Real Estate News

June 30 2015

Tokyo rent market and management practice

We would like to continue to send you "Japan Real Estate Investment News" our newsletter featuring advice regarding Tokyo's real estate news and trends on a regular basis. We recently welcomed Ikuo Okamoto as a project member, and he is known for having through knowledge of the Japanese real estate market.

【Writer's Profile】
IKUO OKAMOTO
岡本 郁雄
Real estate consultant, management consultant, and financial planner, Ikuo Okamoto is familiar with  Japanese real estate marketing having seen more than 3,000 condominiums.  He’s provided consulting services and marketed real estate in Tokyo for more than 20 years.
He has also written articles about trends in the Japanese market with other experts on portal websites such as "All About."  He has been a lecturer at condominium purchase seminars, and has been a familiar voice on radio and television.  He is a graduate of Kobe University’s School of Engineering.


Tokyo's population and how if affects you


On the rise since 1997 and approximately 13,400,000 as of the start of 2015, Tokyo's population has formed a stable rent market. As home to abundant universities (including the world-famous Tokyo University) and the headquarters of Japan's strongest and most powerful corporations, Tokyo continuously attracts a vibrant and youthful workforce, the majority of whom are in their 20s. It is expected that single households will grow for the next 20 years.

Tokyo rent market and
management practice

As a mature society, the appreciation for a “more comfortable lifestyle” is strong, many people think easy access and living is important. New single-occupancy condominium units support such needs with top of the line security (auto lock doors) and convenience (such as delivery boxes for packages that arrive when one is not home). At the same time, Tokyo's elderly population continues to grow. At 86.61 years, Japanese women enjoy the world's longest life expectancy. Japanese men follow close behind at 80.21(4th in the world). And Japan's elderly have access to a stable income thanks to a well-regulated pension system. The need for safe and comfortable single household condominiums is expected to expand.

Tokyo rent market and
management practice

With its universities, hospitals and other key infrastructures, central Tokyo serves all generations, each with their own rental needs. The need for single household condominiums and rental units is high and stable.

Due to continuous market growth, Tokyo owners are able to benefit from customs not so prevalent elsewhere. Of these, perhaps the most famous is “Reikin” (a "gratitude" fee), which the tenant must pay to the owner prior to contract signing. This fee, equivalent to one month's rent, is not returned at the end of the contract and therefore becomes the owner’s income.

Tenants must also pay “Shikikin,” a rental deposit, often equivalent to 1-2 month's rent. Minus any cleaning fees, this amount is returned to tenants when they vacate a unit. A standard rent contract, 2 years in length, may be renewed 1 month prior to expiration. To renew, tenants are often required to pay a "renewal fee," usually equal to an additional month of rent. (not all contracts have renewal fee) This renewal fee is also non-refundable and becomes owner income. We should note that flexible term leases have been gaining in popularity in recent years.

Building management is most commonly handled by a management company. In addition to general management responsibilities, a management company advertises available units in order to minimize vacancies. And when problems arise, e.g. faulty equipment due to ageing, the management company will swiftly address the issue, making management considerably easier for owners.

Handling ownership tax deductions can be complicated, especially for overseas owners. Fortunately, a growing number of Japanese real estate agents provide assistance with this.

In sum, as a foreign investor, you will benefit not just from a positive purchasing environment, but also from Japanese-level operations and management practices. Buying Japanese property is a worthy investment.

[Related Links] [ July 28 2015 ] 2020 - Tokyo is growing - [ June 1 2015 ] Why Japanese properties are safe investments

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Each of us investment team members are expert professionals at property investment advisory, with an acquired know-how of Japanese property investment. We are more than happy to support you by helping you develop your ideas about the properties in the pursuit of your goals. Also, our multinational team welcomes any inquires in English and can provide additional support for speakers of Mandarin and Bahasa Melayu.