Ken Saishoji, a 46-year-old Tokyo real-estate agent, used to answer questions from potential apartment buyers about the proximity to train stations and prices. After the March 11 earthquake, that changed.
“The question almost 100 percent of the customers ask first these days is how strong the ground and the structure of the building is,” said Saishoji, who was in charge of selling 198 units in a 28-story building in Yokohama, south of Tokyo, at broker Nomura Real Estate Urban Net Co.
Mitsui Fudosan Co. (8801) and Mitsubishi Estate Co. (8802), Japan’s two- biggest developers, are adopting higher quake-absorbing methods to reduce motion during temblors in buildings taller than 20 stories. For builders such Nomura Real Estate Holdings Inc. (3231), highlighting quake-resistant features has meant selling all apartments at the Yokohama project at prices 14 percent higher than average for the area.
“The disaster has changed the way people think,” Kamezo Nakai, president of Nomura Real Estate, which sells its apartments through its own real-estate brokerage, said in an interview. “Some may think that people will refrain from buying homes after the quake, but it’s the opposite. People want to move in to apartments they deem safe.”
Mitsui Fudosan rose 2.2 percent to 1,159 yen at the close in Tokyo, while Mitsubishi Estate declined 0.4 percent to 1,155 yen. The Topix Real Estate Index (TPREAL) climbed 0.7 percent, the most in more than a week.
Avoiding Major Damage
Tokyo’s stringent building code, which includes rubber bearings used as foundation so that seismic energy can shift from structures, helped the city’s buildings avoid major damage from the nation’s record magnitude-9 quake, though the temblor turned landfill in the Tokyo Bay area into mud, shattering pipes and disrupting gas, electricity and water supplies.
The quake struck 130 kilometers (81 miles) off the coast northeast of Tokyo, triggering a tsunami and leaving almost 20,000 people dead or missing.
Contracted rates of high-rises in Tokyo, or the percentage of apartments sold before completion, dropped to 66 percent in November, declining below the 70 percent level needed for builders to be profitable, and down from 88 percent a year earlier, according to Real Estate Economic Research Institute Co. data released Dec. 15. High-rises are defined by the Tokyo-based research firm as buildings that are higher than 20 stories.
‘Sense of Security’
Mitsui Fudosan, Japan’s biggest developer by sales, is installing pipes with elasticity to minimize damage and will store three-day electricity supply for buildings and warehouses, it said in a Dec. 15 statement. Its 31-story Park Tower Umeda in Osaka and the 43-story, 585-unit Park Tower Shinonome in Tokyo will be the first projects where the new measures will be implemented. The developments will be completed by early 2014.
“There is rising demand for a sense of security and safe homes after the quake,” Takeru Hasegawa, a spokesman at Mitsui Fudosan, said by phone. “We have strengthened disaster prevention methods for all of our new projects from now on.”
The number of high-rises offered in Tokyo fell to 104 units, the lowest in more than three years, in April, according to the real estate institute. It recovered to 636 units in September, still 20 percent lower than the 796 that were put up for sale in February, a month prior to the quake. In November, it stood at 315 units, according to the latest data.
The supply of apartments in the city last year is estimated at about half the 10-year average of more than 81,000, the institute’s data show. It fell after lenders tightened loans following the collapse of Lehman Brothers Holdings Inc. in 2008.
Demand for properties in central Tokyo will remain high, said Masahiro Mochizuki, an analyst at Credit Suisse Group AG.
“Condo supply was about half of what it was before even though demand remained the same; people who want to buy houses didn’t just disappear,” Tokyo-based Mochizuki said. “The limited supply and rising preference for central Tokyo properties will help boost demand.”
Mitsubishi Estate’s 49-story Park House Harumi Towers, which will be completed by November 2013, will have storage rooms with emergency kits on each floor, as well as stocks of water, food and other daily necessities, and a kitchen system that will allow residents to prepare meals outdoors, it said in separate statements.
Japan’s biggest developer by market value plans to increase fuel reserves for power generators in its residential buildings to last for about 24 hours from the previous estimate of eight to 10 hours, said Ryuichiro Funo, a spokesman at Mitsubishi Estate.
Changing Sales Pitch
“The sales pitch has changed: We demonstrate more as to what we have done in preparation for the earthquake,” said Funo.
An 8-magnitude quake is estimated to strike every 118.8 years on average near Tokyo, the last one being in 1854, government data showed. The chance of a major quake in the next decade beneath greater Tokyo, home to 13.1 million people, has doubled since the March tremor, geophysicist Ross Stein at the U.S. Geological Survey has said.
The March quake triggered liquefaction in neighborhoods in Tokyo Bay, which has about 24,955 hectares (61,665 acres) of reclaimed land, and where Mitsui Fudosan, Mitsubishi Estate and Nomura Real Estate have residential projects. Liquefaction is a phenomenon where soil loses its strength after violent shaking.
Apartments in the area are sought after for their views and travel time of less than half an hour to central Tokyo, a city with an average commute of 49 minutes, according to a survey by national broadcaster NHK. Nomura Real Estate, Tokyo’s third- largest developer, sold all 250 units in the first phase rollout of its 600-unit complex in the Shinonome area in Tokyo Bay within a day, according to the company.
“People’s preference to live in central Tokyo has strengthened” after commuters were stranded as the city’s subway system was shut immediately after the quake, said Tadashi Matsuda, a researcher at the real estate institute. “If the developers can emphasize the safety of their buildings, then that’s positive for them amid rising interest of living in the city.”
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