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Japan is currently facing a unique real estate situation, with official data indicating there are about 9 million vacant homes, known as “akiyas,” across the country as of 2023. This surplus of properties stands in stark contrast to housing shortages experienced in other parts of the world, making it a distinctive phenomenon within the global housing market.
As reported, many of these akiyas can be acquired for remarkably low prices, sometimes below $10,000, making them particularly appealing for those with innovative ideas and renovation skills. These homes, often uninhabited for years or even decades, are found in both rural and urban settings, presenting opportunities for buyers who are willing to take on the challenge of refurbishment.
Understanding the ‘Akiya’ Situation
The increase in empty houses in Japan is primarily attributed to the country’s demographic decline. As of 2023, the fertility rate has dropped to a record low of 1.2 births per woman, contributing to a shrinking population. Concurrently, death rates have begun to exceed birth rates, resulting in a growing elderly demographic.
Tetsuya Kaneko, the head of research at Savills Japan, highlighted that the trend of abandoned properties has historical roots, stemming from the post-war economic expansion that led to an increase in housing development. This issue intensified during the economic downturn of the 1990s and has been exacerbated by ongoing demographic shifts.
Furthermore, urban migration plays a significant role in the akiya problem. Younger adults are gravitating towards cities for employment, leaving behind older populations in rural areas who may pass away or lack the resources to maintain their homes.
Within local communities, akiyas often carry a stigma. Kaneko noted that many view these properties as a burden, leading heirs to shy away from maintaining or utilizing family homes after the passing of elderly relatives. Concerns over safety, renovation costs, and potential superstitions about hauntings add to the reluctance to engage with these properties.
As a result, many Japanese perceive akiyas as depreciating assets that may not offer sufficient value for the trouble and expenses involved in restoring them.
Growing Interest Among International Buyers
Despite the challenges associated with akiyas, there has been a noticeable uptick in interest from foreign buyers. Kaneko reported an increase in inquiries and purchases from overseas, driven partly by lifestyle changes attributed to the pandemic, coupled with the growing acceptance of remote work.
This shift in perspective has led to diverse buyers, including young investors and retirees seeking vacation homes or renovation projects. Notable stories, like that of Anton Wormann from Sweden, illustrate this trend. After being captivated by Japan during a work trip, Wormann chose to buy akiyas as real estate investments. He currently owns several properties, and his ventures in renovation have proved profitable, highlighting the potential for success in this market.
Evaluating the Investment Potential of ‘Akiyas’
The question of whether akiyas represent a wise investment is nuanced. Wormann noted that while his properties yield significant annual revenue, success necessitates a genuine understanding of Japanese culture and strengthening community ties. He emphasized that meaningful engagement with the local environment is crucial to avoid the pitfalls of a poorly executed investment.
Experts generally concur that akiyas can be appealing for certain groups, particularly DIY enthusiasts or those seeking a peaceful retreat away from urban chaos. However, investing in these properties may not suit institutional buyers or individuals pursuing swift returns due to potential high renovation costs and fluctuating resale prospects.
Kaneko cautioned that while opportunities do exist, potential investors should be prepared for significant expenses related to renovation, particularly for homes requiring extensive repairs. Additionally, navigating the home-buying process can be daunting for non-native speakers due to the language barrier and the complexities of dealing with local authorities.
Source
www.cnbc.com