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News & Articles

2014.11.14

Shared Housing in Japan: The Non-Japanese Perspective

     The idea and implementation of shared spaces, living and working, in Japan is fairly recent in its current incarnation. Within the past 5 years the number of shared housing units has blossomed from a handful to several hundred locations throughout Japan. The core reason for this explosive growth stems from a host of systemic issues faced by both Japanese and Non-Japanese renters alike. Issues such as searchability, ease access, move in costs, sponsorship, and lease durations which have kept the Japanese rental market in stasis since the end of the Second World War are at long last being addressed by new innovations and liberalizations of which the shared house is the exemplar today.

     Over the course of the final years of the Second World War destruction of housing within major cities like Tokyo and Osaka was catastrophic. Tokyo alone lost almost 83% of its living spaces with Osaka close behind at 79%. Destruction of major urban spaces on this scale necessitated a truly massive rebuilding effort after the conclusion of the war. However, efforts to implement a directed reconstruction of major cities in Japan was stymied for several years during the initial phase of the occupation due to uncertainties among the Allied powers regarding the direction and shape they were willing to permit for the Japanese economy and the general scarcity of materials and capital. Once the rebuilding efforts began to gather steam in the late 1940’s and early 1950’s much of the initial shanty type structures thrown up in the immediate aftermath of surrender were torn down and replaced by cheap, fast pre-fab units. The goal of the second wave of reconstruction was to build as much, as quickly as possible.

     One of the touch stones of the Japanese urban housing market since the end of the war has been the very small size, generally limited quality of construction and unimaginative design of both homes and apartments. This did not just occur naturally but was rather the result of profit motive, massive population pressures, lack of renter/buyer options and land owner/construction company lobbying. Because Japanese land owners and builders were starting from a scorched earth blank slate they could build homes and apartments to whatever dimensions and level of quality they wished without facing any meaningful market competition from superior available units. From the government point of view at the time the size, amenities and general quality of housing was far less important than that it be built quickly and to scale to meet the needs of a rapidly expanding Japanese urban population and end the critical housing shortages plaguing the country. To this end government permissions were granted to builders and owners allowing for sizes and quality to be kept far below the norm during the pre-war years. What was originally intended as a stop gap measure has become the norm in Japan and the legacy of these decisions have had a lasting and powerful impact on the housing market in Japan to this day.

     With the profit margins so high on “Japanese Style” apartments and homes for owners and builders and without any remaining competition from larger or better built units and with the tacit support of the government what should have ended shortly after the war, an age of the uninsulated shoe box apartment, instead became a norm which today most Japanese have come to consider natural. There is absolutely no reason, beyond naked greed, government complicity and lack of consumer options, for urban housing in Japan to be as small, poor in quality and limited in imagination as it has been for the past 70 years.

     The continuation of the poor quality of Japanese housing has been sustained through a system put in place to make entry and moving exceptionally difficult and expensive for renters. The goal of the system is to lock in renters and prevent meaningful competition from emerging. In a more open market the renters would have the mobility to vote with their feet, as it were, and move to housing options that offer superior space and quality. Renter mobility also serves to reduce overall rent prices through direct competition. Stifling renter mobility in Japan through the triad of primary access via real estate companies, extremely high move in costs, and pricing collusion has led to the current bloated real estate market and the highest rental costs, for some of the smallest and lowest quality housing of any nation in the world. All of this is fixed for Japanese renters but what of the Non-Japanese who choose to live in urban Japan? On top of a system engineered to lock people into highly overpriced housing for the long term while extracting the maximum rent possible Non-Japanese face a myriad artificial barrier to access even the most basic of housing options. Policies such as Non-Japanese renter sponsorship (whereby a Japanese national has to legally obligate themselves to the lease of a Non-Japanese person for the duration of its existence), the legal ability to discriminate based on any factor which both the real estate and property owners have, the ability to charge higher rents and a larger initial move in fee to Non-Japanese based solely on race, all real estate materials being in Japanese, near zero legal recourse in the event of issues and general Japanese racism makes access to an already convoluted housing market exceptionally challenging and expensive for Non-Japanese.

     Shared housing, as it exists in Japan emerged for one reason, to address the massive over building and glut of empty apartments which resulted from the bubble period and consequent recession. Currently the percentage of unoccupied apartments in Tokyo alone stands at 23%, in other major metropolitan centers it is even higher. For land owners and construction interests the fact that over 1 in 4 apartments and homes stand empty in Japan today meant that to fill vacancies a new system would have to be put into place. Instead of facing the main impediments, lack of easy access, high rent and move in costs and overall poor design a stop gap series of mini booms is taking place in Japan of which the shared house is the most visible.

     Despite popular belief the current housing glut has little to do with a declining population in Japan. The effects of Japan’s slowly shrinking population, centered as they are mainly in the rural areas, will take several more decades to put negative pressure on the urban housing market. Instead the main causes are all self-made by land owners, speculators and developers. Rampant overbuilding during the bubble years in Japan, 1980’s and early 90’s, caused the total unit numbers to exceed population and any conceivable demand by a wide margin (at least 25% in Tokyo). The land itself was so valuable and any improvements/new building on it, regardless of actual economic viability, only made it more so. Thus, for land owners and speculators the potential profits from land value appreciation due to building more and bigger apartment complexes far outweighed any potential for loss from low occupancy rates. It was never about apartments in use it was about apartments in being. We are seeing the exact same phenomenon take place today throughout China as their own property bubble inflates well past the point of economic sense. The second core factor in creating a glut of housing in Japan is the attitudes and preferences of the Japanese themselves. Owning a home is no longer a prerequisite of marriage or of social success. The aspiration value of ownership has declined heavily over the past 20 years as first the cost of land escalated outside of realistic purchase for the majority and then, during the recession, as large scale personal investment in land became economic unviable for large parts of the population. The result of this is what we see today in Japan where so many people live with their parents, even well into their 30’s. The percentage of renters versus single family ownership of land is the lowest that has ever been recorded in modern Japan. The logical market reaction to these trends should have been a liberalization of the housing market, increased renter mobility and substantially lowered costs. While these changes may well come about as further pressure is placed on an already weak housing market currently there is seemingly little movement in this direction.

     The earliest of the new generation of shared spaces emerged in the mid 2000’s. The result of property owners trying to develop means of attracting renters while still maintaining small space rooms (packing the maximum number of tenants into the smallest real estate foot print) and high rents. To this end the idea was born to create a housing type that incorporated tiny single rooms with shared bathrooms, typically one per floor, and shared common spaces. The draw would be two fold. First, the spaces would be newly remodeled along the lines of the most current trends and with a degree of shared space amenities not generally available in the housing market in Japan. One of the defining features of shared housing today in Japan is just how opulent the shared spaces, kitchens, restrooms and even gyms and outdoor areas are. The idea is that if the shared spaces are nice enough then people will be willing to trade these perks for the tiny size of their rooms, lack of private spaces and high rents. The second draw is the creation of intentional communities. Generally most shared apartment buildings are centered around some theme. This may be all students, people working in a similar profession, those coming from the same area outside of Tokyo, shared interests like drawing or music, etc. As traditional social structures continue to decline in Japan the need for a sense of community remains undimmed. The previous generations’ standard “school-company-retirement/neighborhood” pattern for creating shared social groups has evaporated as mobility among companies increased and the advent of modern mass media drew people away from their peers. Shared spaces intentionally work to generate a new place for social circles to emerge and this, for Japanese, is highly attractive.

     Using broad strokes Non-Japanese people living in Japan have traditionally broken down into three distinct categories in the eyes of the Japanese among whom they live. Western, other Asians and the Others. While Westerners have faced less trouble in finding housing options open to them in Japan there have always existed significant obstacles to freely moving into and out of housing here. For Non-Western Non-Japanese the story has been very, very different. Japanese generally polite regard for Western Non-Japanese absolutely does not extend to Asians and Others. The number of “Others”, people from South America, the Middle East and Africa has always been small. Currently there are less than 30,000 others, excluding Brazilians in Japan. For these residents the language, cost and racial discrimination issues are largely side stepped through strong national group bonding and mutual support networks. By far the largest group of Non-Japanese in Japan are the other Asian, mainly Chinese and Korean. This is the group that faces the greatest degree of discrimination within Japan and the most difficulties accessing the general housing market. Their stories are largely unheard in Japan or in the West but they make up approximately 97% of the total Non-Japanese population, excluding the US military presence. Given such numbers strong group bonding and mutual inter-community cooperation is difficult and the biases held by Japanese, most particularly land owners and real estate companies, is telling and highly exclusionary.

     The story of Non-Japanese shared housing in Japan is two parted. The majority of NJ focused shared house type units in Japan today were created to cater to Chinese and Korean residents. Among the Type I, Non-Japanese resident only, shared housing almost 2/3 of it is Chinese or Korean only. For the Type II, hybrid Japanese/Non-Japanese residents, shared housing the large majority of Non-Japanese living in this are Western. This split itself is telling. For Asian residents the ability to access the standard Japanese housing market is extremely limited and yet for those with adequate resources there is no desire to live in typical “gaijin ghetto” style accommodations into which large numbers of Chinese and Koreans are forced. For Western residents of Type I, all Non-Japanese, shared housing the prime mover is a lack of basic capability to operate in Japan (minimal language, few personal connections, limited capital, etc.). For Type II, hybrid, shared houses the appeal is in the community. The ability to live among Japanese people and experience life “like a Japanese person”. Each of the various shared housing models has a central and yet distinct reason for being and the Non-Japanese who gravitate to one or the other does so by both choice and due to systemic constraints.

     With so much empty housing in Japan one might wonder why the tiny rooms, lack of privacy and obligatory community of shared housing has proven so popular over the last ten years. The reality, for both Japanese and Non-Japanese, is that the real draw of shared housing rests not in the community or the so-called “amenities” of the shared spaces but rather with the systemic differences between shared housing and standard Japanese housing market practices.

     Discoverability: Between the tiny fragment of the total population that Non-Japanese make up, the disinclination of Japanese owners to rent to Non-Japanese and the generally poor level of Japanese peoples’ ability with other languages it is somewhat understandable that only a micro fraction of the available housing units advertise in English or other languages. However, Non-Japanese shared houses, almost uniquely, do run English and other language advertising and make their properties easily discoverable online.

     Accessibility: Interaction with the ownership elements of Non-Japanese focused shared housing can usually be done in English. There is no Japanese citizen sponsorship requirement to move in. And leases are month to month, instead of the standard two year agreements for Japanese rental.

     Move-In Costs: A typical Japanese rental property will still ask for upwards of 5-6 months rent, in advance, to move into a property. This is among the highest in the world and a major obstacle for most Non-Japanese renters. Shared house type rentals generally have a much more streamlined, first month and one month, refundable deposit requirement to move in.

     Language: communications are handled in English or other native languages which is highly reassuring and offers some recourse in the event of problems.

     Community (type I): access to an existing community of one’s own countrymen and the potential to pool experiences can ease the entry into Japan itself and offer a psychological safety net for new residents.

     Community (type II): there exists a strong desire among some segments of the Non-Japanese population to mingle more easily with Japanese people and the shared house environment offers a unique chance to do so. The main draw for this type of housing is the opportunity for cultural “immersion”.

     Superiority to other options: of typically better construction and environment that other, more easily accessible, foreigner friendly rental options (i.e. “gaijin ghetto” style buildings).

     Discrimination: not having to deal with discrimination and blatant racism common to the rental process in Japan is a main motivator for Non-Japanese to prefer for the shared house option.

     The current Japanese housing system is stuck in a system out of time. Both in the sense that the era which spawned it is thoroughly over and that there are powerful economic forces currently working to pull it apart. While there is no immediate challenge to the dominance of the current model of high price, low space, densely packed and low quality the potential for change is present and the necessity soon to be pressing. Emerging and increasingly popular options, such as shared housing, for Japanese and Non-Japanese alike are coming online in increasing numbers. The shrinking profit margins of property owners, the ease of creating startup challengers offering disruptive changes to staid systems, the tastes and needs of Japanese and Non-Japanese renters as well as the simple passage of time for poorly built buildings in Japan all offer the possibility of real change coming to Japan’s housing market in the near/mid term. In the meantime options like shared spaces will continue to proliferate and offer a different and potentially superior solution to Non-Japanese renters in the face of the many travails of the current system.

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