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We will explain how the spread of the sharing economy impacts real estate prices, its logic, and introduce specific sharing economy services.
Noi: Hello everyone. I'm Noi, the host of this channel. In this video, we will be interviewing Mr. Ueda, Representative Executive Officer and President of Gaiax, about the valuation of old detached houses for investment in the modern era.
Ueda: Thank you for having me.
Noi: Since last time, we've been discussing the current social conditions for creating future models, divided into four topics. 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 discussing the second topic, workation and remote work. Mr. Ueda, please begin.
Ueda: Thank you.
Ueda: We are currently discussing how to evaluate real estate, and just as a declining population affects valuation, the fact that work styles like workation and remote work have become acceptable also needs to be considered in real estate valuation. I truly believe that remote work, especially with COVID-19, has significantly changed what is considered normal. 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: 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 did that; I used to live in a very small place, but since I started spending a lot of time at home, I moved to a slightly larger one, 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 parents' home with good station access and suitable for daily leisure. For example, they might continue living in Hiroshima Prefecture. This kind of thing has become possible after COVID-19, with the improvement of communication environments as a base. This is a significant point.
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 while local nursery schools are struggling with declining numbers, more and more regions are now saying, 'We can accept immigrants anytime.'
In a word, places outside of major cities, rural areas that 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 reality, it's not that many people are moving to rural areas sparsely for remote work; rather, it's noticeable that people are moving to specific, popular areas because they can work remotely.
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 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 these popular places.
Places that can't gain popularity will decline. So, it's not that remote work means people go to the countryside and the countryside is saved; rather, people go to the countryside for remote work, but not all areas are saved. Only a select few 'winning' areas are saved. 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 at a level of maintaining or perhaps a slight increase.
Ueda: Now, I'd like to elaborate a bit more on that valuation. Until now, the focus was heavily on whether it was urban, near a station, or in a densely populated area. In the case of Zushi and Hayama, Zushi Station being near the station was good. Hayama, for example, didn't have a station, so it might not have been highly valued, but Hayama actually has beautiful oceans. In this era of remote work, the beauty of the ocean or the ocean view 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, you can't stand it. So, I think places where many people are constantly creating 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, there is a constant supply of talent. Oita Prefecture has APU of Ritsumeikan, and the talent that went there is creating various businesses around Oita, making it interesting. I think such places also have potential power.
Until now, I think valuations 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, 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 reality, we, as real estate investors, look at such things to decide whether or not to buy land. If it's a thriving 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 really 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 constantly exchange information among themselves right in front of Zushi Station. Many other projects are also starting up, and they're always talking about things like, "Shall we build a sauna together?" or "How about a co-working space like this?" 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 places would have been in decline, but now, with remote work, there aren't 100 or 200 places that have turned around, but I think there are dozens.Noi
: Thank you. This time, from the current social conditions for creating future models, we discussed workation and remote work. Next time, Mr. Ueda will continue to talk about the sharing economy. Please watch the next video. Thank you for watching.Ueda
: Thank you.First published: Akiya Lab (2024 - now integrated into this site)
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