Hi.
5 years ago I bought a rental appartment (over 30 years old) in central Tokyo (Shinjuku is are name). Two years later our building has been included in a development project sponsored by the Tokyo Metropolitan Guvernment, Shinjuku local Guvernment, and the developer, which is the 3rd biggest construction company in Japan. It is a big project which when completed will comprise two multi storey bldgs ( 40 and 21), several two storey bldgs, and a park. There will be appartments, office space, retail space, restaurant spaces, and a supermarket.
Construction is scheduled to start in 2014 and to be completed in 2017.
As a result the owners will obtain similar properties of similar sizes in the new buildings at no charge.ALSO, (and here is where I need advise and suggestions, please), indiferently of what we currently own, as owners, we have the right to buy extra space, or additional property, namely anything from the above mentioned, except for the supermarket, at the rate of construction expences, and not the market price which is higher.
I believe there must be opportunities in this case, but my ideas are quite vague, so I was hoping to hear other peoples opinions as well.
Please, send me any ideas, suggestions…Thank you.
I was in Shinjuku a few weeks ago – extremely busy place. But I would be worried about investing in Japan because of the lack of capital growth (or decreasing values) and the high taxes.
What would the rental yields be?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Very interesting thread. What is is in for the construction company? I assume that all the units in the current towers are owned by landlords.
Depending on the type of property the rental yelds in central Tokyo go anywhere from 4% to 7% on new property.
As for the construction company`s interest, I believe there must be some limits established regarding the maximum area and maximum number of units one can have, which we were not told of yet. The property still remains to be decided and distributed between the parties involved. How it will be done, and based on what criteria we have not been told yet.
If I understand you correctly, you are being offered to buy additional apartments/commercial units at the actual cost of construction, rather than current market value.
If that is the case – and you can "verify" the construction cost as being the actual cost and not an inflated cost, it sounds like a no-brainer to me.While previous posters are correct that growth in Tokyo is non-existent and rental yields passable at best, you need to keep in mind that most builders (at least here in the U.S.) have a construction margin of 25-30% at least, which means you should be able to "flip" your unit at completion (or maybe even off-plan) as you are buying at a significant discount, or if you choose to rent it out, your yields will very comfortably be in the double digits.
I would probably also look a bit more at the contract and the payment schedule – are you required to pay most/all the money upfront – in that case, the builder is most likely using your money to fund part of the construction. Is there a restriction on the use and/or resale of the unit?
It's something I would look more into – although I don't claim to be an expert on Japanese real estate
I'm also not an expert on Japanese real estate, but from my research, some of the property prices seem very steep (even in comparison to Aussie property prices!
(and the low yields and lack of growth is a concern)
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