion published in an economic magazine in 2017.
"Of the total 900,000 vacant houses in Tokyo, 70%, or 630,000, are for rent."
This is a recent article.
In other words, the issue that was warned about seven years ago is still an ongoing issue today. It is said that one of the reasons for the excessive construction of apartment housing is to avoid inheritance tax. Apartments were built on vacant land owned by private landowners. This is because doing so would reduce taxes at the time of inheritance. It is also reported that at the time, financial institutions were also not too strict in providing real estate loans to such private landowners, which was also one of the factors that increased apartment construction.

According to the Cabinet Office of Japan, there are currently over 350 certified businesses in the National Strategic Special Zones that were established in 2013.
Some of these businesses aim to reuse vacant houses that are no longer in use (as it is called Kominka, which have great historical value).
One of these certified businesses that is being introduced as a success story and a business model is the accommodation business in Sasayama City篠山, Hyogo Prefecture.
The business was established thanks to government deregulation, but is run by a private company. They already have accommodation facilities in 31 regions across Japan.
https://www.sasayamastay.jp/en/

A fixed-term lease contract in Japan is a type of rental agreement where the duration of the lease is explicitly set for a specific period, typically ranging from one to five years. Unlike a regular rental contract, which can be automatically renewed, a fixed-term lease does not automatically renew upon expiration.
Fixed-term lease contracts in Japan offer a clear and predictable rental arrangement for both landlords and tenants. While they provide stability and potential cost savings, they also come with certain limitations in terms of flexibility and renewal. Understanding the terms and legal requirements of a fixed-term lease can help tenants and landlords make informed decisions and manage their rental arrangements effectively.
For example, in Minato Ward港区, where the high-end residential areas of Aoyama青山, Akasaka赤坂, and Azabu麻布 are located, 25% of properties over 70 ㎡ are fixed-term leases.
Fixed-term leases make it easier to rent out properties because the revenue outlook is clear, which may lead to an increase in the supply of such high-end rental properties.

July 7th is polling day for the Tokyo gubernatorial election.
A news article was published on whether there would be any change in land prices in Tokyo if the metropolitan governor were to be replaced.
It has already been reported that land prices are climbing all over Japan, not just in Tokyo. It is also well known that housing prices in Tokyo in particular are soaring.
Will the change in the Governor of Tokyo affect those land prices in Tokyo?
In other words, will they go up or down?
One thing is clear. That is, even if a new governor takes office, property prices will not fall immediately.
Even if a new governor were to implement policies to curb the rise in land prices, they would not immediately start trending downwards.
The main reason is that demand for new housing will not disappear and the large developments that have already started construction will not stop.
However, there may be a slight curtailment of large urban developments that are due to start construction in the future. When that happens, there may be some volatility in prices in the neighborhoods where the developments are based.

July 1st, the National Tax Agency in Japan released roadside land prices as of January 1st of this year.
The national average was up 2.3% from the previous year, marking the third consecutive year of increase. This is the first time in 16 years that the increase has exceeded 2%.
The general view suggests that the recovery of inbound tourism, redevelopment projects taking place all over Japan, and growing demand for housing are pushing up land prices.
As I have stated in previous posts, I believe that this rise in land prices is different from the rises that occurred during Japan's past bubble era in 1985 - 1990.
To some extent, there is unnatural price rise due to speculative investment.
However, most can be considered a natural rise due to the balance of supply and demand. Therefore, there may not be need to make risky predictions that there will be a dramatic price collapse at some point.
The important thing is to avoid reckless overinvestment in real estate. Even if you do invest, you should carefully assess the actual demand before doing so.

If you buy a condominium unit in Japan, you automatically become a member of the condominium management association.
This is required by law, and even if the buyer is a non-resident, the owner must become a member of the association. And of course, the owner is obligated to pay the management fee and repair reserve fund every month. Furthermore, as a member, he or she must participate in the management association's meetings or assembly and resolutions.
If you do not reside in Japan, you can choose to participate by exercising your voting rights by mail.
This cannot be replaced by the tenant.
If you continue to default on the payment of management fees and repair reserve funds, you will eventually be subject to legal measures ranging from a ban on the use of the private and common areas to seizure and finally auctioning off your condominium.
This is a pivotal public matter, so if you do not know about it when purchasing a condominium in Japan, you cannot get away with saying you did not know.

Osaka is also trying to be a pioneer on a controversial topic.
IR stands for Integrated Resort, which aims to promote international tourism.
It is a complex facility that brings together hotels, casinos, theaters, shopping malls, and MICE facilities (international conference centers and exhibition halls, etc.), and is modeled after cities such as Las Vegas and Macau.
In Japan, it has been discussed since the 2000s. Then, the IR Promotion Bill passed the Diet in 2016. And by 2022, several Japanese cities had put their name forward for certification.
However, in the end, it was Osaka City and Nagasaki Prefecture that submitted the IR area development plan.
Osaka City's development plan was approved by the government on April 14, 2023.
In response, Osaka City is preparing to open an IR in 2029.
Osaka is planning to build the facility on an artificial island called 夢洲Yume Shima.
Since the Osaka World Expo will also be held in 2025, the Osaka area is hoping that
provides a trigger for further activation of economic.
Actually Osaka is taking Singapore as its model.

A slightly unique property for sale in Tokyo
A whole building for sale that can be used as an apartment, employee dormitory, or private lodging facility
Location: Ota-Ku, Tokyo
Land area: 79.98 m2
Building area: 127.31 m2
Date of construction: August 1992
Number of rooms: 11
Structure: Steel frame
Price: 84 million yen
Other: Expected return at full occupancy of 10% or more
Note: The photo is for illustrative purposes only

There is a public park in Tokyo called Shinjuku Gyoen. It is a tourist spot where you can see many cherry blossoms during the cherry blossom season. A commercial building located a one-minute walk from the park is for sale. It is currently fully occupied. The price is about 1 billion yen, but it is possible to negotiate the price.
If you are interested, please contact us by email and we will be able to obtain the detailed information and let you know.
The image is unrelated to this case.

A unique wooden hotel in Tokyo was found for sale
Within 30 minutes by train from Asakusa
The building area is less than 100 square meters
The selling price is 54.8 million yen
The expected surface yield is 15%

Licenses for real estate brokers in Japan are issued by the governor and the Minister of Land, Infrastructure, Transport and Tourism. For example, a company that has an office only in Tokyo is licensed by the Governor of Tokyo. Currently, there are more than 25,000 companies in Tokyo. They will have to renew their licenses every five years.
People can see the number of renewals by looking at the ( ) number written on the license number. Within the first 5 years it is (1).
The higher the number, the longer it can be regarded as a company that has been in business for a long time.
However, even if the number is large, it cannot be said that it is a reliable company.
This is because if a company increases its office to another prefecture during the license period, it will have to reapply for a license to t the Minister of Land, Infrastructure, Transport and Tourism. Then, the license number starts with (1) again. It is not always the case that a company that has greatly expanded its real estate business has an old license.

It is taking longer to complete an apartment building. According to a survey by the Nihon Keizai Shimbun, the average construction period for large-scale properties in the Tokyo metropolitan area is two and a half years, a 30% increase over the past 10 years.
There is a serious labor shortage not only in construction but also in facilities.
Due to rising construction costs, new construction prices have reached an all-time high. It is highly likely that construction periods will become even longer.
There are pessimistic predictions that this will cause sales prices to rise again, ultimately reducing housing demand.
Everyone knows that the labor shortage is a major and serious issue for the entire Japanese industry.
The shortage is particularly severe in the construction industry.
This price increase is not due to the economic situation or the balance of supply and demand in the market. It is a hopeless price increase that is caused by a fundamental problem facing society.

For those considering moving to Japan
How about Saitama Prefecture? Saitama Prefecture is next to Tokyo.
Benefits of living in Saitama:
- Rent is cheaper than Tokyo
- Easy access to Tokyo
- Many parks, good environment for raising children
- Many large commercial facilities
- Abundant leisure spots
- Less damage from disasters

Population 7,326,804 people, 5th in the nation
Population of each city
Saitama City 1,324,591 people
Kawaguchi City 594,461 people
Kawagoe City 354,680 people
Tokorozawa City 342,535 people
In the 2024 official land prices for Saitama Prefecture announced by the Ministry of Land, Infrastructure, Transport and Tourism, residential areas increased by 2.0%, marking the third consecutive year of increase.

When purchasing the land on which the old house stands, it is necessary to choose whether to demolish the building and rebuild it, or to renovate and reuse the building as it is.
If the house is too old to be used, it will have to be demolished or removed.
So how much does it cost to dismantle and remove?
It varies greatly depending on the location, structure, and size of the building.
For reference, let's give an example of the approximate amount of money for each building structure.
In the case of a building area of about 100㎡
Wooden structure: 900,000 ~ 1.5 million yen
Steel frame: 1.2 million ~ 1.8 million yen
RC structure: 1.8 million ~ 2.4 million yen
In some cases, it may be better to conduct a paid survey called a so-called inspection of the building by a specialist.

In Japan, the old unit of area, tsubo坪, is still used. What is tsubo?
A Japanese unit of areal measure, roughly 3.3 ㎡ or 35.5 sq/ft, equivalent to the area of two rectangular tatami mats placed side-by-side to form a square.
With the enactment of the Measurement Act in 1959, the metric system became the official standard. Nevertheless, in real life, units of the shakkanho system, such as "tsubo" and "shaku", still survive. Especially in the real estate industry, "tsubo" is often used to intuitively convey the size of a property.

The financial results of major housing manufacturers and builders in Japan for the fiscal year ended March 24 have been released.
Daiwa House Industry and Asahi Kasei Homes posted record sales for the third consecutive year.
In Daiwa House Industry's housing business, sales of detached houses were 951.0-billion-yen (up 8.5% year-on-year). The company's overseas business had sales of 496.7-billion-yen (up 15.5% year-on-year).
Asahi Kasei Homes' overseas business division grew as companies in North America and Australia were consolidated.
It is clear that the overseas expansion of Japan's housing industry is contributing to the growth of the industry as a whole.
Japanese housing companies had already started expanding overseas more than five years ago. When it became clear that domestic housing demand in Japan would shrink, companies turned to overseas expansion.

The following deal was concluded yesterday.
The sales price for this one-room apartment in Ginza 1-chome, Tokyo, was approximately 27 million yen.
Although it is a small one-room apartment with an area of just under 22 m2, it is conveniently located just a four-minute walk from the subway station. It was built in 2004, so it is relatively new.
There has been a change of owner, so there is currently a tenant, presumably a female resident.
And the annual rental income is over 1.1 million yen, which works out to an annual yield of nearly 4%.
By owning multiple such properties and running a rental management company, it is likely that you will be able to come closer to meeting the application requirements for Japan's Business Manager Visa.
*The image is for illustrative purposes only.

Transferring the registration and ownership of property in Japan involves a detailed legal process to ensure that the transfer is valid and recognized by the authorities. Here is an overview of the steps and considerations involved:
Steps for Transferring Property Ownership
Preliminary Agreement
Negotiation: The buyer and seller negotiate the terms of the sale, including the price and any conditions.
Letter of Intent (LOI): Sometimes, a non-binding LOI is drafted to outline the agreed terms before the formal contract is created.
Due Diligence
Property Inspection: The buyer inspects the property to ensure it meets their expectations and requirements.
Title Search: The buyer or their legal representative conducts a title search to verify that the seller has clear ownership and that there are no outstanding liens or encumbrances on the property.
After this, the next steps will be sales and purchase agreement, payment, and then the handover of the property, i.e. the completion of the transfer registration.

Construction License System in Japan
A construction license is required in accordance with the Construction Business Act in order to carry on a construction business in Japan, regardless of public or private works.
However, a company is not necessarily required to register the construction license which receives only minor works* and carry on a business.
* Minor works means as follows:
1) General building works less than 15 million yen or wooden house construction with total floor area less than 150 m2.
2) Other types of works less than 5 million yen.
It is not difficult to obtain a construction permit/license in Japan with the help of an administrative scrivener. However, the difficulty now is to recruit artisans and workers after the opening. This is because the construction industry is facing a serious labor shortage.

A method of purchasing a store property for example.
Store property for sale on the first floor of an office building in Yokohama
Address: Yokohama
Price: 46.8 million yen
Yield: 6.48% (currently)
Structure: SRC, first floor street-facing store
Year built: 1995
Area: Approximately 42 ㎡
Current status: Rented (expected to move out in a few months)
After the current tenant moves out, you can bring in a new tenant or open your own store.
The image is for illustrative purposes only.

Japanese people in general prefer properties near train stations. Why?
In Japan, especially in urban areas, transportation is well developed, and people rarely commute to work or school by car. As a result, residents concentrate near train stations, and many shops and other commercial facilities are built. In addition, public facilities such as schools and government offices and hospitals are also built in the vicinity. As the number of shoppers and other users increases, the security improves as the number of people increases.
Ultimately, the convenience and good security attract more residents. In this way, after the war, Japan has formed a living area with a large population centered around train stations.
Therefore, even if the area is the same and the houses are the same, the real estate prices are different near the station and far from the station.
Recently, suburban homes a little away from the station have become popular.
As the use of cars has become common, it has become possible to commute to work and shop without relying on the train, so being near the station is no longer necessarily convenient. More than that, there are more generations who value nature such as forests and woods nearby.
Moreover, real estate away from the station is a little more affordable, making it easier to purchase.

If you are thinking of purchasing real estate in Tokyo, it would be a good idea to include the greater Tokyo area in your search.
Price: 258 million yen Approx. USD 1.65 million
Location: # # , Kanagawa
Land area: 406.14sqm
Building structure: RC 7floors
Total floor area: 765.30sqm
Land category: Urbanization area
District Zoning: Category 2 residential districts
Building coverage ratio: 200%
Floor area ratio: 60%
Built: 1988
Property: 19 units with 1 store
Ownership form: Freehold
Assumed Yield: (Fully occupied) 6.8%
Remarks: Ownership change
Conditions of transaction: Real estate brokerage
* The photo is for illustration purposes.
All paperwork such as certificate of authenticity, Inspection certificate are complete.
Major renovations were completed in 2018. The property is fully occupied.
For example, it is desirable to look for properties with a good current real estate status like this.
However, how long will you hold onto it? After how many years will you resell it? Or will you keep it as it is until it is rebuilt? Still, it is important to consider these things in advance.