In the previous feature on Minato Ward, we went back in history and discussed the reasons why the property values of Minato Ward have continued to be maintained. However, the other 23 wards also have various characteristics as well. The same can be said for real estate building regulations, and we're going to introduce some ordinances that may be a useful reference point for investors in this episode.
Do you know that Tokyo has recently enacted studio apartment regulations that will be phased in for new condominiums to be built? As you've probably noticed, Tokyo is a city where buildings and condominiums are being built one after another, and a large percentage of people gather together and live in very small rooms. However, because the majority of the population in Tokyo is single-person households, which is the target of studio apartments, there are concerns about the balance between supply and demand. There are some theories as to why the regulations have been made more stringent despite these circumstances.
■Because the majority of single people do not intend to live somewhere permanently, they do not form permanent communities
■Even though residence tax is linked to one’s residence certificate, there is a risk of people only benefiting from the administrative services of the area without paying taxes because residence certificates are not necessarily transferred when people do not intend to reside somewhere permanently
The above two main points can be both be confirmed from several references. Certainly, it is easy to imagine the background that has caused people to generally say that single people have a high likelihood of not becoming permanent residents, such as university students who only commute to the same place for a certain period of time or young company employees who may be transferred every few years. In fact, there is data like that below that shows that the number of people who buy condominiums (assuming that there are generally more married couples and families than studio apartments for rent) is increasing year by year, and from their point of view, an explosive increase in the number of people who will only live somewhere temporarily would bring few benefits.
*Reference: Prepared by International Interface based on the “Results of the Comprehensive Survey on Condominiums for FY2018” from Ministry of Land, Infrastructure, Transport and Tourism
Let’s look at the situation resulting from this. For example, while most wards set the minimum floor space at 25 square meters, there is a difference in the minimum floor space between Shibuya Ward and Minato Ward and a studio apartment tax has been introduced in Toshima Ward.
Situations like these are exactly what investors should be looking for. Studio apartments, which tend to be favored by investors because of their relatively low gross price and ease of producing yields, are expected to fall short of meeting the increasing market demand. For this reason, many investors are buying used studio apartments in areas where studio apartments are less likely to be developed.
We've picked up some information that might be hard to find if you're not in Japan in this episode, and we would be very pleased if it is useful. You can always consult with us.
*Reference: Toshima Ward Tax System Survey Review Meeting July 24, 2030
“Population Trends in Japan” from Ministry of Internal Affairs and Communications
“Results of the Comprehensive Survey on Condominiums for FY2018” from Ministry of Land, Infrastructure, Transport and Tourism (released on April 26, 2019)
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