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Cranes deliver Japan's real estate revival to BOJ's doorstep

By Stanley White

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New condo construction is happening all over Shinjuku. As the population shrinks, who is going to live in all these new places?

3 ( +3 / -0 )

I worked across the street from that building site for 15 years. I love Nihonbashi but I have watched it change too much over the years.I hope they don't destroy it too much.

1 ( +2 / -1 )

All new mansions are almost all sold out before construction is finished. People always want to move to a new place and the monthly payments and lttle or no down payment now make them very attractive for the 35 to 50 year old set.

The older places will sit empty as the population declines.

3 ( +3 / -0 )

The title should say "Tokyo's Real Estate Revival", as there has been no revival anywhere else in Japan. Outside Tokyo, hundreds of homes become vacant every day (there are more than 8 million vacant buildings in Japan now), with no buyers, and the prices of houses and property sliding downward.

None of this is good, it means that due to lack of opportunities outside the major cities means people are forced to leave, and migrate to the few cities where there is work to be found. Worse yet, it is inevitable that the population in the major cities eventually start to decline as well. The market is booming now, and I have made a little money in it, but after 2020 it will suffer.

4 ( +5 / -1 )

Tokyo real estate is only going up by 10-15% pa. The BoJ needs to drive that to 20-25% to have a real impact on the rest of the economy.

Tokyo demand overcomes Japanese demographics because (i) household numbers are increasing as household numbers decline because more people live alone and less seniors move in with their kids, and (ii) about 33% of Japan lives in the Kanto Plain conurbation but about 50% wants to.

3 ( +3 / -0 )

why would anybody put their money into a new property thatll probably lose half its value within 10~15yrs? I recently bought a new building that was constructed in 1994. Its a steel / concrete construction good for at least 50~60 yrs much longer if maintained, Cost over 80million yen with land new in 1993 got it for 25million, almost robbery. Last house i lived in was 17yrs old 150sq/m, 1600sq.ft, with renovations cost about 23million yen , sold it last year for 21.5million. lived in it for 8yrs so it cost me the equivalent of about 16,000yen a month rent! My brother inlaw bought an 2LDK apartment for 5million yen plus 700,000yen renovations , 23millionyen new. will live in it for about 4 yrs until his family grows too big. will easily get the money back he paid for it effectively living there rent free for 4yrs!!

3 ( +3 / -0 )

You can make good money on new and old. I sold a 25 yr old condo last year making 30% profit over 5 years (not including the rental profit every month). Someone I know bought a condo new in 2011 and just sold for 75% profit (again, not including rental). Given you can easily borrow 80-90% LTV at next to nothing rates, the returns are great!

1 ( +1 / -0 )

Bought a house in the UK 12 years ago and the price is now double!

Would I buy in Japan?

No, I'll sell the UK property to realise a massive profit and buy a new car and invest again!

In Japan, investing is a waste of time....plus there is land tax to pay every year!

1 ( +1 / -0 )

Bought a house in the UK 12 years ago and the price is now double! same can be said for Australia / Canada NZ. only risk you have are exchange rates and property bubbles. Investing in Japanese property doesnt have much returns but for my business it basically give me free rent for the time I occupy it. Land / property taxes arnt that much more expensive than other countries and I claim them all as a tax deduction anyways. My fathers home was bought 35yrs ago for $110,000 spent about another 100k on renovations and extensions over the years. sold it last year for $1.3 million. now thats a return on your investment

1 ( +1 / -0 )

No, I'll sell the UK property to realise a massive profit and buy a new car and invest again! In Japan, investing is a waste of time....plus there is land tax to pay every year!

How is a "land tax" all that different from council taxes in the UK?

I just wonder if BOJ policy is setting us up for another real estate bubble that will pop sometime after the 2010 Olympics. From what has been reported in Japanese language news, the Tokyo property boom is fueled in part by Chinese money and Airbnb rentals. This kind of investment is not going to do anything to restore or maintain Japanese competitiveness.

0 ( +1 / -1 )

The AirBNB sector is still tiny - much too small to affect the market in general. Chinese money is significant in the 200 million plus area - they are about half to a third of that top sector. Below that the market is driven by banks willingness to lend. Banks have been aggressive for 3-4 years in the sub-100 million sector. Now, finally, they are getting good in 100-200 million.

1 ( +1 / -0 )

@bullfighter The council tax is paid for by the resident of the house whereas the the Japanese tax is paid by the owner of the land or property. I have let my house for almost 12 years and not being resident has meant that in the short time that I had sole possession, I paid out only the equivalent of 20000 yen.

1 ( +1 / -0 )

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