Category Archives: BUSINESS

Hope for peace on the Peninsula is not in vain

Author: William H Overholt, Harvard University

Most Western experts dismiss the current Korean peace initiative: ‘we have been here before’, they say. ‘The North can’t be trusted, and two previous North–South summits led nowhere’. But today’s situation is different.

Kim Jong-un has become convinced that economic growth is decisive for North Korea. He knows that his father’s policies destroyed the country and that his own future depends on rebuilding it. He even apologised in last year’s New Year’s Address for failing so far on the economic front.

South Korean President Moon Jae-in shakes hands with North Korean leader Kim Jong Un during their summit at the truce village of Panmunjom, North Korea, 26 May 2018 (Photo: Reuters/The Presidential Blue House).

His reforms began by freeing local markets while keeping them technically illegal. This policy has achieved early success. By building a credible nuclear force, he has advanced a powerful argument that the country no longer needs to invest everything in tanks and planes, so his generals should tolerate spending more on economic development. Investments by South Korean companies would ensure long-run success in this regard.

New North Korean priorities have additionally spawned a new diplomacy more accommodating to peace. Since the Korean War, Pyongyang had derided South Korea as a pawn in a …continue reading


Forecast of new apartment prices in Tokyo from 2018 onwards

The Japan Real Estate Institute (JREI) has issued an updated medium-term forecast for the price of brand new apartments in Tokyo’s 23 wards over the next seven years. Price predictions have been revised updwards from last year’s forecast. In 2018, average new apartment prices are expected to be 994,000 Yen/sqm, up 0.5% from 2017 and 4.4% higher than their previous forecast.

In 2019, the average price is expected to drop by 0.6% to 989,000 Yen/sqm, and a further 2.4% in 2020 to 965,000 Yen/sqm. The predicted decline is attributed to the scheduled increase in the consumption tax rate from its current level of 8% to 10% in 2019. Consumption tax applies to the building portion of brand new apartment sales or transactions where the seller is a corporation, but does not apply to the land portion of the sale. Developers typically pass along any increase in consumption tax rates to consumers, leading to a last-minute rush by buyers before the tax deadline kicks in.

In 2025, the average price of a new apartment is forecast to be 967,000 Yen, 4.2% higher than their earlier forecast.

Forecasting future property prices is an impossible task and data can be unreliable due to the unpredictable nature of the market and the factors influencing it. Back in 2014, the Institute forecasted that the average price of a new apartment would be 816,000 Yen/sqm in 2020, while the most recent forecast puts it at 965,000 Yen/sqm (a 18.3% difference).


The average rent of a brand new apartment is predicted by the Institute to see gradual increases up until 2020. In 2018 the average monthly rent is forecast to reach 3,367 Yen/sqm, up 1.4% from 2017. By 2020 it is expected to reach 3,413 Yen/sqm, before declining to 3,407 Yen/sqm by 2025.


The Institute has been providing …continue reading


Kyoto City sees 4,500 new hotel rooms added in 2017

Kyoto City saw an additional 4,532 hotel/accommodation rooms added in 2017, putting the city’s total inventory above 38,000 rooms. In the past 12 months over 3,000 rooms have been opened in simple lodgings, which refers to guest houses and low-priced hostels. The growing number of foreign tourists to the former capital has been a driving force behind the new supply.

The city had 38,419 rooms as at the end of 2017, up 13.4% from 2016. Hotels make up the largest share with 23,899 rooms, up 6.5% from the previous year. Traditional ryokans dropped 0.8% to 5,273 rooms, while simple lodgings saw a 50% increase to 9,247 rooms. Kyoto City’s survey only covered licensed accommodation, with unlicensed, illegal rooms not included in the total count.

Over the past three years a total of 9,230 rooms have been added in the city. It is expected that a total of 12,000 new rooms, not including simple lodgings, will be added between 2017 and 2010, putting the total supply above 40,000.

Simple lodgings, such as machiya that are renovated into guest houses, are becoming a popular choice for small operators as they have looser licensing requirements and can require lower capital costs due to the lower cost of converting an existing property.

On the hotel side, the city saw 29 new hotels open in 2017, putting the total supply at 211 buldings. This is the first time the number has exceeded 200.

The city has increased its goal for annual visitor expenditure by 30% to 1.3 trillion Yen (approx 11.8 billion USD) by 2020.

Future mid-to-high-end hotel openings:

  • Ace Hotel Kyoto (213 rooms): 2019
  • Park Hyatt Kyoto (70 rooms): 2019
  • NTT Higashiyama Project (50 rooms): 2019
  • Sumitomo Hotel Project, Higashiyama (approx. 200 rooms): 2021

Thye Kyoto Shimbun, May 20, 2018.
The Mainichi Shimbun, May 17, 2018.

…continue reading


Trading in old tensions for new ties at the Trilateral Summit

Author: Takashi Terada, Doshisha University

On 15 May 2018, leaders from China, Japan and South Korea gathered together for the first time since November 2015 to attend the Trilateral Summit in Tokyo.

Japanese Prime Minister Shinzo Abe shakes hands with Chinese Premier Li Keqiang as South Korean President Moon Jae-in looks on, at the end of their joint news conference following the seventh Japan-China-South Korea trilateral summit talks in Tokyo, 9 May 2018 (Photo: Reuters/Kimimasa Mayama).

The tripartite meeting was originally established in December 2008 as an annual event. But Japan’s strained bilateral relations with China and South Korea — concerning persistent historical and territorial disputes — have hampered China and South Korea from keeping their commitments to trilateral cooperation.

Tokyo’s hosting of the Trilateral Summit was the first visit of both the Chinese premier and the South Korean president to Japan since 2011, hinting at a possible improvement in Japan’s troubled relations with its two neighbours.

Chinese Premier Li Keqiang’s and South Korean President Moon Jae-in’s visits to Tokyo did not eliminate the sources of political tension with Japan. But the disputes were temporarily …continue reading


Second share house company files for bankruptcy

In the wake of a widening investment loan fraud scandal, a second share house company in Tokyo has filed for bankruptcy.

The company operated by developing and selling share houses to individual investors and then managing the properties on behalf of the buyers, offering high yields and guaranteed rents. However, as was the case with the other defunct share house operator that filed for bankruptcy last month, the vacancy rates of the share houses was higher than forecast and the company was not able to make the guaranteed rent payments to investors.

The majority of the company’s clients had purchased share houses with financing provided by Suruga Bank. The average share house had 14 rooms. With an assumed average loan of 150 million Yen taken out by an investor per property, the scale of loans could reach the 15 billion Yen (approx. 137 million USD) range.

One investor borrowed 86 million Yen for a 10-room share house. The share house operator had provided a net rental guarantee of 560,000 Yen per month for 30 years. Loan repayments were 400,000 Yen per month, resulting in a positive cash flow of 160,000 Yen each month for the investor. For the first year the investor was receiving the rent as promised, but received notice that the operator was cancelling their rental guarantee late last year. The investor started collecting rent directly from the share house tenants. After reducing the rent and getting the occupancy ratio up to 70%, the investor was left with a net rent of 250,000 Yen per month, falling short of their 400,000 Yen/month loan repayments.

According to the Teikoku Databank, the company, which was established in 2015, had debts of 1.369 billion Yen as at October 2016. In 2016 they reported sales of 4.311 billion Yen. By 2017 they had developed over 100 …continue reading