Japan - The One and the Many
April 20, 2010 - Japan
Japan. Few places evoke such a rich and varied collection of images in the mind's eye: blue hills shrouded in rolling mist; bullet trains moving at the speed of light; tranquil temples, bonsai gardens; futuristic cities flooded with neon light; colourful kimono-clad Geishas; businessmen in monochrome suits...remarkably, most of these images fulfill an accurately descriptive function.
The particular fusion of ultra-modern industrialised wealth with time-honoured cultural codes is part of what distinguishes this archipelago of islands in the Pacific - as do the gracious hospitality and attention to detail that render anything from dining, shopping, sightseeing and relaxing an absolute indulgence.
Despite the notorious boom and bust of the 1990s and the recent setback the export-driven economy suffered as a result of the global financial crisis, Japan real estate remains one of the priciest in the world. Tokyo came fourth in the Global Property Guide's 2009 survey of the world's most expensive markets, behind Monaco, London and Moscow. The average price for an apartment in Tokyo city centre is a staggering US$17,998 per sq m.
Premium prices do not always correspond with premium quality, though, and potential buyers will encounter an uneven assortment of available properties. Japan's disposable approach to building and overvaluing of new properties has distorted a market already fairly obscure to foreign buyers. However, those willing to look closer will discover exquisite gems in the market, from trendy condos in Tokyo and modernised Sukya-style homes in Kyoto, to private villas in tranquil Azouyaki and plush ski chalets in powdery Niseko.
Japan's ability to sustain various eclectic and even contradictory components extends well into the country's property scene - from flimsy concrete condos to exquisitely refurbished courtyards, Japan presents a radical kaleidoscope of options.
The ‘authentic' Japanese home as it exists in popular imagination is a delicate fortress of tranquility; an airy architectural wonder comprised of tearooms and tatami mats; a rural retreat framed by manicured gardens and lotus ponds. While properties like this do exist, the reality of urban life in Japan's densely populated cities complicates this pristine ideal - as does the flimsy construction of many post-war buildings.
Despite being home to some of the world's oldest standing structures and a population of consumers renowned for top quality choices, much of Japan's post-war building falls below international standards.
A recent study by The Economist Group reports that on average Japanese houses last for only 30 years. "The Japanese have the ability to build farmhouses that last centuries" says Graham Davis, Managing Director of the Economist
Group in Japan, "but until recently, residences in urban centres were second-rate, and had to be continually rebuilt."
The short life cycle of buildings has perpetuated a supplier-led model in Japan and disproportionate demand for new houses.
According to the same study by The Economist Group, sales of new houses or apartments currently constitute 88 per cent of residential property sales in Japan (compared with 22 per cent in the US and just 12 per cent in the UK).
"Buildings have little value - the land does" Davis says, "which means there is basically no market for second-hand residences." New houses are even known to depreciate in value - up to 15 per cent - the moment they are purchased, according to industry estimates.
With growth in land prices dwindling, however, a new kind of thinking is emerging in Japan - a consciousness based around building and buying homes of lasting value and fixing up existing homes. "Land price has come down, and as a result price is no longer a limiting factor," says Davis. "High-end developers have realised there's a market".
The government also recently spearheaded a new program for "the 200 year home", with broad consensus for legislation that would offer incentives in the law for houses designed to last.
When Japan does invest in quality building the results are remarkable. A highly developed tradition of craftsmanship and renowned design aesthetic that seamlessly marries form and function mean exquisite art pieces are to be found at the top end of the market.
Japan's second largest real estate developer, Mitsubishi, who recently became an affiliate of Christie's Great Estates, lists an impressive collection of villas for sale. Many luxury villas are located in popular holiday locations such as Atami, Azouyaki and Kyoto. The Jyun-Shin-An residence in Kyoto, for example, has been meticulously re-constructed according to traditional ‘Sukiya' style architecture (see page 112). Located on a historic lane just minutes from two Kyoto temples, the property is on the market for US$6.6 million.
Villa Emusu-An, located in Atami, a popular hot spring resort town near Tokyo is perched on a hill overlooking the coastline with extensive cedar decking and a beautiful Japanese garden cascading down the hillside. On the market for US$11 million, the estate includes two properties built according to traditional layout but with modern touches like floor to ceiling glass, private hot springs and an elevator.
When it comes to urban living, the country's chief developers are setting the trends for apartments and condos in Tokyo.
Projects such as Mori's refined Roppongi Hills project (see page 116), Mitsui's trendy Tokyo Midtown, and Mitsubishi's newly launched Azabudai Parkhouse (see opposite page) combine the latest in design, security and amenities for centrally located residences.
Location, in particular proximity to a subway station, is an absolute requisite for luxury residences in Tokyo. Prices will vary in direct accordance with a property's distance from the centre of Tokyo and from the nearest station, with features like tranquility, greenery or views barely factoring in. "Luxury is determined by location and size in prestigious areas - and being close to a train station" says Graham Davis. "Quality homes in these key locations are available in limited supply, so it's a stronger market."
Roppongi Hills and Tokyo Midtown are available only for lease - catering to a large base of expatriate as well as local families - while Mitsubishi's upcoming project is available for sale with prices starting at US$8 million. Built in cooperation with the Tokyo American club, Azabudai Parkhouse is located on a hilltop perch in what was once a prominent Daimyo mansion district.
The project includes large units of up to 265 sq m with spacious balconies and master retreats with walk-in closets and giant soaking tubs.
The market of foreign buyers in Tokyo - and Japan generally - is growing.
Last March, London-based HSBC Group announced it would tie up with two Japanese real estate companies to extend mortgage loans to foreign residents so they can buy property in Japan more easily. The two partners are Mitsui Real Estate Sales Co., one of the leading Japanese real estate firms, and Ken Corp., which specialises in handling real estate for foreigners.
Ayako Iizuka of Mitsubishi Real Estate Services says the international inquiries she receives target both condominiums in Tokyo and luxury homes around the country. "I receive some inquires looking for condos in central Tokyo, mostly from people who travel there a lot on business."
"We are seeing more and more foreigners with Japanese spouses coming back to Japan and looking for luxury housing" adds Mr. Takenaga Ito, General Manager of the Cross Border Transaction Advisory Department for Mitsubishi Real Estate Services. Until recently, not many portals were available for foreign buyers to browse and research their options.
More international inquiries have starting to trickle in since Mitsubishi became a Christie's affiliate in October 2008. An American buyer from California recently purchased a stunning historic courtyard in Kyoto that was listed for US$84,210,526.
Indeed, gems are available all the way to the top of the market, but the idiosyncrasies particular to the market require due diligence on the part of the property seeker. This applies to both second homes and investment properties. "There are good investment opportunities if you're clever about it" says Graham Davis of The Economist Group. "You can make money across the board, but the market is too big and too complex - you can't bring foreign ideas into it."
Source: LP Luxury properties magazine
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