Teleworking fails to stick, Fukuoka’s faulty tower, a drop in apartment asking prices, and a fire-sale by a major landlord. Below is a quick weekly summary of some of the recent goings-on in the Japanese real estate market.
Tokyo apartment asking prices see first drop in 8 months
According to Tokyo Kantei the average asking price of a 70 sqm apartment in Tokyo’s central six wards dropped 0.9% in June to 82,940,000 Yen. This is the first month-on-month decline in 8 months, although pricing is 6.5% higher than 12 months ago.
Faulty construction found at Fukuoka apartment block
JR Kyushu, Fukuoka Shoji, and Wakachiku Construction Co. have apologized to apartment owners after it was discovered that the foundations of a 7-story, 60-unit condo in Fukuoka City were not sunk deep enough. Shortly after the condo was built in 1995, cracks started to appear in the exterior but owners were assured that it was not structural. In 2016, a survey found one floor was leaning by 10cm, but residents were told it was to ensure proper drainage. When entrance doors became difficult to open and close they were informed it was due to a recent earthquake. It was only after a ground survey carried out a few months ago that the foundation issue was discovered. The three companies responsible for the development will bear the cost of either foundation repair or reconstruction of the building. The work is expected to take two years.
Fewer people working from home
On July 26, Yasutoshi Nishimura, Minister in charge of Economic Revitalization, and Novel Coronavirus Disease Control, urged companies to aim to get teleworking back up to 70%. During the State of Emergency in April and May, commuter numbers had dropped to around 20 ~ 30% of normal levels but had recently returned to around 70% as people return to the office. A recent nationwide survey of 14,602 companies carried out by Tokyo Shoko Research in June found that only 31% were implementing teleworking, while 27% had tried it but gave up. Docomo Insight Marketing reported crowd numbers around Tokyo Station were 33.9% below normal levels during the 8 am rush hour on July 27. In Osaka Station, commuter numbers were only down 10%, while Nagoya Station was down 16%.
LeoPalace offloads 18 assets
As part of an urgent fundraising effort, rental apartment landlord LeoPalace21 announced on July 30 that they will be selling 18 company-owned buildings below book value. The properties include Hotel LeoPalace Nagoya and 17 rental apartment buildings. Details on the buyer have not been made public, while the settlement is expected to take place in late September. The company reported an 80.2 billion Yen loss this past financial year, while the equity ratio dropped to 0.7%. A construction defect scandal in 2018 has the landlord on the hook for expensive repairs.
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