SleepWell Data: Japanese Property Foreclosure Data Resource

Setagaya Ku, Can the Mind Really Agree With the Heart?


Posted: Thursday, 13th of September 2012

R2012-10-11  The scenario has been around for eons but when i meet couples looking for a place, variations withstanding, the wife still wants a lovely place while the husband insists on a solid investment. Both sexes, I believe, have come a long way in appreciating eachothers’ needs, being able to discuss and compromise but this week I thought, I'ld search with my heart and see if my mind could really agree!

 My criteria being a large, hearty size freehold apartment, over 70m2, and a management fee less than 20,000JPY/mth, within 12 minutes from a station in a conservative yet well to do area. Click “search” and this little beauty popped up. Case File No: H24N108 in Setagaya Ku, 95 square metre apartment overlooking a small park with zero management fees! Login to http://sleepwellhomes.jp and then click on the link, http://sleepwellhomes.jp/Listing_PropertyDetail.php?id=2681


Setagaya Ku is the 2nd largest of the 23 Wards a little smaller than Ota Ku so quite diverse but it locations between the Keio Line out of Shinjuku and the Odakyu Line out of Shibuya are in a sought after, highly residential, affluent area with many schools and what we can’t have enough of in Tokyo, many trees.  Very pleasant on the senses indeed.

 Adding to the excellence of the location is, as you would expect, 3 minute proximity to its closet station, Matsubara Station on the Tokyu Setagaya Line. More importantly of course, only 9 minutes walk to the Keio Line's ShimoTakaido Station which is a mere 4 stops from Shinjuku but unfortunately only the Rapid service stops. Nonetheless the renown MeidaiMae Station is only 16 minute walk away where all services stop and from which Shibuya is only 3 stops with the Keio-Inokashira Line's rapid service.

 The property itself is a 3LDK apartment with 95m2 of floor space and quite a unique, interesting layout. Walking in from the street to the right of the building's garage, the apartment's entrance is up a set of stairs on the 2nd floor. The entrance is quite roomy with plenty of storage for shoes and the like. Just inside to the left are 2 good size bedrooms both with a decent amount of in-built wardrobes and large windows overlooking a park on the other side of the street. From the main entrance we walk down a short set of stairs into the main part of the apartment bringing us to a very spacious, open Living/Dining Room area which features a large L shape Kitchen on the room’s far side and always a touch, window over the kitchen sink.  The bathroom, toilet and laundry are all tucked neatly at the back of the apartment. The laundry is only steps away from a side door which leads to a set of outside stairs for the roof where no doubt, you guessed it is the clothes line on the roof balcony! The main bedroom is one of those you love but possibly dislike at the same time. It has plenty of in-built wardrobe space and 2 very large windows which step out onto a not so squeezy balcony which probably leaves really only one position for the double/ queen sized bed on one the south wall only restricting the "flow" of an otherwise lovely bedroom. My only other dislike is that the living dining room did not have the balcony instead. I do like that this room is about 3m in from the south border of the property providing the ability for light to be able to enter the wide window. A far cry from some places where if you open your window, you can see and touch your next door neighbour. So, all in all, not too shabby for the Mrs at all.

 Ok let's talk the men's stuff! The 2 storey building itself has only 2 residences with a massive combined floor area of 402.34m2. Our target property owning a still generous, said 95.74m2. It is 32 years old and built of reinforced concrete with 8 years of depreciation remaining. The ownership is a little complex and seems whereby the property has been handed down through the generations. Our owner is a group of 3, possibly a casualty of the famous Chinese wisdom of the rich, and i'm paraphrasing, "the first generation makes the money, the 2nd keeps it and the 3rd loses it." But if you were going to live here and that exactly would be my purpose, you'ld want be extra nice to your neighbours and not mention this since they own the lion’s share of the building the remaining 307m2 and are not charging any management fee for the apartment itself. (A risk therefore exists that they may introduce a fee in the future for non-related tenants.)

 This brings me to another exciting and most valuable point about this property, the land. The entire building is on total land size of 397.8m2 which has zoning designated as Low Rise Residential Zoning and 60%/150% for construction. Our apartment has a 175.71m2 parcel of land which, unusual for multiplex freehold apartments, has it's land clearly defined as being on south side of the property.  This i believe has 2 very advantageous benefits. Firstly, the land being clearly defined offers the opportunity for a separate dwelling in the future. Next, being the corner block also means that if built on separately there would be a good chance that the plot be granted a construction ratio increase to 70%/160%. This could of course afford you a 120m2 on first floor and a few apartments up top for possibly the kids or rental. But let's get ahead of us here, with less than one third ownership of the existing building and only one other side having the remaining 70%, we don’t have such a big say on when that time will be!

 Nonetheless the land is the value point here. Having been recently in the area researching a few properties I know that sales have shown land values to be around the 600,000JPY/m2 region. Excluding the dwelling completely this puts our plot to the value of 105MJPY.

 This leads me to think that this property's appraisal of 34.25MJPY is well undervalued. However before we go too overboard with the bid, there are signs of possible leasehold issues also so it is critical that one checks this thoroughly while also allowing for the possible introduction of a management fee in the future in your calcs. However if these issues proved minimal and a potential upside of 70MJPY existed, or even half that, the mind would certainly agree with the heart!! Last bids to be submitted by 5pm on 25th Sept. and Bid to Win!

 Disclaimer: SleepWell has not thoroughly investigated this property and accepts no responsibility of loss due to purchase or attempts to purchase this property. It is absolutely imperative that the prospective buyer undertakes his own investigation or requests the assistance of SleepWell Consulting in procuring this property for them.

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