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

Articles on 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 impacts 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 interviewing Mr. Ueda, the Representative Executive Officer and President of Gaiax, about the evaluation of investment in old detached houses in the modern era.

Ueda: Thank you for having me.

Noi: Last time, we discussed the current social conditions for creating future models, divided into four topics. The first was lifestyle and demographics, the second was workation and remote work, the third was the sharing economy, and the fourth was the evolution of technology. This time, we will be discussing the second topic, workation and remote work. Mr. Ueda, please begin.

Ueda: Thank you.

What kind of 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 have become acceptable work styles must also be considered in real estate valuation. I believe that remote work, in particular, has significantly changed what is considered normal, especially with the advent of COVID-19. 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: How about the people working around you, Noi?

Noi: Most of them work remotely. I think the number of people who have to commute every day from Monday to Friday is close to zero.

Ueda: Where do they all live?

Noi: Many people around me still live with their parents, 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 away from the city, doesn't it?

Noi: That's right. It inevitably gets more expensive, so people move a little further out. Also, with more 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 actually left Tokyo and moved to places like Fukuoka or Nara, even though they had hardly ever been there before. I myself have always been in Hayama, and the Shonan area has really seen an increase in population.

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 and suitable for daily leisure. For example, they might continue living in Hiroshima Prefecture. This has become a major factor in the post-COVID era, as communication environments have improved, allowing such things to happen.

Along with this, honestly, various related businesses have also increased, 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 short, what it means is that local nursery schools, which are struggling with declining populations, are increasingly welcoming migrants at any time.

In a word, places outside of major cities, rural areas, which have been experiencing significant population decline, are at an advantage. However, compared to the large wave of population decline, if you ask if many people are moving because of remote work, it's not that many. In fact, it's not that many people are moving to rural areas sparsely for remote work; rather, it seems that people are moving to specific, popular areas because they can work remotely.

The places that are easiest for everyone to imagine are Karuizawa in the Kanto region, and then Hayama and Shonan, which are the most popular. But even if not there, 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, so everyone is moving to such popular places.

Places that can't gain popularity will decline. So, it's not that remote work will save rural areas because people are moving there; rather, remote work will lead people to rural areas, 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 it's more like maintaining or a slight increase.

About Valuation

Ueda: Now, I'd like to elaborate a bit more on that evaluation. Until now, the focus was heavily on whether it was urban, whether it was near a station, and whether it was a densely populated area. In the case of Zushi and Hayama, Zushi Station being close to 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 ocean views. In this era of remote work, the beauty of the ocean or the ability to see ocean views becomes relatively more valuable than being near a station.

Another important point 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, that's unbearable. So, I think places where there are many people who constantly create interesting 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, there is a constant supply of talent. Oita Prefecture has APU of Ritsumeikan University, and the talent that goes there is 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 roadside land values, but if you make one wrong move, it can become a truly popular piece of real estate. I want you to have the mindset of how to evaluate this, how to try 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, tapioca drinks became very popular, and many people lined up for them. They would evaluate whether to lend money or not based on that. In fact, we, as real estate investors, look at such things to decide whether to buy land. If it's a thriving area, we're willing to pay a high price, but if it's an area that's just going to decline, we'll 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 to make decisions in a way that is closer to the mindset of such investors.

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

: Actually, a lot of interesting people from the Kanto region have gathered in the Hayama and Zushi areas. The people who originally ran businesses there, and these 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 being launched, and they have daily discussions like, "Shall we build a sauna together?" or "How about a co-working space like this?" It's really interesting.: Actually, a lot of interesting people from the Kanto region have gathered in the Hayama and Zushi areas. The people who originally ran businesses there, and these 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 being launched, and they have daily discussions like, "Shall we build a sauna together?" or "How about a co-working space like this?" It's really interesting.

: That's really interesting. So, with the spread of workation and remote work, such activities are taking place in various locations, aren't they?Noi

Ueda: If it weren't for remote work, the numbers would have just kept decreasing. While there aren't 100 or 200 places that have reversed this trend, I think there are several dozen.

Noi: Thank you. This time, we discussed workation and remote work from the perspective of modern social conditions 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.

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