Purchasing an abandoned home in Japan’s countryside is a cheaper option for foreigners keen to invest in Japan, but there are caveats …
The Dos and Don’ts
Recent media attention of the restoration of “akiya” or abandoned homes in Japan has prompted a growing interest in this curious market with buyers looking beyond the chaos and dilapidation of these properties for redevelopment, perhaps even relocation. I wanted to know just how realistic it is to acquire an abandoned property. In speaking with an expert in the field, Matt Ketchum, co-founder of “Akiya & Inaka,” a Japanese company specializing in helping foreigners purchase abandoned or semi-abandoned homes in Japan, I explored the attraction to this market, and the caveats.
Millions of Abandoned Homes
The government states that as of 2013 there have been more than eight million abandoned homes in rural Japan. Why did this happen? Matt explained that during the Bubble Period, in the late 1980s and early 1990s, those who made money, picked up second homes to retire. As they became elderly, these rural homes were either given to their children, or simply left behind. Often, these countryside properties became an inconvenience for the family to maintain, and left in a state of deterioration.
Other explanations have been that growth planning policies of the post-war government favoured “new home” mortgages over the older houses that were in need of repairs and maintenance. Taxes on vacant lots, as a result, were higher. It became more feasible therefore, to leave the house standing than tear it down.
House-Hunting
With millions of properties around the country, the government encouraged the implementation of various databases also known as “akiya banks.” These are municipally controlled, manually updated with missing information, poor images, and all in Japanese – making it very difficult for foreigners to source through.
It is not surprising that the properties themselves can be a nightmare. People may have died in them, or they have become a breeding ground for rats, spiders, etc. In fact, the majority of akiya properties on the database truly need to be demolished. To state the obvious, to make better use of your time, and to avoid pulling all your hair out of your head, a safer route to weed out the good ones would be to use market professionals.
Matt KetchumThat being said, not all are dilapidated, dumpster fires. The price can vary significantly. For example, according to Matt, a cabin in the woods type property on a plot of land 500 to 600 sqm in Kanagawa could cost USD$6,000.
Whereas, north of Mount Fuji $600K to $850K. These would be more like mini hotels with multiple storeys, hot springs, Japanese gardens, with all the bells and whistles. In another case, a vacant property in Nagano, a city popular for its skiing tourism, came with kitchen utensils, television, and furniture. What brings the price down is that generally a buyer pays for just the land, not the property.
Perhaps you are thinking of moving to the countryside to get away from the crowded city, post-pandemic, with a need for fresh air, greenery, and rivers, but want to be close enough to the city to still enjoy the night life. Keep in mind, moving away from the city doesn’t mean isolation. It often means becoming part of a rural community.
Perhaps you are looking for a mini hotel with surfing and a spa for short term rentals and need to find a location that authorizes registration. Or, you might have a family with children and want a 4-bedroom home where they can amuse themselves with baby goats. Perhaps you need a place for teleworking, as a midway point between home and office to share space, as is quite popular with career women over the age of 40.
Recognizing the growing anxiety of living in a crowded city, coupled with the fear of how to move to the countryside, Matt’s company takes you from concept to development. “All you need is an idea of what you want.”
Is it Worth it?
The approximate cost for renovations for an akiya property would be between USD $50K and $100K, much more affordable than purchasing a property in the city. Of course, prior to the renovations, a survey and inspection on the land and structure will confirm if the soil is safe to build on and the condition of the structure. Expect to pay approximately $500-800 for such an inspection.
If the purchase is for investment purposes, it can generate between $30 to $60/night and attract local and foreign visitors. For some, the attraction is the cultural experience. For others, it’s about making connections with farmers, architects, artists, and like-minded people in a community.
The Future of Akiya
As Matt says, “There is an immense, cultural and financial gravitational pull to the big cities, especially for young people.” But, the pandemic has triggered a shift. The fear of contracting the virus has prompted people to consider a move to rural areas away from crowds.
The health benefits, lush greenery, and, in most cases, and perhaps in contradiction to the situation in other developed nations, also high-speed internet infrastructure – these can all present the hope of an enticing future.
On a speculative note, if close-knit communities and businesses continue to develop in the countryside and boost population, then land values also have the potential to increase. Regardless, the concept is a breath of fresh air.
Priti Donnelly is the Sales and Marketing Manager of Nippon Tradings International (NTI). She can be contacted at: info@nippontradings.com