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All-you-can-rent startups turn Japan's 8m empty homes into gems

Not quite Airbnb or WeWork, but eyesores gain new life

Empty no more: A house in Chiba Prefecture that ADDress offers as part of its subscription-based housing service.

TOKYO -- In Nichinan, Japan, a city of about 50,000 people on the southwestern island of Kyushu, a house that had sat abandoned for more than a decade gained new life this summer.

The building, situated in a shopping district just a six-minute walk away from Kyushu Railway's Aburatsu Station, was remodeled into a stylish home over the course of two months by Tokyo-based startup ADDress for its subscription-based housing service.

President Takashi Sabetto said he decided to refurbish the place the moment he laid eyes on it.

The startup is among those finding gold in Japan's vast stock of vacant homes, which has swelled by 50% over the past two decades to 8.5 million. These buildings, typically seen as obstacles to redevelopment or outright hazards, are being brought back into service to accommodate new ways of living and working in the modern economy.

Established just last year, ADDress leases or buys vacant or rarely used houses and renovates them into livable homes. For 40,000 yen ($365) a month, users can stay in any of its 26 properties around Japan, with no need for a lease or deposits.

ADDress members, who now number in the hundreds, are often gig economy workers without a single set workplace or steady hours.

This ADDress property in the city of Nichinan was once home to a greengrocer.

The company has received hundreds of contacts about potential new locations. But "90% of the properties would be tough to use" in their current form, said Masahiro Takamoto, a team leader at ADDress in charge of those negotiations. Most rejections are because the homes lack access to public transportation or are too large to manage effectively.

To turn abandoned houses into places where subscribers would want to stay, ADDress looks to establish communities based around certain themes. It assigns a "guardian" to each location and encourages them to draw in people who share their interests. One house near the beach has a guardian who enjoys surfing, for example.

ADDress partners with transportation companies to cut down on travel time to its properties. East Japan Railway has invested in the business through a subsidiary, and ANA Holdings has signed on as a partner.

"We plan to add more locations while maintaining the quality of our properties," Sabetto said. ADDress aims to expand to 2,000 homes and 10,000 members in three years.

Abandoned houses can be transformed into attractive properties surprisingly quickly. But the high cost of demolition or renovation presents a major obstacle.

Enjoyworks, based in the city of Kamakura near Tokyo, offers help clearing this hurdle, bringing together local residents, creative professionals and investors to revitalize vacant properties. It has handled 10 successful projects so far.

Among these is a former electronic parts factory in the nearby city of Zushi, which had been left untouched because tearing it down would be too expensive to be worthwhile. It was reopened in October 2018 as a shared space for artists with rooms that can be rented for a monthly fee.

Enjoyworks added plywood dividers and furniture to turn this former factory into a shared space for artists.

Enjoyworks hammered out the concept with local creatives, put together a proposal, and launched a crowdfunding campaign, securing capital from 70 investors. The project itself was fairly simple -- dividing the inside of the factory into individual working spaces using plywood -- but progress pictures posted on social media helped draw enough interest that the new facility was fully booked when it opened.

At 20,000 yen a month for each space, the entire investment can be recouped within a few years if occupancy rates stay high, according to Enjoyworks.

The company has held seminars for those interested in taking on similar projects, with about 100 people attending so far. It offers a crowdfunding service for such renovations, charging fees based on the amount raised.

"If this spreads across the country, it'll become a big business," said President Kazunori Fukuda.

Established companies are getting in on the act as well.

Real estate information company Lifull operates a website featuring a "bank" of vacant properties, which now has roughly 6,000 listings in 570 partner municipalities. The database lets users search for properties in specific prefectures or towns, and it includes information ranging from building layouts and prices to records of past natural disasters and the likely severity of earthquakes in the area. Lifull peer At Home runs a similar site.

Lifull plans to launch its own subscription-based housing service next August.

Meanwhile, homebuilders see connecting potential sellers with buyers as a way to cut down on the proliferation of vacant housing.

The Provision of Quality Housing Stock Association, also known as SumStock, certifies properties that meet certain requirements, including earthquake resistance equivalent to modern homes and a maintenance program for at least 50 years after the building's construction.

Each year, an estimated 12,000 stand-alone houses supplied by the organization's 10 main members -- including Sekisui House and Misawa Homes -- go back on the market as existing stock. But only about 15% were resold through SumStock members last fiscal year.

Sekisui House Chairman Toshinori Abe, who chairs SumStock, said the organization aims to increase this to 20% as a medium-term goal. "Low awareness of the system is an issue," he said.

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