We hope everyone had a Happy Holiday, Merry Christmas, and a Happy New Year.
This past year was considered a positive year compared to 2018. 2019 brought in the New Era Reiwa (令和), the G20 summit being held in Osaka, Japan as the host country for the Rugby World Cup to name a few major events.
We are excited on the outlook of 2020, being optimistic and positive by nature, and looking for opportunities wherever they may arise.
Today would like to share with you all some information in regards to the outlook in 2020 doing our best to keep the information local in Osaka. There are a ton of other news outlooks which focuses on Tokyo. Osaka isn’t forgotten, but information in English is limited.
Condominium Supply Forecast for 2020
17,000 units are said to be available in 2020, up 1.2% compared to 2019. These numbers cover the entire Kansai Region. The reasoning behind the slight increase in inventory is the continued rise in prices.
Osaka City: 7,700 units
Osaka Prefecture (excluding Osaka City): 3,400 units
Kobe: 1,900 units
Hyogo Prefecture (excluding Kobe): 1,700 units
Kyoto City: 1,300 units
Decrease in inventory for Osaka Prefecture and City, but an increase for Kobe, Hyogo Prefecture, and Kyoto City.
Increase in high rise condominiums in Osaka City
High rise condominiums are expected to be in large supply with the remaining inventory carrying over from 2019 (Osaka City).
Investment properties such as the 1K (studio/1 bedroom) will increase in supply compared to recent years with the competition from hotel construction.
Kyoto City will see an increase in mid level condominium complexes in 2020.
Kobe and Hyogo Prefecture will continue to see an increase in high rise condominium complexes as well as mid level condominiums.
There was a 4.4% yoy decrease to start construction from January 2019 to October 2019 continuing the lag or lack of inventory as a whole.
A total of 21,060 units have started construction between the months of January and October 2019 down 4.4% yoy.
The inventory at the end of November 2019 was at 2,174 units down 17.9% from the previous year.
The average price per square meter between the months of January and November 2019 was ¥673,000, up for the seventh consecutive year.
Price per square meter to continue to rise with the upcoming 2025 World Expo and IR concept (casino) for Osaka City.
Construction costs and land prices will continue to increase with the continued competition from hotel construction to supplement the increase in price per square meter.
Convenience will continue to be in demand, with senior citizens looking to buy closer to a train station, or an additional second home being closer to public transport. With newer construction being slightly away from the closest train station, the competition with newly developed homes in the suburbs will intensify.
This data and information was provided by the Real Estate Economic Institute. For the original report click here.
The outlook for tourism in Japan in 2020 continues to be perceived as strong because of the 2020 Tokyo Olympics. Even with the decrease in tourists from Korea (Korea just behind China as the second most inbound tourists) from the summer, the total number of tourists in 2019 look to be on par or a slight increase from 2018. The build up to the 2025 World Expo after the Tokyo Olympics should keep the tourism market healthy for Osaka.
For data on tourism click here.
Shift in Focus
The second half of 2018 and in 2019, we saw a shift in location where investors were looking further south. Prior to that investors were looking in the Namba area to invest in the short term rental accommodation market or Airbnb market for short. These investors were of course private investors, insitutional investors would invest in hotels in the area between Umeda and Namba.
The area between Sakai-suji and Yotsubashi-suji along Mido-suji between Umeda and Namba will remain king, being the CBD of Osaka City.
In 2020, we believe the western area of Osaka City will continue to grow.
The graphic above shows the shift in focus from the Umeda area to Namb, all the way south to Tengachaya to the Osaka Bay Area.
The graphic also displays the potential extension of major train lines.
Yellow: either JR or Nankai
Green: Osaka Metro
The graphic above is a close up of the potential extensions of train lines in western Osaka City which will extend to Yumeshima.
Yumeshima being the site for the 2025 World Expo and for the proposed casino resorts in Osaka.
We are excited for these events and these extensions not only for potential business but for the city and people of Osaka as well. Adding on to the already convenient train system will only make life easier for the general public in turn making our life in real estate easier as well. Different areas in the city and outside of the city become more accessible.
We will end with the cliche and say we are looking forward to what 2020 will bring. 2020 being the first full year of the New Era (令和2年) and the Tokyo Olympics. There will definitely be excitement leading up to the summer games and the uncertainty to what will happen after the games. We all have heard and read about the negative impact the Olympic Games can bring a city and country post competition. We are extremely curious of the aftermath of the modern Olympic Games in the country we live.
Either negative or positive, we know we will continue to have a positive outlook for 2020 and beyond.