Evaluation of Investment in Old Detached Houses in Modern Times (3) The Spread of the Share Economy and Real Estate Valuation – The Spread of the Sharing Economy

Akiya Lab Articles | Roopt (Makigumi)

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

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

Introduction

Noi: Hello everyone. I'm Noi, the host of this channel. In this video, we will be interviewing Mr. Ueda, President and Representative Director of Gaiax, about the evaluation of investment in old detached houses in modern times.

Ueda: Nice to meet you.

Noi: Since last time, we've been discussing modern social conditions 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'll 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 work styles such as workation and remote work are now acceptable must also be considered in real estate valuation. I believe remote work, in particular, has significantly changed what is considered normal, especially with the advent of COVID-19. By the way, Noi, do you 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, how about the people working around you, Noi?

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

Ueda: Where do they all live?

Noi: Many of my friends still live at home, but some have moved to slightly larger homes because they work from home a lot. I myself was living in a very small place, but I ended up spending a lot of time at home, so I moved to a slightly larger home, and many people around me have done the same.

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

Noi: That's right. It inevitably becomes more expensive, so some people move a little further out. Also, with the increase in remote work, people don't go out as much, so some might think it's okay to live a bit further from the station.

Ueda: That's right. Thank you. At Gaiax, many members have left Tokyo, for example, moving to Fukuoka or Nara, even though they've hardly ever been there. I myself have been in Hayama all along, 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 work from their hometown. Since they have a fair amount of money, they move to a place near their hometown station with good access, suitable for daily recreation. For example, they might live in Hiroshima Prefecture. This kind of thing, based on improving communication environments, has become permissible after COVID-19, which is a significant factor.

Along with this, honestly, various peripheral businesses have also increased, and there's no end to listing them. For example, among the members of the Sharing Economy Association, there's a service called KitchHike's Nursery School Study Abroad. 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'll explain next, but in short, what it means is that while local nursery schools are struggling with declining populations, more and more regions are now saying they can accept immigrants at any time.

In a word, places outside of cities, rural areas, where the population has been drastically decreasing, are at an advantage. However, compared to the large wave of population decline, it's not as if many people are moving just because remote work is possible. In fact, it's not the case that many people are moving to sparsely populated rural areas for remote work; rather, it's noticeable that people are moving to certain popular areas because remote work is possible.

The places that are easiest for everyone to imagine, from the Kanto region, are Karuizawa, and then Hayama and Shonan; these areas are the most popular. But even beyond that, for example, a member of our company 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 like the left and right sides of the coast. Surfing is popular there, and there are stylish cafes, and people are moving to these popular places.

Areas that fail to gain popularity will decline. So, it's not that remote work will save rural areas because people are moving there; rather, while people are moving to rural areas for remote work, 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 these top-tier areas, if you ask if they are strong enough for land prices to rise, I don't think they are. It's probably more like maintaining or a slight increase.

About Evaluation

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

Another important point is brand and local community. If you go there and the cafes are boring, the businesses are boring, and it's just rice fields everywhere, you can't stand it. So, I think places where many people are constantly creating interesting businesses are more important.

Here's another point: to continuously produce such interesting people, it's relatively easy to have a constant supply of talent if there are universities or similar facilities in the region. Oita Prefecture has APU (Ritsumeikan Asia Pacific University), and the talent that goes there is starting various businesses around Oita, making it interesting. I think such places also possess latent power.

Until now, evaluations were based on very static or unchanging factors like past transaction prices or road values, but one wrong step could lead to a truly popular property. 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 popular?" For example, a while ago, popular tapioca drinks were lined up everywhere, attracting many people. They would evaluate whether to lend money based on that. In reality, we, as real estate investors, decide whether to buy land by looking at such things. If it's a thriving area, we're willing to pay a high price, but if it's an area that's clearly declining, we'll go there, observe the atmosphere, and if we think, "This isn't good," we won't buy it. I think it will be important in the future to make decisions in a way that is closer to the investor's mindset.

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

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

Noi: That's really interesting. So, with the spread of workation and remote work, are such activities happening in various places?

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

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

Ueda: Thank you.

Source: Akiya Lab