Niseko runs low on water, Allianz adds to residential portfolio, apartment rents in July, and Harajuku’s old station building to get the wrecking ball. Below is a quick weekly summary of some of the recent goings-on in the Japanese real estate market.
Niseko’s water woes
The Hokkaido ski resort area of Kutchan and Niseko is running low on water as rapid development draws on limited resources. Water usage around the Hirafu district has risen dramatically. In 2019, the maximum daily water supply was 3,335 cubic meters, up 14% from the previous year, and a 75% increase from 10 years ago. By 2028 it is expected to reach 6,167 cubic meters, but the town needs to spend 6.8 billion Yen (approx. US$64 million) in necessary infrastructure upgrades to meet this demand. With a city budget of just 10 billion Yen, this may not be possible. The town is thinking of charging a special levy to developers of large projects to help raise funds. In February, Niseko Town asked hotels around Niseko and Soga to conserve water as well levels dropped to 40%. A temporary water pipe had to be installed from a neighboring district. One inn operator had to ask guests to refrain from using the in-room showers, and instead go to a nearby onsen to bathe. Water reserves had recovered by late April, but the cause of the drop remains unknown.
Allianz acquires 18 apartment buildings
Allianz Real Estate has purchased a portfolio of 18 brand-new apartment buildings in Tokyo, comprising 380 units for approximately US$160 million. This comes after a recent purchase of 11 new apartment buildings with 275 units in Tokyo’s 23 wards in May for 13 billion Yen. In October 2019, the insurance giant spent 130 billion Yen acquiring 80 rental apartment buildings in Tokyo and Osaka.
Apartment rents in July
According to Tokyo Kantei, the average advertised monthly rent of a condominium in Tokyo’s 23 wards was 3,849 Yen/sqm in July, down 0.3% from the previous month but up 4.6% from last year. Yokohama City saw rents fall 1.2% from the previous month, while Saitama City saw a 5.4% month-on-month drop. Rents in Chiba, Kobe and Nagoya City are all down from last year.
Demolition of old Harajuku Station building
Demolition of the 96-year old former Harajuku Station building is scheduled to start on August 24, ahead of schedule. Built in 1924, this is the oldest surviving wooden station building in Tokyo. It may be replaced with a new building designed with a similar exterior, with some of the historic fittings to make a re-appearance.
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