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For those selling genuine properties in Japan, it may be time to do so, as the country is preparing for a slow drop in land prices.
At least that’s what the most recent figures show. Land costs in urban spaces have fallen due to the blockade of transactions as a result of the new coronavirus, a trend that is likely to be repeated across the country and can lead to a fall in average land costs first published in six years next year.
Land value in 38 of the hundred evolving residential and advertising districts in major metropolitan areas of Tokyo, Osaka, Nagoya and elsewhere fell between April and June this year, while only one district experienced an increase, according to quarterly Look Land. published through the Ministry of Land, Infrastructure, Transport and Tourism at the end of last month. Knowledge marked the first time since 2012 that the number of districts experiencing value decreases above that of emerging value zones.
Experts say the most recent decline may simply be a major catalyst for change, perhaps matching the scale noted in 2008 by the global monetary crisis caused by the collapse of Lehman Brothers.
Here’s a look at the latest knowledge and those that are likely to have an effect on space costs in the coming months.
What does this report have?
The quarterly survey examines land value trends for a hundred intensively evolving residential and advertising neighborhoods near major railway stations in the metropolitan areas of Tokyo, Osaka and Nagoya and other primary cities. Cities.
The Look report had shown basically normal increases in urban spaces until earlier this year, thanks to sustained progression and increased demand for incoming trips.
Then came the coronavirus epidemic here.
Reflecting an accumulation in entry tax since last October and a decrease in hotels and branches due to a sharp drop in incoming travelers, the report detected the first drop in urban land costs since 2014 in the first quarter of this year. In most of the hundred monitored urban spaces, the value of the land still increased.
However, this quarter, the number of urban spaces that saw their plots increased from 73 in the last quarter to just one: the ad district in front of Sendai Station in Miyagi Prefecture, where it is taking place. a big remodel task.
Of the hundred advertising and residential neighborhoods studied, 38 spaces experienced a decrease in value, to 4 in the report 3 months before and 0 six months earlier.
The remaining 61 districts unchanged, approximately 3 times from the previous quarter. Eight districts, which added prominent advertising areas, such as Kabukicho in Tokyo and Shinsaibashi and Namba in Osaka, depreciated by 3-6%, recording the first decreases of this kind since the fourth quarter of 2011.
“Due to the COVID-19 pandemic, prospective buyers of genuine properties have maintained a waiting attitude and blocked transactions in many districts,” the Ministry of Land said in a statement. Retail outlets have been particularly affected by the crisis of the new coronavirus and have experienced a decline in demand due to declining profitability. “
According to genuine real estate analyst Kazuyuki Yamashita, “the latest knowledge is a radical replacement and obviously marks a harbinger of the fall of genuine real estate in Japan. “
“The Look report is an advance indicator and the decline detected in these giant urban spaces will have a domino effect on the suburbs of giant villages and then on regional villages,” he added.
How high can we expect?
Japan has noticed a sharp drop in land value over more than 3 decades, with primary effects felt through the bursting economic bubble of the 1990s, the 2008 monetary crisis, and the 2011 Greater East Japan earthquake.
Some analysts believe that the effect of the new coronavirus on space costs can be as severe as that of the 2008 monetary crisis or the consequences of the economic bubble, but the chances of a significant short-term decline are slim.
Average condominium costs in Tokyo’s metropolitan domain remained high in July with more than 60 million yen, according to a survey conducted last month by the Institute of Real Estate Economics, along with the maximum costs observed when the bubble burst three decades ago.
“There are a number of reasons why genuine real estate costs may not become cheaper, but essentially condo developers would suffer losses if they reduced the costs of the condominiums they built at peak costs,” Array Yamashita said.
So do prospective buyers buy a home now or wait for costs to drop?
After the 2008 currency crisis, many Japanese banks were forced to restrict their loans, leading many mid-sized and suffering developers to sell hotels to liquidation, leading to a sharp drop in condo prices.
But with many small and medium-sized developers now quitting, the condo source has remained low and its costs have remained solid at the highest levels.
“Today, the seven major condominium developers, adding Mitsui, Mitsubishi, Sumitomo, Daikyo, Nomura and Tokyu, and other solid corporations, account for about 70-80% of the market, and are unlikely to get rid of condos without problems, even if sales stall,” Yamashita said.
But there are symptoms of a radical on the horizon.
Property developers have lost to hotels by gaining land in high-end locations, such as places within a five-minute walk of an exercise station, due to top profit margin forecasts for hotels, Yamashita said.
But now that hotels have been affected by the virus, asset developers are starting to get high-quality land at less expensive prices, he said.
“The less expensive condos that developed on those high-quality plots will enter the market in a year or two,” he said. “Japanese basics aren’t that weak despite the coronavirus, so don’t expect a dramatic drop of 20, 30. “or even 50% in value. If you have an asset you need to buy, I’d say you’d better buy it now without hesitation. “
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