TT-565 -- Vacant Houses Going Cheap, e-biz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, May 16, 2010 Issue No. 565

+++ INDEX

- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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+++ WHAT'S NEW

Now that Japan's population is officially dropping and will
probably continue to do so for the foreseeable future, it
is easy to predict that from here on we will start to
experience a surplus of vacant housing. Actually, this
trend is already happening in the countryside areas all
over the nation, not just from people dying faster than
they are born, but also because of the ongoing trend of
urban migration.

Indeed, last year, Tokyo was one of the few cities to
continue recording an increase in population, adding 83,000
people. And if you include the surrounding bed towns, then
the migration trend is even more obvious. So just how many
vacant properties are there in Japan? According to the
Internal Affairs and Communications Ministry in 2008, there
were an amazing 4.127m unoccupied housing units, up 451,900
from 2003.

That's a lot of unused homes.

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[...Article continues]

Unoccupied homes, otherwise known as "akiya" in Japan
apparently account for about one in eight dwellings. We
could not find any definitive figures, but from our
experience, they fit broadly into three major categories:

1) The ancestral home, where all the kids have moved to
nearby cities and mom and pops are either in old age homes
or have already died of old age. These houses are
recognizable because they're older style homes that are
being overrun by vines and vermin, and yet no one seems to
be making much effort to stop the rot. Most such homes
should be demolished, but since this costs more than the
place might be worth, the family legally leaves things as
they are. Many of these homes are beyond repair and
although officially registered are uninhabitable.

2) Next are the apartments and postage stamp size houses
in bed towns and the countryside where people have simply
upped and moved to the city and were unable to sell the
house. Often these places have tax liens against them, and
you can often see them coming up for sale in tax
foreclosures. Check out the site http://bit.sikkou.jp/. We
have a friend in Okayama who bought one of these houses and
she was telling us about a property consisting of a
recently built log house on 60 tsubo of land, that was
being sold by the local court for just JPY3MM. That would
have been about 50% of the replacement value of the house
alone. Of course, you'd have to want to live in the deep
countryside to wind up with such a bargain. The closer you
get to the major cities, the higher the bids by people
wanting to buy foreclosed property. You can track the bids
on the website. Quite interesting stuff. All in Japanese of
course.

3) Second homes owned by wealthy city dwellers who fell in
love with a town or countryside location, bought some
property and built a house, then forgot about it. The best
way to find these places is to drive around your favorite
location and go in and pester the local real estate agents.
Favorite places to find such homes include the Izu
Peninsular, Karuizawa, and in and around Mount Fuji. Now
that several foreign banks are willing to lend against
second homes, this is quite viable as an option. We're told
the key to a bargain is to be persistent with the owner and
wait until they need the money badly enough. With the
economy sputtering along the way it is, you may not have to
wait that long.

You can find akiya all over the country, and particularly
out in the countryside. Trawling the internet has turned up
some quite interesting websites and blogs of foreigners who
have bought into local communities rather cheaply, by
acquiring a disused Japanese style house ("Minka") and
fixing it up. Not all the experiences being posted are
positive, but they certainly point to the fact that in the
face of declining populations, many countryside towns would
welcome anyone, even foreigners, into the midst so long as
it means the rejuvenation of their community.

One reason why foreigners are a good fit to solve the
vacant housing problem is that they are more willing to
live in older properties and to perform their own
maintenance. Japanese have been educated over the last 50
years that housing older than 25 years old should be
demolished and rebuilt, leading people to really only want
to buy new places. This writer knows this firsthand, after
a relative bought a countryside property, built a
substantial Japanese-style post-and-beam house on the land
(and which will last another 50 to 100 years), but being
told by the bank several years ago that the house itself is
now considered to already have zero value....!

So with this in mind, we have been wondering if there isn't
a business in gathering information about akiya, and
setting up some kind of buy-sell-rent exchange center,
where a property manager would handle the details but
owners could find tenants looking for a bargain. There is
in fact such a company doing this, and we met with them
last year, but they told us that the demand by Japanese
themselves for akiya is very low. As a result, although
they are the largest handler of akiya in the nation, they
only have 4,500 dwellings on their books.

Akiya might be in low demand with Japanese right now, but
if the polarization in the economy continues for much
longer, there will be an increasing number of people who
can't be choosy. And then, of course there are the
foreigners. Our imagination quickly conjures up a program
of akiya communities in, say, Kyushu or Sado Island,
serving Chinese and students of other nationalities,
needing somewhere cheap to live while they study Japanese.
We don't know if the locals would be too happy about it,
but we figure they will get over it as the rent money starts to
flow. :-)

Or are property owners just too stubborn to want foreigners
in their midst?

The Japan Times ran an interesting article last week about
an organization called the Japan Property Management
Association, which called a seminar of 170 real estate
agents to discuss how to get more foreigners into the
vacant housing stock of the nation. Indeed, with
foreigners in Japan being the only increasing population
group, it is inevitable that they will be the renters of the
future.

The seminar basically dug up the same old stuff about the
majority (60% according to one survey) of all estate agents
being uncomfortable dealing with foreigners and not being
able to communicate. It appears that the Association is
making vigorous efforts to help overcome the language
barrier and has published guides in four foreign languages
for non-Japanese tenants, spelling out the rules of
tenancy. It is going to take a long while for old
prejudices to be broken down and certainly the problem
isn't just non-Japanese speaking foreigners not knowing
which trash to throw out on which specific day.

In the end, we wonder if the language of cold hard cash
might not overcome that discomfit? This has certainly been
the experience of another moribund area that was
rejuvenated by foreigners moving in -- we speak of
Nisseko. Sooner or later, the financial needs outweigh the
emotive ones: Maslow's hierarchy of needs at work...

*******

Last call for any budding entrepreneurs wanting to start a
company in Japan. Our quarterly Entrepreneur Handbook
seminar is taking place next Saturday, May 22nd. We still
have some seats available. If you are already in business,
or are simply thinking about it, this seminar will help you
figure out what to expect and how to deal with the
inevitable challenges that will come your way.

http://www.japaninc.com/entrepreneur_handbook_seminar

...The information janitors/

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+++ NEWS

- Solar-electric car test in Tsukuba
- Nissan Leaf orders exceed factory output
- IMF reckons government debt to hit 250% of GDP
- Vege prices back under control

-> Solar-electric car test in Tsukuba

The first full-scale test of an electric vehicle charging
system using solar power to top up the recharging station
batteries is being launched in Tsukuba, in cooperation with
Mazda. What's interesting is that the Mazda
DemioProgression is powered by Norwegian company Think
Global's drive trains and the US-based Enerdel's
solar-driven charging stations. The test will be called the
Tsukuba Environmental Style Test Project. (Source: TT
commentary from tonic.com, May 15, 2010)

http://www.tonic.com/article/japan-first-test-solar-electric-car/

-> Nissan Leaf orders exceed factory output

While doubters wonder if all the effort will actually pay
off, Nissan's Carlos Ghosn is having his company forge
ahead with plans to ramp up production of the all-electric
Leaf vehicle, which will go on sale in December this year.
According to Ghosn, Nissan has already received 13,000
orders in the U.S. and Japan, exceeding the 12,000 vehicles
that it can actually produce between now and March 2011.
(Source: TT commentary from businessweek.com, May 13, 2010)

http://www.businessweek.com/ap/financialnews/D9FLQBCO0.htm

-> IMF reckons government debt to hit 250% of GDP

The International Monetary Fund (IMF) reckons that Japan's
government debt will hit 250% of GDP by 2015 if spending
and deficits continue at the current rate. At present it
says that Japan's deficit will be 9.8% of GDP for 2010,
dropping down to 7.3% by 2015. ***Ed: Not sure why the IMF
thinks that the government has the guts to implement the
austerity measures needed to get the deficit down by any
meaningful amount -- although it does mention the
consumption tax rising to 10% as one way. Instead we think
there will need to be an international loss of confidence
in Japan and a run on its bond market, to cause the
government to take any action.** (Source: TT commentary
from nikkei.com, May 15, 2010)

http://e.nikkei.com/e/fr/tnks/Nni20100514D14JFN04.htm

-> Vege prices back under control

Vegetable prices rose 30%-45% higher than normal in April,
due to the late cold weather that plagued the nation this
year. Now that warmer weather has returned, prices are
coming back down to normal levels. According to the Nikkei,
the wholesale price of cabbages is now 45% lower than four
weeks ago and spinach is down by 30%. ***Ed: Makes you
realize that despite all the talk of imports from China, a
lot of household produce is still grown locally.** (Source:
TT commentary from nikkei.com, May 13, 2010)

http://e.nikkei.com/e/fr/tnks/Nni20100512D12JFA05.htm

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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+++ CANDIDATE ROUND UP/VACANCIES

=> BiOS, a Division of the LINC Media group, is actively
marketing the following positions for customers setting up
or expanding in Japan, as well as other employers of
bilinguals.

** HIGHLIGHTED POSITION(S)

BiOS is now sourcing experienced candidate for the role of
eSourcing Account Manager, to work in a specialist
eAuctions company and aid in the rapid expansion that
their fledgling Japan side operations are currently
enjoying. In this role you will be responsible for a
variety of tasks including project management, executing
reverse eAuctions, category expertise, strategic sourcing
and assisting sales meetings, and will report directly to
the Managing Director. International travel is also a part
of this role.

As an ideal starting point to your application you will
have at least 3 years experience in a procurement
environment, hopefully more, and ideally in a retail
procurement background. As well as this, you will need to
have a strong eye for detail, excellent communication
skills, and an energetic go getting attitude to support
the growth of this expanding company.

Remuneration is JPY4.5m – JPY5.5m depending on your
experience and level.

** POSITIONS VACANT

- Jnr Sales Rep, Plastics Manf, Ebina, JPY4m – JPY6m
- Onsite Coordination Mgr, Global Vendor, JPY3m – JPY4.5m
- 1st Tier, H/w & Apps Support, Global Vendor JPY3m – JPY4m
- FileNet Architect, European Insurance co., JPY6m – JPY7.5m
- Unix Engineer, Okinawa I-Bank, JPY4m – JPY5m

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stuart.gibson@biosjp.com

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+++ UPCOMING EVENTS/ANNOUNCEMENTS

------------ Entrepreneur's Handbook Seminar --------------

Start a Company in Japan

Entrepreneur's Handbook Seminar 22nd of May, 2010

If you have been considering setting up your own company,
find out what it takes to make it successful.
Terrie Lloyd, founder of over 13 start-up companies in Japan,
will be giving an English-language seminar and Q and A on
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This is an ideal opportunity to find out what is involved,
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For more details:
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Date: Thursday, May 20, 2010
Time: 6:30 Doors open, Buffet Dinner included and cash bar
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Open to all - Venue is The Foreign Correspondents' Club of Japan
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***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors@terrie.com.

No feedback this week.

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+++ ABOUT US

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