July 13, 2017 12:37 pm JST

Tokyo homebuyers choose practicality over prestige

Kichijoji is out, Funabashi is in as bedroom communities top neighborhood ranks

HIROKI OBAYASHI, Nikkei staff writer

An aerial shot of Japan's capital area, with Tokyo to the left and Chiba to the right. (Photo by Keiichiro Asahara)

TOKYO -- Home buyers are straying further from central Tokyo, where property prices are soaring, to more peripheral (and affordable) bedroom communities.

The trend is reflected in the 2017 ranking of Greater Tokyo neighborhoods most attractive to prospective home buyers. The results have caused quite a stir.

Perhaps most surprising is that Kichijoji, western Tokyo, a perennial favorite, fell out of the top 20.

Nearly as stunning is that Funabashi, Chiba Prefecture, approximately 20km east of Tokyo, came in at No. 1 after not cracking the top 10 the last two years.

Meguro -- five stops from Shinjuku, one of the world's busiest commuter train stations -- put a downtown Tokyo neighborhood on the list, at No. 2.

Then other prefectures pushed Tokyo down the line. Urawa, Saitama Prefecture, placed No. 3. Totsuka, Kanagawa Prefecture, was No. 4. Kashiwa, Chiba Prefecture, came in at No. 5. These communities are all about a 30-minute train ride to central Tokyo.

The ranking was compiled by real estate website Lifull Home's. The fall of Kichijoji, popular for its fashionable shops, restaurant-filled yokocho alleys and the nature-rich Inokashira Park just steps from the station, could be due to the methodology of the survey. Previously the ranking was based on the favorability of the town. This year's survey, however, was based on the number of actual inquiries received from home buyers, as well as search data from the company's website.

It showed that while people loved Kichijoji, when it came down to choosing homes, people had stayed away from the pricey station.

On a recent weekend, potential buyers from Chiba Prefecture and Tokyo gathered to listen to a presentation on a new condominium complex in Funabashi built by Shimizu Comprehensive Development, a Shimizu construction company subsidiary.

According to the speaker, all 39 units are now expected to be sold before the end of summer -- much sooner than the initial estimate of before the end of the year.

Among the visitors was a 33-year-old company employee currently living in Tokyo's Chiyoda Ward.

"Coupled with a better and more comfortable living environment than in Tokyo," the man said, "it is very convenient to live here. This area is almost located midway between Haneda and Narita airports, so I can easily go to both airports."

The complex is a seven-minute walk from Funabashi Station. A local train from the station takes 23 to 27 minutes to get to Tokyo Station.

And Funabashi has plenty of shopping -- a Loft general merchandise store, a Bic Camera electronics emporium, an Ito-Yokado supermarket.

According to a survey by the Tokyo-based Real Estate Economic Institute, condos in newly constructed complexes in Tokyo's 23 wards in fiscal 2016 carried an average price of 67.62 million yen ($595,000), up 27% from five years earlier.

The number of Tokyo homes that are unaffordable to most people has increased, according to Tomoya Takahashi of Tokyo-based Lifull Home's Souken, an in-house think tank. "Consumers are keeping their budgets realistic," Takahashi said. "As a result, they are looking for deals in little-known yet highly convenient locations."

Takahashi is not alone in seeing this trend. Tatsuhiko Hisamitsu, president of Totalbrain, a Tokyo-based real estate advisory company, has noticed that there are now more people looking for "convenient" places to live rather than for hip or posh neighborhoods.

"Convenience" takes many forms. Some home buyers like the idea of being an easy train ride to an airport. Others seem to want a train line that gives them a straight shot to where their office is. Young couples might look into the day-care situation before buying. Do these facilities have long waiting lists? For others, convenience is not having to leave your bedroom community on weekends.

No. 3-ranked Urawa scores on a couple of these points. It has Isetan and Parco department stores near the station. And the opening of the Ueno-Tokyo Line offers a direct connection to Tokyo Station in less than 30 minutes.

No. 7-ranked Tsudanuma, Chiba Prefecture, began losing its "little known" distinction once home buyers took notice of all the station's early morning train runs into Tokyo. It didn't take long for contractors to see this demand, then try to feed it with massive condo and commercial developments. Apparently, the builders got something right, and now Tsudanuma is riding a new wave of popularity.

So how long will these bedroom communities hold their appeal? The answer depends on price movements.

Chiba Prefecture offers a good example. Although newly built housing in the prefecture is much cheaper than in central Tokyo, the average sale price in fiscal 2016 was 40.89 million yen, 10% higher than five years earlier.

The land prices around Funabashi Station are also going up. In fact, it is no longer rare for a new condo to cost a hefty 50 million yen.

A real estate industry representative said the situation -- it's even getting expensive in the far-flung burbs -- is convincing some potential buyers to give up on home ownership despite today's ultralow interest rates.

Meanwhile, in central Tokyo, where condo prices had been rising at an exponential pace, housing costs seem to have plateaued. If the price difference between central Tokyo and bedroom communities narrows, home buyers could return back to the middle of the metropolis.

Shimizu Corp.

Japan

Market(Ticker): TKS(1803)
Sector:
Industry:
Industrial Services
Engineering & Construction
Market cap(USD): 8,330.40M
Shares: 788.51M

Bic Camera, Inc.

Japan

Market(Ticker): TKS(3048)
Sector:
Industry:
Retail Trade
Electronics/Appliance Stores
Market cap(USD): 2,014.86M
Shares: 182.47M

PARCO CO., LTD.

Japan

Market(Ticker): TKS(8251)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 1,228.96M
Shares: 101.46M

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