A Little Piece of Tokyo

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There has never been a better time to climb aboard the Japanese property ladder. The combination of the economic downturn, over- zealous construction companies and reduced building costs has led to a shopping bonanza in the world of real estate, on a scale never thought possible before.

Mortgage rates in Japan are at an all-time low, prices are being slashed by developers and constructors and housing loans are becoming easier to obtain as financial institutions are becoming more attuned to the international buyer. More than ever before, home ownership is more tempting. Say goodbye to the rental treadmill and hello  to  your own little piece of Tokyo.

The once prohibitively high cost of property  within  the 23 wards of Tokyo  is now a thing of the  past as prices  come  tumbling  down. Traditionally, the foreign borrower faced  an  uphill struggle to  obtain  a home loan  both  from  domestic  and  overseas financial institutions, but all this  has  changed, and  we are now in  a new era of financing opening  a world of possibilities.

Foreign lending institutions who entered the market to offer yen loans for properties overseas  have  expanded their services  and now offer  home loans to  those of us wishing  to purchase  here in  Japan. Both    HSBC (www.hsbc.co.jp/1/2/hsbc-premier/mortgages) and The National Bank of Australia Asia (www.nabasia.com/0,,96121,00.html) now offer mortgages for a variety of home-owning options from land purchase and construction to ready-built properties. While domestic banks such as Shinsei (www.shnseibank.com) are offering comprehensive lending  programs to  foreigners. Requirements vary, residency is not necessary in all cases and loan  periods of up to  35 years  are  available. Good news all round.

In the past, the buying  process was  shrouded in mystery and only  the  few  brave pioneers  stumbled though, more by luck than  anything  else. Now, comprehensive websites  from the likes of Shinsei and the National Bank of Australia guide you through the process and  calculate  your  borrowing potential and  arrange pre approved loans and before  embarking on  your search. Welcome to the new era.

Typically, you will  have to provide a minimum of 10% of the purchasing price, often  more to show your level  of  commitment. The process of applying, seeking  approval  and  getting  the loan can be  as  fast as  six  weeks. Whether you choose to live in a deluxe high-rise apartment overlooking Tokyo Bay or your very own architect-designed house in one of the many leafy backwaters close to the city centre, the market is overflowing with opportunities.

For a quick and easy  purchase, one of the  multitude of  ready-built  tower blocks  is  certainly  a good  buy. Developers are falling over themselves to  move  empty units and  now you get more square meters for your  money than ever before; floor-to-ceiling  glass and  a  view  to  die  for. Why limit yourself to  an apartment? If you’re looking  for  something more substantial, houses are now available at  similar starting prices. Choose  from an off  the  shelf  design from  one of the major nationwide home building  companies such as Panahome (www.panahome.jp) or Komatsubara Komuten Ltd. (www.komatsubara.co.jp) and customize with  your  choice of  finishes.

Perhaps most attractive of all in the  current market conditions is the possibility to  build  your own family  residence  using the services of  small  boutique architectural  practices.  Fees are reasonable and the level of expertise second to none when working within the tight confines of strict building regulations, limited space and unusual plot layouts. Typically the land cost is between 65% and 75% of the total construction and the building accounts for around 25% to 35%. Land prices in central Tokyo have  for the most part  held their value but  there is  certainly  more room  for  negotiation  than  there  has been.

Creating your own unique family residence is certainly  more time-consuming  but  ultimately  more rewarding  for the family. It’s a longer process, involving  the  sourcing  of appropriate land and searching for a good  architect but the effort will pay off. You can work closely with your architect to get the  best out of  your  budget and  make your dream home  a reality.

Heather Williams, a long time resident of Tokyo, did  just that: “After 15 years of renting in Omotesando, watching money slip through our fingers, we decided to get on the property ladder here in Japan. After a few false starts and sleepless nights, we now live in a beautiful, ultra modern house designed around our family. It was the best move we ever made. Of course  we had  to  make  some  compromises – I never did get that roof top jacuzzi – but we managed to  create a great  environment for our children to grow up in, way  beyond our expectations. We couldn’t be happier and neither could our kids.”

Why not follow suit and get your little piece of Tokyo? There has never been a better time.

Classic Living  Special Promotion

When moving to Tokyo, finding the ideal home can be quite a struggle. The Minato ward, however, remains a favorite amongst expatriates and their families. Apartments and homes in the area are in close proximity to some major international schools, hospitals, and foreigner-friendly supermarkets; not to mention the wide-open parks, diverse restaurants, reasonable shopping centers, and movie theaters most likely accessible by foot. A favorite residential area for many relocating foreigners is the Azabu area, which retains its classic, peaceful ambience.

What caught Tokyo Families’ eye most were the Homat apartments: the Homat Ambassador, Homat Sharon, and Homat Virginia. How come, you ask?

The environment

The bountiful greenery both indoors and out please the aesthetics.

The view

Springtime brings a beautiful gift in the form of sakuras that bloom from the many cherry trees around the buildings.

The space for kids

The bright apartment rooms themselves are spacious enough to comfortably support playful children’s activities, which is vital for growth.

The space for parents

The bedrooms are indeed quite spacious and well-ventilated, allowing Dad to set up a private office or Mom to set up a small home gym.

The utilities

The kitchen counters, bathroom sinks, bathtubs, etc. all suit the average height of western foreigners; and the kitchen, with its enormous GE fridge, heavy-duty washer-dryer, and built-in oven are sure to please. The central cooling and heating system keeps the home cozy.

Tips for managing property in Japan

by Kevyn Johnson

In the real estate business in Tokyo, we are often asked by clients and acquaintances for help and advice.  As there are many different types of property owned for many different reasons, we will target this month’s advice to the non-professional property owner, leasing commercial or residential property to tenants in Japan.

1 Get thy house in order: That is, make sure that your property exists in its peak condition prior to leasing.  If you are building and need to employ inspections to ensure proper building techniques are followed, then do so.  Spending a few extra pennies now may save you millions later.

2 Know thyself (or at least thy property): Be organized on your side.  Go over every square inch of the property yourself.  Photograph any places that you think might become problem areas in future.  Your most expensive items will include: plumbing, ventilation, air conditioning, sewage, etc.  Additionally, maintain a complete and accurate set of plans for your property.  Nothing is worse than finding yourself at the mercy of a contractor who has more information about your property than you.

3 Keep thy friends close: Employ a reputable or trustworthy broker.  Your goal of course is to lease your property with a decent return, which requires that you plan clearly and carefully.  While solutions for each situation are different, you and your broker should discuss and agree on negotiating within the following parameters: Market rate for Rents, Free Rent, Deposit, Key Money, and Depreciation.  We recommend international team of brokers.  And remember, paying your broker a fair market rate is the best way to ensure his/her effectiveness and loyalty.

4 An ounce of prevention is worth $1,000 of cure: With respect to property management, though, you may find that an international team including both Japanese and foreign managers may represent your interests more fully.  Simultaneously, you will require a Japanese legal perspective and an intuitive understanding of non-Japanese tenant-landlord relationships.  Contact your property manager once a month. Show your interest in the property and the manager.  Be friendly but firm with your manager.  Be sure he/she is on your side working for you.  Make sure that your property manager reports to you regularly (monthly) regarding property conditions and maintenance.  Have your property manager cover regular expenses.  Yearly property tax you might handle yourself; however, if you relocate overseas, be sure to discuss your options in taking care of expenses.  Again, be sure to compensate your manager at a fair market rate.  Local markets are much less used to the tough negotiations of non-Japanese, who, in an effort to save a few pennies up front, may cost themselves more than a few pounds in the long run.

Kevyn Johnson is a director with Platinum Real Estate Consulting and a co-chair for the Architecture, Construction and Real Estate committee of the American Chamber of Commerce in Japan.  He can be reached through our editors, or directly at kevyn@platinum1000.com.

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