The market trend
Price reduce signs
The market has been in heated, but has been showing a sign of peaking out. For instance, the downtime has been longer than it was before and the asking price has actually been settled at the price where cap rate of 3-4 percent is applicable, regarding the residential apartment for lease.
Construction cost effect
This trend will continue in 2020. Regarding the construction cost, which has been one of the reasons to push up the real estate value, seem to be peaking out as well. For instance, Okinawa market, some constructors have had cancellations for their forward committed projects. This would automatically create the competition in construction contracts and reduce the construction price. Therefore, the properties developed under construction price competition would remain in the market, for the owner to pay back the loan, they may have to sell the property at discount. Given such expectations, we may have to see the price softening and slight reduction for future.
However, among Japan, in the markets where efficiency in constructors have increased enough, construction cost would not drop so much, and the huge price reduction come from the cost is unlikely.
Opportunities-small to middle size businesses-
Japanese government have been seriously dealing with the discontinuity of small- middle businesses. Most of them are performing well but due to the lack of successors, they have to sell the business. Abrils have been well connected with family business network and will provide you our clients to information of business sales including real property.
The recommendation and suggestion
Keep watching the market carefully as there have been opportunities. The opportunities would come from the industry dynamism like small-middle class business sales.
