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In the last issue, we introduced four basic benefits of investing in a Japanese apartment. In this issue, we will introduce what the risks you should be aware of, the impact of the "mask period", and how to succeed in investing in Japanese apartments in the future. Please read to the end, as it is an important content for those who are slightly interested in investing in Japanese apartments.
Risks of investing in Japanese condominiums and countermeasures
1
Vacancy risk
Vacancy risk is the biggest risk common to all real estate investments, not only in Japanese condominiums, but also in condominium and office management. Rental income is only generated when there are tenants in the owner's property, so if the property remains vacant, the rental income will be zero.
How to reduce this risk is an important issue for owners, and the age and location of the building is key.
As I mentioned earlier, newly built and relatively new apartments tend to be popular due to the national character of the Japanese, and this popularity can be used as a countermeasure to vacancy. In addition, since residents of apartments tend to value convenience, such as proximity to the station or ease of access to the city center, properties with good location conditions remain popular even after they have become obsolete.
From the above two perspectives, it is important to understand the advantages of newly built apartments and choose properties with good location conditions when there are no redevelopment plans.
2
Aging of buildings over time
Even if the newly built apartments shine brightly, they cannot resist the passage of time. It is inevitable that property will become old and deteriorate due to force majeure. Just like humans can't avoid aging by aging.
However, in humans, there is a drug called anti-aging that can slow down the rate of aging through efforts. Similarly, with proper maintenance of apartment properties, it is entirely possible to minimize the aging of the house over time. The condition of the property can change depending on whether it is maintained or not, so from an asset preservation point of view, you should choose a relatively good management company.
3
Losses caused by natural disasters
The risk of disasters such as earthquakes such as the Great East Japan Earthquake and weather disasters such as typhoons and heavy rains is becoming more and more evident in the Japanese archipelago. Most apartments are made of reinforced concrete, and many of them are solid buildings that are said to be relatively disaster-resistant. However, it is necessary to understand the risk of natural disasters, such as using disaster maps and choosing locations with lower risk.
It's also a good idea to take out insurance so you can financially cover the damage to your property.
In this article, from a risk management point of view, this is the advantage of zoning investment in Japanese apartments.
Investing in Japanese apartment concepts with an eye to the "mask period"
1
The spread of telecommuting has led to an increase in housing demand
The most symbolic impact of the "mask period" on the real estate market is the sluggish demand for offices and the strong demand for housing due to the spread of remote work. As more and more people spend part of their time in their home offices, new demand for residential properties has been sparked.
This trend can be seen even in the J-REIT market as a listed REIT. In terms of types of J-REITs, hotel-type J-REITs saw the largest decline due to reduced foot traffic, while commercial facilities and office J-REITs also stagnated in demand due to reduced foot traffic. On the other hand, mail order sales increased due to strong demand for homes, and sales of logistics facilities properties increased, while residential properties also maintained strong momentum.
Apartments that are mainly used for residential purposes will also maintain their momentum, and if work styles such as telecommuting become commonplace, it could become a mainstream trend.
summary
Even if the "mask period" has a significant impact on society and the economy, the essential benefits of investing in Japanese apartments will not change. This is clearly demonstrated by the fact that the business model of condominium management has not wavered even when major risks such as the Lehman Shock and the Great East Japan Earthquake have become a reality. Investing in Japanese apartments has benefits and risks that come with them, so let's understand both and invest in Japanese property with the goal of becoming a successful owner.
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