Do you live in Japan ? and

Do you have Permanent Residency or are you married to a Japanese Citizen ?

If you satisfy the above conditions then it is likely that Japanese banks will offer you the same financing as Japanese nationals.  Many banks offer teaser rates below 1% and there are even fixed rate mortgages of around 1% now !

If you don’t check the boxes above then don’t despair. Financing is available. Check the table below for the details of the financing currently available.

The offer price is reasonable at JPY 175 million and significantly below market value for land in this area (see chart below, the average land for this area is 1.13MJPY/m2).   Thrown in for free is the house with a huge garden, a rare gem to find in this prime area of Tokyo.

The location is very convenient, only 6 minutes walk to Platinum Street and  5 minutes walk to Shirokanedai.

• Price of the House: JPY 175,000,000
• Size of the house: 167.67m2
• Land size: 254.64m2
• Completion: 1994
• Station: Shirokanedai (5 minutes)

The current house significantly under-utilizes the zoning determined build-able area of this land.

Floorplan

http://www.housingjapan.com/real-estate-tokyo/sales-details/?bid=12340&pid=13288&webview=1

Tokyo is the world’s most populous metropolitan area with over 35 million people. It has been the largest city in the world for decades and will retain this status until at least 2025 according to population data from the United Nations.

Tokyo is also the world’s largest metropolitan economy with a GDP of USD1.479 trillion at purchasing power parity in 2008, ahead of New York City and larger than many major countries.

Tokyo also boasts head quarters of 51 of the Fortune Global 500 companies, the highest concentration of any city in the world.

Sumida-ku area is a traditional shopping, entertainment and residential district of Tokyo. Currently, the area is being reviewed for use as the distribution system in time of disaster using the canal network. It is also home to Tokyo’s latest landmark building, Tokyo Sky Tree.

Construction of Tokyo Sky Tree will finish in December 2012.  At a final height of 634 meters it will become the highest radio tower in the world. Sumida ward office projects that visitors to Tokyo Sky Tree area will reach 5.5million per year. The economic effect is expected to be as much as USD 1billion per year. The grand opening is slated for spring 2012.

In 2006, the master plan issued by Tokyo mentions the importance of the canals and river system in Sumida-ku from the stand-point of tourism and as the distribution system in times of disaster. However much of the canal system had been buried over time as the expansion of land transportation made it obsolete.  It has been determined that this canal network and transportation will be essential in the event of a major earthquake.

Many of the canals have been redeveloped with wharves, water parks, commercial and residential projects.  This redevelopments is in a sense a re-birth of Tokyo. In the Edo-period when the canal system was used extensively Tokyo known as the ‘City of Water’.

Reference: 東京計画地図　（編：東京都市研究会）

In October there were 2,670 secondary apartments transactions, a 4.9% increase on October 2010 and 1008 secondary house transactions, a 6.1% increase.

New house transactions were roughly unchanged from last year at 359 houses sold. There were 425 plots of land sold (100-200 sqm in size) which is a 3.9% increase on the same month last year.

Price: Price on Application
Address: MinamiAoyama 4-5-18, Minato-ku, Tokyo
Land: Freehold
Land Size: 99.19SQM (30tsubo)
Frontage: 4.00M public road
Bldg Structure: RC 3 story plus basement
Year Built: 2007 Feb
Floor Plan: 4LDK+2S+Roof Terrace
Floor Size: 194.77SQM (58.91tsubo)
Station: Ginza-line, Gaienmae station 9min

Architect: Riccardo Tossani

www.tossani.com
Construction company: Takenaka Corporation

www.takenaka.co.jp

Teak Flooring, Floor heating system installed in all rooms.

Special made open-kitchen. Bose speakers throughout the house.

Roof Top Balcony with excellent 360° view.
Built in kitchen, water-proof speaker.

Location

Bubble period (1982 to 1990)

Real-estate prices across Japan rose by as much as six to seven times during the 1980s asset bubble. Confidence was strong as the Japanese economic model, often referred to as “Japan Inc.” seemed to be invincible. Japanese corporations awash with cash made speculative purchases of real-estate and corporate assets all over the world. At home in Japan, low interest rates and loose monetary policy fueled a strong economy and high stock prices.  Following the Plaza Accord in 1985, the yen appreciated from around 240 yen to the USD to about 120 yen in less than a year. In response, the Bank of Japan lowered interest rates from 5.5% down to 2.5% in 1987.  This dramatic easing of monetary policy at a time of economic strength sparked an explosion of real-estate transactions and high stock prices.  Adding fuel to the fire, the government under Prime Minister Nakasone, reduced corporate tax rates from 42% to 30% and slashed top marginal income tax rates from 70% to 40%. It was said at the time that the value of the Imperial Palace in Tokyo exceeded the value of all the real-estate in California. Land in Ginza 4 Chome was reported to have traded at JPY 90,000,000 ($750,000 at the time) per square meter.

Bubble burst

As asset prices reached extreme levels the government tried to slow the growing bubble and introduced policies which led to the bursting of the bubble.

In 1990 the Ministry of Finance put restrictions on the total loan volume of real-estate lending (Soryo-kisei) which caused an immediate and dramatic drop in the availability of credit.  Other government restrictions resulted in the need for buyers to seek approval from the local ward office for transactions of land size over 100 square meters. These restrictions brought the price rises to a grinding halt. The Bank of Japan also did their part tightening interest rates to peak of 6% in 1990.

In December 1989 the Nikkei average reached its all-time high of JPY 38,915. In the following nine months it crashed to below 20,000. Financial institutions were swamped with bad loans as asset prices tumbled.  Land prices were slower to react but eventually started dropping and continued to slide downwards for the next ten years.  By 1995 the Bank of Japan had dramatically reversed its monetary policy, slashing rates to a previously unthinkable 0.50% in a desperate effort to stem the slide of the economy and asset prices.

Mini Bubble (2002 to 2008)

The new millennium began but Japanese economy and asset prices failed to recover.  In signs of desperation the Bank of Japan cut rates further to 0.1% and began extreme monetary policy in the form of QE (Quantative Easing). Around this time the J-Reit market began and the newly listed investment trusts caused a flurry of activity in the property market.  In the early years of the new decade there were trillions of yen worth of securitized real-estate transactions done which lead to a mini “fund boom” in real-estate prices. These investment trusts focused their attention on assets in the major cities, prices in some parts of central Tokyo rose as much 70 to 100% compared to lows seen in 2002 but the overall market continued to languish.

Mini Bubble burst

By 2006 it seemed once again that a bubble was beginning so the MOF moved again to restrict investment real-estate loans. The global financial markets then took center stage as the US sub-prime loan scandal erupted in 2007 culminating in the “Lehman shock” of 2008.  Foreign investors disappeared from the Japanese real-estate market as the securitized non-recourse lending market ceased to exist.

Real-estate prices in Tokyo once again slumped but did not return to the lows of 2002. By 2010 prices managed to stabilize at levels around 50% above the lows.

Earthquake

On March 11, 2011 the Tohoku region of Japan was devastated by an enormous earthquake, tsunami and the melt-down of the Fukushima nuclear power station. Tokyo also experienced a large tremor but buildings and infrastructure were largely unaffected. Initially the real-estate market froze as buyers were very nervous to commit in the wake of the disaster.  As the situation stabilized and the recovery efforts in Tohoku commenced, real-estate transactions began again and the price level in Tokyo is basically unchanged from before the earthquake.

The weak commercial real estate market presents opportunities for significant savings. Below are 3 recommendations for companies to take advantage of the current market conditions.

1. Use a tenant representative to leverage market conditions to your advantage. The information and market knowledge a good tenant rep. provides is key to negotiating a favorable deal. There is some question however as to whether it makes the most sense for a company to ”go direct” when renewing a lease and not have a tenant rep. broker the deal. While this option could be touted as saving the tenant money because they save the agent fee, a knowledgeable tenant rep with good negotiating skills can offer value by achieving a better deal than the tenant is able to negotiate directly, as well as being able to negotiate more aggressively than an ongoing tenant, reducing any fears of relationship damage with the landlord. When a tenant rep familiar with market standard clauses isn’t used, landlords can potentially incorporate clauses into a renewed lease (such as after hours air conditioning charges) that earns far more for the landlord than the tenant believes he is “saving” by not using one. The best thing a tenant can do to cover all bases is to choose a knowledgeable tenant rep to represent their interests.

2. If you have less than 1 year remaining on your lease, consider renegotiating. Companies in this situation have landlords looking closely at the expiration of their lease term. While it’s true that in the current market landlords are often willing to accept a lower rental rate in order to secure a lease renewal, tenants must be careful to put themselves in a position of strength when looking for these results. Great deals don’t happen automatically. Thorough market data, the willingness to leave your current location and a tenant representative who will leverage your position with the landlord against other possible locations for your business in the market all come together to get you the best deal. For example, I was recently able to secure an extra floor – double the space – in their current building for a client for only approximately 25% of the rent of the original floor. The client had been paying 700,000 per month for the original floor, and I was able to achieve a rent level of 950,000 per month for both floors. This satisfying result was achieved via a position of strength in the negotiation process as it was made very clear to their current landlord that the client was willing and ready to accept a nearby alternative property at a similar rent level that I had identified. The landlord wisely conceded and the deal was done.

3. Lock in a long term lease now as rental rates are significantly down from their peak. According to Sanko estate, rental levels in A class buildings are in some cases down as much as 50% from their highest peak and down at least 20% from even a couple of years ago when companies currently renewing leases last had the opportunity to renegotiate. An option to lock in a low rental level once achieved would be to request a 3 or even 5 year fixed term lease. Some major developers are already requesting fixed term leases in exchange for significantly lower rental levels, and in this case a request to extend the term from the standard 3 years to 5 years would be prudent.

While the landscape of commercial real estate continues to change, these are examples of proactive steps that a company is able to take to protect their interests and drive savings and efficiencies within their leased space.

While the consequences of earthquake of March 11^th have caused some uncertainty and hesitation in the business community, we are finding that the real estate market in Tokyo has shown no sign of slowing down; proof that the city and its residents are ready to get back to business after the disruption of the earthquake.
Both our residential and commercial leasing divisions are seeing an increase in the amount of enquiries from clients ready to take advantage of exceptional deals being offered by landlords, regarding both rental rates and conditions. For example, a client that is considering relocating their office, could potentially achieve either a significant rental saving on a property in a similar area as their current building, or perhaps upgrade to a newer, larger space in a more prestigious part of the city for an equivalent rental rate as their current space.
Although there was an exodus of foreign residents after the earthquake due to safety concerns, Tokyo is completely safe and very much business as usual. Housing Japan is ready to get back to work and very much looking forward to continuing to assist our clients with their real estate needs.

Land prices have been in continuous decline for the past 19 years, and residential values are 35% of their peak during the bubble, but there are indicators that the market is bottoming out:

-       Tokyo apartment prices have risen 6.8% since 2009
-       Land transactions are increasing
-       Commercial real estate investment rose 35% from 2009
-       Investment by real estate investment trusts doubled from 2009

Bloomberg September 22, 2010.

http://www.bloomberg.com/news/2010-09-21/japan-land-price-declines-slow-for-first-time-since-2007-as-buyers-return.html

The company president, Takashi Uematsu, believes that land prices in Tokyo are bottoming out and “probably won’t decline further”. His reasoning for investing in the residential market is that “it is one of the most stable and easy to make investments in as long as you choose the right locations”.

The fund will start investing by the end of this year and will have a target return of 10 percent. 

Source: Bloomberg, September 16^th, 2010