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Book Review - Landed: The Guide to Buying Property in Japan

Christopher Dillon, the author of Landed: The expatriate’s guide to buying and renovating property in Hong Kong, has now published a similar guide on buying property in Japan. Landed: The Guide to Buying Property in Japan is now available and will be supported by a series of public events next week (schedule at the end of this post). Read more

Jiyugaoka is Tokyo’s most desirable neighborhood

According to the average result of surveys carried out over the past five years by Major 7, a website run by a consortium of real estate firms, Jiyugaoka has been voted the most desirable neighborhood within Tokyo’s 23 wards to live in, followed by Futakotamagawa and Ebisu. The rest of the ranking went like this: Read more

More trouble and bankruptcies in the real estate market; Renovated condos more appealing to buyers?

Over the past week, condo developer Sebon filed for bankruptcy with about 62 billion yen in liabilities, while FEC, another condo developer, filed for bankruptcy protection with about 13 billion yen in liabilities.

New condos simply aren’t selling the way they used to, and the squeeze on bank lending to real estate developers is going to start hurting those firms that have survived on credit lifelines rather than sales first.

But the real story here is the result of a recent survey conducted by Next and published in the Nikkei a few days ago. Apparently, over half of respondents stated that they would choose buying a renovated existing condo rather than a brand new unit, provided that they could save about 5 million yen in the transaction.

With the average price a new condo in Tokyo up 9.3% last year, it’s no wonder buyers aren’t looking to buy new places. But with sales of new condos down 17.9% in 2007, the real mystery is why these bankrupt firms didn’t get into the condo renovation business when they still had a chance.

Japan’s department stores out of ideas, intend to target young customers

Japan’s nationwide department store sales have declined for eleven years in a row. In June, they fell 7.6% year-on-year, and in May they slid 2.7%. February is the only month so far in 2008 to have seen a rise in department store sales, and that was by less than one percent. It seems to safe to say that 2008 is not going to be the year when department store sales turn around.

Yet, food sales have been rising month after month. In June, food sales made up 28.4% of all sales at departments stores, comprising the second largest category after clothing, which represented 34.0% of all sales in June. Sales of clothing fell 14.0% against June of 2007.

With clothing sales being pounded over recent months, department store operators in Tokyo have been pouring massive investments into their stores in order to upgrade facilities. Some of this - particularly in Tokyo’s Ikebukuro, Shinjuku and Shibuya areas - has been motivated by the opening a new subway line. Yet, the approaches taken have been inconsistent. Some department stores have declared that capital investments were being made to cater to senior citizens, others have announced upgraded areas for women’s clothing.

One might think simply, “They don’t know what to do.” Today’s Nikkei seemed to confirm that suspicion with the headline Department Stores Plan Renovations To Lure The Young.

This seems as though a move from beyond desperation. The Nikkei puts it simply:

Department store operators tend to cater to middle-aged and older consumers. Faced with sluggish sales of relatively expensive items, however, these retailers will now offer more products that younger consumers can afford.

Ouch.

Shibuya’s Tokyu Department store is spending 180 million yen for a renovation that it believes will lead to a 10% increase in sales. Generally, department stores who have announced this strategy appear to be targeting women in their 20s. Shinjuku’s Odakyu department store is spending 150 million yen - a fraction of the 8.5 billion yen it intends to spend overall by the end of fiscal 2009 - in order to create a new section of products designed to appeal to women in their 20s.

We would love to see the reports leading to the conclusion that such a move could result in a 10% increase in sales. With the way that declining department store sales are blamed on bad weather by the Japan Department Stores Association month after month, it would almost seem to make more sense to invest the money in a weather control machine at this point.

Or they could invest in new brands to open as small, niche-based shops. Nah.

Retail Roundup: Seiyu announces more changes to come

Let’s start by looking at Seiyu, a firm that has been much discussed on this website over the past year or so. According to the Nikkei, Seiyu intends to renovate about 90 of its locations over the coming two years, at a cost of over 30 billion yen.

Seiyu lost about 20 billion yen in fiscal 2007 and has been in the red for six straight years. The Nikkei tells us that Seiyu intends to sell more Wal-Mart brand casual clothing at its shops, despite the fact that clothing sales at supermarkets continues to fall - they were down 8.6% in May alone. Seiyu also intends to link up further with Wal-Mart in terms of sourcing products from China. Although this might make economic sense, it also bucks the trend of consumer mistrust of goods produced in China.

Finally, we see that Seiyu intends to carry an “expanded lineup” of flat-panel TVs. Again, supermarkets are generally selling less of this kind of stuff, and it’s hard to imagine Seiyu outpricing, let alone out-marketing the Yodabashi, Bic Cameras and Kojima Denki shops in this area.

Finally, sales per square meter continue to decline at Japan’s supermarkets. Yet again, Seiyu intends to focus its renovation efforts on its larger locations, with 6,000 to 10,000 square meters of shop space.

Ex-Nova President Sahashi arrested on embezzlement charges

Asahi is reporting that former Nova President Nozomu Sahashi has been arrested on charges of embezzlement, after having initially been brought in for voluntary questioning on Tuesday morning.

Since this arrest was so predictable, so obviously in the making for such a long time (and possibly only the tip of the iceberg), it can’t be good PR for the firm that decided to buy the rights to Nova’s name - and it doesn’t look like the negative PR is going to stop anytime soon. The decision to keep the firm’s muck-dragged name and not go through some sort of re-branding strategy baffles the mind.

As letsjapan.org is following these events in more detail, we recommend anyone following the case to head over there to read up.

HT to Shawn at letsjapan.org and JEN reader trev.

BizCast Japan #13 released: department stores, Fukutoshin, Seven-Eleven, whale meat imports, real estate and the iPhone in Japan

This is just a quick announcement that BizCast Japan #13 has been released over at Trans-Pacific Radio. In this edition of the show, Albrecht Stahmer and I discuss department store renovations, the new Fukutoshin subway line, Seven-Eleven’s move into China, Japan’s first import of whale meat in 18 years, the real estate market in Tokyo and the iPhone.

You can listen and comment at Trans-Pacific Radio.

DoCoMo has a new logo; increased market share to follow?

We’ve touched before on the struggles facing DoCoMo, Japan’s mobile market leader. As the introduction of number portability and aggressive advertising and pricing campaigns from rivals AU and Softbank have driven DoCoMo’s market share under 50% for the first time since late 1998, the firm is at a crossroads. It has attempted to reassert itself as an innovator by launching a line of phones that emit scents, and is pushing the same kind of family discount packages on its website that Softbank has leveraged into market share expansion over the past year. Read more

Metropolitan Musings: Panasonic Goes Gaga Over Google

Tokyo: Google and Apple are the tech brands du jour right now, something not lost on Panasonic as it seeks to consolidate its brand globally. On January 6, Panasonic and Google announced that they are pursuing a television capable of showing Google’s YouTube videos and Picasa photos. This made the news, but is it really newsworthy? At first glance, such a move seems like a stroke of genius, converging computer content with the living room television: the long-sought holy grail in modern media of marrying content and delivery. In reality, it’s an idea that will probably never get far, but served the extremely useful purpose of injecting Panasonic into the news cycle—joined at the hip with Google—at the beginning of the annual International Consumer Electronics Show (CES) in Las Vegas from January 7-10, the largest trade show in the industry. Not coincidently, Panasonic President Toshihiro Sakamoto was one of the six keynote speakers this year.

Simultaneously, they were also trying to beat Apple to the punch in the event that Apple CEO Steve Jobs were to announce something revolutionary at the MacWorld Expo on January 15. It turns out that Panasonic did not need to announce anything extraordinary as Apple’s key announcement, the MacBook Air—much more evolutionary than revolutionary—has received only a lukewarm reception from macheads. Read more

Japan’s leadership searching for excuses for the Nikkei’s drop, and waiting for instructions

Wednesday morning’s Nikkei is reporting that Japan’s six major banks have seen unrealized profits on their equity holdings reduced by some 60% since the end of last September. That adds up to a decline of 70% in value since the end of June 2007.

Yesterday didn’t help much, as the Nikkei lost 752.89 points to close at 12,573.05. Combined paper profits at the six firms have been wiped down from 12.5 trillion yen at the end of September to somewhere in the 6-7 trillion yen range.

What attention has all this gotten from Japan’s policy makers? Back on January 15, State Minister for Economic and Fiscal Policy (should those really be the same job?) Hiroko Ota told reporters, “The various price rises, including for food, are starting to affect consumer sentiment bit by bit…I want to watch things very closely.”

Not reassuring. Ota was commenting on the Economy Watchers Index, which had been released the week before and was down for the ninth consecutive month. The survey’s index hit its lowest level since January 2003. The Economy Watchers Index measures sentiments amongst people whose jobs are sensitive to changes in economic conditions - taxi drivers, barbers, restaurant workers, hotel staff and so on. Edward Hugh posted a chart over at Japan Economy Watch that shows how this index has fallen over the past year.

Nine straight months down. Ota’s response? Again: “I want to watch things very closely.” Read more

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