THREE MISCONCEPTIONS ABOUT PROPERTIES IN JAPAN PRITI DONNELLY
Misconception #1 Properties are Made of Wooden Structures
Some investors have concerns about the materials used to build real estate in Japan and whether or not they
can withstand the force of earthquakes and tsunamis. This misconception stems from traditional wooden
houses which used to line the streets of Japan in the former imperial capital. Most investors focus on buildings
for the cashflow play, rather than houses. Therefore, the concern is an outdated concept and no longer a
consideration. Furthermore, wooden houses are being steadily replaced by earthquakeresistant, reinforced
concrete apartment blocks.
Misconception #2 Properties Built after 1981 Pose Less Risk
In 1981, the Building Standards Law was revised to protect residential and commercial structures against
earthquakes. In 2006, building certificates and inspections became even more regulated subjecting builders to
inspections during the construction process for buildings above three stories. Because of the revisions to the
Building Standards Law in 1981, some investors consider 1981 the turning point for sounder structure. Herein
lies another misconception.
A building’s condition is affected by more than just its age. A properly managed accumulated funds pool can
also affect its condition. With adequate funds, buildings built prior to 1981 can be retrofitted to bring them up to
code by regularly renovating, repairing and restrengthening exterior walls and taking care of unforeseen
renovations. Alternatively, a newer building could be poorly managed with insufficient funds for renovations
and maintenance. As you can see, investing in an older building under these circumstances could be the wiser
choice to minimize risk.