This is a great topic and I hope people gain greater perspective if considering buying. Lots to ponder n both sides of the equation.
Originally Posted by
5khours
Unless things have changed, the rating doesn't have any impact on life safety.
It has not changed and yes it has a great deal to do with life safety.
Originally Posted by
5khours
Anything built today is safe.
Safe until it is not, yes. (i.e. hit with a big enough seismic jolt)
Originally Posted by
5khours
Sure with cheaper building you might get cracks and other issues, but you won't get a collapse or structural failure.
This is patently false and I would strongly recommend learning more about this. It is precisely for this reason that efforts are constantly being made to solve the Long-period wave destruction.
Originally Posted by
5khours
If you look at Kobe where they had intensity 7 shockwaves, there was virtually no damage to any post 1971 structures. A few cracks. That was it.
Again, completely untrue and it was from this earthquake that gas rather than electricity powered generators came into more widespread use in commercial projects.
Originally Posted by
5khours
I've spent a ton of time with structural engineers on new buildings and reinforcement projects, and as far as I can tell the proclaimed differences in earthquake engineering/building technique is mostly sales hype and has nothing to do with earthquake life safety (tsunamis/fires are a different question).
Sales hype? Really? I think a bit more learning about absorptive systems, results, predictive systems, triage of problem solving, access to life supplies, etc. is in order if that is the opinion held. Suffice it to say it is not the opinion of the Earthquake Research Institute at the Univ. of Tokyo, the fire dept. and others who would know and who have no commercial horse in the race.
Originally Posted by
5khours
As to the economics.
- Self employed, retired, investor, etc. - Almost impossible to get a property loan regardless of financial condition.
Self-employed as a teacher or a company president? I would not loan money to a teacher or other contract staff either to be honest. They fall into the category of bad loan prospects due to no long term tie to Japan. Retired? The timeline to pay off a loan is up to 30+ years here. How do we know they will be alive? Debts of deceased parties in Japan are forgiven not passed on. Banks don’t want to take a bath. Investors buy homes all the time, and if Japanese have easy access to loans. If non-Japanese they may not have the credentials to even get a bank account, i.e. a resident alien card. I have to say, three very weak examples on which to base an argument.
Originally Posted by
5khours
- Agree rental income in central Tokyo (on non-premium residential property anyway) is rock solid even in a downturn. Residential rents in Tokyo went down maybe only 2 to 3 percent after Lehman. (Rents on premium residential properties got whacked.) Occupancy rates have been similarly solid for non-premium properties during downturns, but I was actually referring to the case, where you want to sell the property when the market is down. Even on non-premium properties, it would be very easy to lose 30% or 40% of what you paid if your timing is bad. Some people who bought high end condos in the late 1980s lost 90% of the value of their property.
I thought we were talking about buying to live in? If so why is someone selling? If purely an investment then it can be a hit but not if living there. From 2008 for some time (post-Lehman shock) there were losses on rental income of 20-30% not just 2-3%. But, the elasticity of domestic demand became very clear, and the demographic of renting parties changed and what has occurred is an organic growth of new lessees that have the characteristic of being stable for the very long term, i.e. locals. As for bubble era purchases losing money, that is more related to the thinking and the banks than to the property market per se. A lot of bad investments were made, but that does not mean the underlying asset has dramatically changed in nature.
Originally Posted by
5khours
If you believe in EMH (efficient market hypothesis), the expected after-tax risk adjusted cost of owning can't be cheaper than renting. I certainly would not predict future prices based on past trends....good way to get wiped out. .
I do not believe in EMH as a be all and end all philosophy. There is too much evidence to the contrary. Efficiency in information dissemination is a fallacy, but EMH does not hold up without it. I am more about the actual data and looking at that rather than describing predicted market behavior. I would not buy a fund based on past performance, but would and have bought Tokyo real estate on such data. Totally different animals and subject to significant different influences.
Originally Posted by
5khours
That said, if someone needed a modest place to live in Tokyo for 15 to 20 years and has a salaried job at a reputable employer, buying might be the right option... but I'd probably wait until 2020 since IMHO the market's a little rich at the moment. Or if you want a nice place and don't mind the risk/return characteristics, buying might also be a good option. But I don't think you can generalize that buying is the right option for everybody... even in central Tokyo.
2020 is going to be an interesting time to see. I think 2025, a time at which 2020 choices will begin to have effect. I think buying if you will live there in Central Tokyo is without any doubt the right call for anybody. Especially in Central Tokyo.