Is it better before the Tokyo 2020 Olympic Games to invest in an apartment? Or is it good after?
- Japanese real estate expertise
"The prices of apartment are soaring in Tokyo. If I invest in real estate, is it better to do it after the Olympic games?"
"Are apartment prices falling after the Olympic games?"
Are you one of them to think like this?
<<Opportunity loss of about JPY 4,300,000 in four years>> *JPY=Japanese Yen
Is it better to purchase investment apartments after the Olympic games?
Let's look at CONCIERIA KORAKUEN CROSSIA (selling price: JPY 36,900,000) which we launched in February 2019.
[Monthly Income and Expenditure]
|Rental income (Guaranteed)||JPY 110,805|
|Expense||Management and Sinking fee||JPY 16,120|
|Other expenses||JPY 5,292|
|Net rental income||JPY 89,393|
|*Taxes are not deducted yet from the above amount.|
The monthly net rent is JPY 89,393 when expenses are deducted from rental income. However if you purchase it four years later, you might be losing the opportunity to earn four years' rent income relative to your current purchase.
JPY 89,393 × 12 months × 4 years = JPY 4,290,864
<<Changes in apartment prices>>
The chart below shows the changes in the prices of apartments for new investments (1K types: Studio) in the Tokyo metropolitan area.
Reference: Real Estate Economic Institute Co., LTD., Tokyo Kantei Co., Ltd.,
Weekly Housing Newspaper, Daily Fudosan Keizai
Even the fluctuation rate during the period of the greatest decline was only -2.6% amid the trend in transaction prices for new one-room apartments in the Tokyo metropolitan area. Despite the Lehman crisis and the Great East Japan Earthquake, prices have generally risen.
<<Property Prices of the Olympic City>>
The Olympic games were held in London in 2012 as a metropolitan city compared to Tokyo in recent years.
In those metropolitan cities where the Olympic games have been held so far, including London, real estate prices are as follows.
Housing prices of the Olympic host city in the past
Compiled by Mizuho Research Institute Ltd. from the Bank for International Settlements (BIS)
and the Federal Housing Finance Agency (FHFA).
In 2013, the year after the Olympic Games were held in London, there were 39% more real estate sales transactions than in the previous year, and the prices rose as well.
Reference: Research Institute Report of NLI Research Institute, "Real Estate Investment and Development in London: Changes in London"
From these changes, the Olympic games are a checkpoint of urban formation, and it can be said that it has become one of the triggers for urban development with a view to the future.
<<The price of the real estate in Tokyo four years from now is...??>>
No one knows how the Olympic games will affect the real estate market in Tokyo.
However, referring to the trends in real estate prices in the Olympic cities in the past, it is expected that the post-Olympic property prices will not fall as much as the rent income earned over the past four years. Rather, if the price rises, it may be impossible to purchase in the current price range.
<<To those considering the purchase of apartments for investment>>
In this column, we forecasted the theme of “Will apartment investment after the Olympic games be lost money?” taking into account data on real estate prices.
The prices of apartments in central Tokyo where the population is also increasing, and areas close to the JR Yamanote Line continue to rise.
And if there is a possibility that the price of the Tokyo apartments will rise even after the Olympic games, it might be a good opportunity to invest in it now.
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