Valuation of old detached houses for investment in modern times (3) The spread of the sharing economy and real estate valuation – The spread of the sharing economy

Articles published in Akiya Lab | Roopt (Makigumi)

Makigumi, which operates Roopt, constantly researches case studies and other information on the revitalization of vacant houses and publishes them as columns.

We will explain the logic of how the spread of the sharing economy will affect real estate prices, and introduce specific sharing economy services.

Introduction

Noi: Hello everyone. I'm Noi, the host of this channel. In this video, we will be talking to Mr. Ueda, President and CEO of Gaiax, about the valuation of old detached houses for investment in modern times.

Ueda: Nice to meet you.

Noi: Since last time, we've been discussing the current social situation in four topics to create future models. The first is lifestyle and demographics, the second is workation and remote work, the third is the sharing economy, and the fourth is the evolution of technology. This time, we will be talking about the second topic, workation and remote work. Mr. Ueda, please.

Ueda: Nice to meet you.

What changes have occurred?

Ueda: We are currently discussing how to evaluate real estate, and just as a declining population affects valuation, the fact that workation and remote work are now acceptable work styles must also be considered in real estate valuation. I think remote work, especially with COVID-19, has significantly changed what is considered normal. By the way, do you, Noi, also do remote work or workation?

Noi: Yes. I work almost entirely remotely, and when I was a first-year university student, it was during the COVID-19 pandemic, so all my classes were remote, and that's how I lived.

Ueda: By the way, what about the people working around you, Noi?

Noi: Most of them work remotely. I feel like there are almost no people who have to go to the office every day from Monday to Friday.

Ueda: Where does everyone live?

Noi: Many people around me still live with their parents, but some people have moved to slightly larger homes because they work from home a lot. I myself moved from a very small place to a slightly larger one because I started spending so much time at home, and many people around me have done the same.

Ueda: Moving to a larger house often means moving a bit further away from the city, doesn't it? What do you think?

Noi: That's right. It inevitably gets more expensive, so people move a little further out. Also, an increase in remote work means less going out, so some people might think it's okay to live a bit further from the station.

Ueda: That's right. Thank you. At Gaiax, many members have actually left Tokyo and moved to places like Fukuoka or Nara, even if they've hardly ever been there before. I myself have been in Hayama for a long time, and the Shonan area has really seen an increase in people.

For example, many people come to Tokyo from university when they get a job. There are cases where they just work from their hometown. Since they have a fair amount of money and leeway, they move to a place near their parents' home that has good station access and is suitable for daily recreation. For example, they might continue to live in Hiroshima Prefecture. This kind of thing has become possible after COVID-19, with the improvement of communication environments, and that's a big factor.

Along with this, honestly, surrounding businesses have also increased in various ways, and there's no end to listing them, but for example, there's a service called 'Hoikuen Ryugaku' (Nursery School Study Abroad) by Kitchhike, which is also a member of the Sharing Economy Association. What this is, is a service where families live in a region for one or two weeks and enroll their children in a local nursery school. This is more related to the sharing economy domain, which I will explain next, but in any case, what it means is that while local nursery schools are struggling with declining numbers of children, more and more regions are becoming open to accepting immigrants at any time.

In a word, the advantage lies in areas outside of major cities, rural areas, where the population has been drastically declining. However, compared to the large wave of population decline, it's not as if a huge number of people are moving just because remote work is possible. In reality, it's not that many people are sparsely moving to the countryside for remote work; rather, it's noticeable that people are moving to specific, popular areas because remote work is an option.

The easiest places for everyone to imagine, starting from the Kanto region, are Karuizawa, and then Hayama and Shonan, which are the most popular. But even beyond that, for example, our company members who moved to Fukuoka chose Itoshima. By the way, Fukuoka is strong even within Kyushu, but within Fukuoka, there are two strong areas: Itoshima and Fukutsu, which are on the left and right sides of the coast. Surfing is popular there, and there are stylish cafes, so everyone is moving to such popular places.

Areas that fail to gain popularity will decline. So, it's not that remote work will save the countryside because people are moving there; rather, people are moving to the countryside for remote work, but not all areas will be saved. Only a select few winning areas will be saved. The land prices in Zushi and Hayama have risen considerably, but outside of this class, if you ask if they are strong enough for land prices to rise, I don't think they are that strong. I think they are at a level of maintaining or perhaps a slight increase.

About Valuation

Ueda: Now, I'd like to talk a bit more about that valuation. Until now, the focus has been heavily on whether it's urban, whether it's near a station, and whether it's in a densely populated area. In the case of Zushi and Hayama, Zushi Station was good because it was near the station. Hayama, for example, might not have been highly valued because it doesn't have a station, but Hayama actually has beautiful seas. In this era of remote work, the beauty of the sea or good sea views become relatively more valuable than being near a station.

Another important factor is brand, and the local community of people. If you go there and the cafes are not interesting at all, the businesses are not interesting at all, and it's just rice fields all around, you can't stand it. So, I think places where there are many people who constantly create such enjoyable businesses are more important.

Here's another point: in order to continuously produce such interesting people, if there are universities or similar facilities in the region, human resources are constantly supplied. Oita Prefecture has Ritsumeikan APU, and the people who went there are starting various businesses around Oita, making it interesting. I think such places also have potential power.

Until now, I think evaluations were based on very static or unchanging things like past transaction prices or road prices, but one wrong step can turn a property into a truly popular one. I want you to have the mindset of how to evaluate this, and to want to evaluate it.

If a financial institution were to lend money to a cafe, they would ask, "What kind of cafe is it? Is it a popular cafe?" For example, a while ago, popular tapioca drinks were lined up and many people came, right? And based on that, they would decide whether or not to lend money. In fact, we, as real estate investors, look at such things to decide whether or not to buy land. If it's a booming area, we're willing to pay a high price, but if it's just going to decline, we go there, look at the atmosphere, and if we think, "This is no good," we won't buy it. I think it will be important in the future for decisions to be made in a way that is closer to the mindset of investors.

Noi: Mr. Ueda, thank you for your talk. What kind of changes have occurred around Hayama, where you live, after COVID-19?

Ueda: Actually, a lot of interesting people from the Kanto region have gathered in the Hayama and Zushi areas. The people who originally ran businesses locally and those interesting people who moved from Kanto, about 100 of them, have pooled their money to create a bar in front of Zushi Station. Only the 100 shareholders who invested can participate at night, but they always exchange information among themselves right in front of Zushi Station. Many other projects are also starting up, and they're having daily conversations like, "Shall we build a sauna together?" or "How about we develop this co-working facility together?" It's really interesting.

Noi: That's very interesting. So, after workation and remote work became widespread, these kinds of activities are happening in various places, aren't they?

Ueda: If it weren't for remote work, these places would have been in decline, but now, due to remote work, there are not 100 or 200, but several dozen places where the trend has reversed.

Noi: Thank you. This time, we talked about workation and remote work as part of the current social situation for creating future models. Next time, Mr. Ueda will continue to talk about the sharing economy. Please watch the next video as well. Thank you for watching.

Ueda: Thank you very much.

First published: Akiya Lab (2024 - now integrated into this site)