PII-34 -- Building a House

Personal Finance Intelligence for the Tokyo Community
Personal International Investor
Vol. 34
November 11, 2005 Tokyo

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Building a House

This is last article in the series on buying property. Here I would
like to talk about building a home in Tokyo. Unlike buying
a pre-built place, the point of attraction is that you get to build
what you please as long as the lot accommodates it. So, in addition
to design, the utilization of space is a major consideration.

There are some interesting rules about land usage in Tokyo (and
elsewhere as well; Tokyo is just an example). When you look at
realtor ads in the newspaper or online you'll see a building-land
ratio for each location, which typically varies between 120% and
300% (in built-up areas). There is another ratio, which indicates
how much of the property can be covered with the building. This is
often 50% to 60%. Therefore, on a 50/120 property, which is common, you get to
cover 50% of your land with 2-3 stories, the last story being an
attic taking up the remaining 20% not used on the first two floors.

Note that this land coverage/building size ratio applies to your living
space, and not to car parking and similar storage space. So if you
plan to build a garage and can afford it, my advice is to build it
underground, in which case you wind up with a whole extra floor.
With adequate sky lights, this space can be quite usable later.

So can you use the garage for anything other than parking a car?
Well, just as in some states in the USA (e.g. California),
so long as the space is not finished or built-out when you have your
building inspection done, it appears that many owners do in fact
partition, line, and finish such spaces and use them for extra
bedrooms or whatever. It's not within the code, but it seems to
be allowed. You just need to remember to make the space compliant
again before you sell, which is when the next building inspection
will occur. Unlike the States, you can't simply declare the space
non-compliant. You do actually have to return it to an unfinished state.

Another factor in determining the size and shape of your house is
the height. I mentioned before that on a 120% ratio for building size
you will probably make a third-floor attic. You won't see the area
height number on the realtor ads, but in fact the information is known
to the realtor. So call and ask. Typically the height is either 10m
or in some locations, 15m. Practically speaking, 10m means three
fairly low-ceilinged stories, so you need to consider this. Also
related to height is your neighbors' right to sunlight, and there
is a formula that mainly pertains to the walls face west and south
and also the distance and height of the ground level from the road.
Again, your realtor has this information.

Lastly, to build, you will be wanting to find an architect. Just as
with anywhere else, they are not cheap, and typically charge
between 8% and 12% of the building cost. However, unlike other
countries, Japanese architects really do take care of everything
and are responsible for cost and quality control. This means that
you don't have to employ a separate project manager or bird-dog the
building process yourself.

That's it for now. We'll be back with a new related series in a few
months about practical experiences related to actually building
a house and what's involved. Next week, we start a series on
pre-IPO companies that are up and coming and some of which
are open to foreign business and investment approaches.

Terrie Lloyd
...Investor in Training/

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Team Tokyo Forex Weekly
November 2- November 9, 2005

On Monday afternoon there was a mood to sell off the yen in our
office and make short profits through it's devaluation and sure enough
the pair dropped and the yen became unstable jumping back and
fourth. This type of minute-by-minute analysis can only be done by
real-time traders and the advice paid off. We were tipped off by
our team leader and made a collective decision that you don't get
when trading alone.

The general consideration here is that the yen is reaching it's peak
against the USD and consolidation will take place to balance the
market. Expect the yen to rally high and drop quickly as
consolidation counters. This is a trader's field here and unless
you have a commissioned trader on your team, you are likely
to miss solid profit taking opportunities.

Here is some interesting commentary by GCI Trading :

Japan's Fin Min Tanigaki weighed on Tuesday the negative
economic impact of rising long-term market rates in a deflationary
environment as markets anticipate an eventual ending to the
Bank of Japan's quantitative easing policy.

The yen moved higher against the USD on Wednesday as the
greenback tested bids around the 116.85 level after encountering
offers around the 117.65 level. Stops were triggered below the
117.10 level, representing the 23.6% retracement of the move
from 113.00 to 118.35.

Data released in Japan saw September industrial machinery
orders climb 62.9% y/y to 978.33 billion while October bank
lending was off 0.7% y/y, the 94th consecutive monthly decline.

Also, the October M2+CD money supply decelerated to +2.0%
growth last month from +2.1% in September. The yen also notched
gains on its major crosses and many believe the dollar and other
majors will undergo a period of consolidation before traders may
try to push the yen lower. Q3 GDP and October CPI data will
be released on Friday.

The retail inflation data are very important because positive
year-on-year inflation is the main criterion Bank of Japan will
cite when it finally begins to unwind its long-standing quantitative
easing policy.

The Nikkei 225 stock index climbed 0.25% today, just shy of
a fresh 52-week high. Dollar bids are cited around the 116.30
level. The euro moved lower against the yen as the single
currency tested bids around the 137.60 level and was capped
around the 138.30 level. The British pound and Swiss franc
depreciated against the yen as the crosses tested bids around
the 203.75 and 89.15 levels, respectively.

The Chinese yuan appreciated against the U.S. dollar as the
greenback closed at CNY 8.0857, down from CNY 8.0867.
People's Bank of China reported it expects GDP will exceed
9.0% this year with CPI printing around 2.0%. PBOC also
reported it will work to keep the yuan at a “reasonable and
balanced level.” The yuan's value will likely be on the agenda
when President Bush visits China in about a week.

View Our Team Tokyo Forex Chart here.

Editor : Jason Bainbridge

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ICA Event
November 17th, 2005

Speaker: Greg Tarr - Founder & Chief Executive Officer,
SecureMobile and Partner, CrossPacific Capital
Topic: The Next Threat - W-CDMA/EVDO Mobile Security

RSVP Complete event details at http://www.icajapan.jp/
Date: Thursday, November 17, 2005
Time: 6:30 Doors open, buffet dinner included
Cost: 3,000 yen (members), 5,500 yen (non-members),
Open to all - Location is Foreign Correspondents'

Club http://www.fccj.or.jp/static/aboutus/map.php

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- Consultant - Treasury (JPY 7-10M)
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SUBSCRIBERS: 644 as of November 11, 2005

Edited by Burritt Sabin (editors2@japaninc.com)

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