00:00:00: Not everything makes money, you know and I think having done it for this period of time now we've got a fair feel For what's gonna make money?

00:00:08: And what's not going to make money.

00:00:10: so if we feel like it's not Gonna Make Money for the owner.

00:00:14: And It's not Going To make Money for Us its Better If We don't Try and try and manage it and You Know We try and Provide Some Guidance for People if Possible Before They make The Purchase in A Heart Will Recommend okay we understand that you would like to do this kind of thing but actually, we feel like that will be a better decision.

00:00:36: But some people are just capped by budget.

00:00:38: so naturally there is a certain budget threshold that's required in Kyoto.

00:01:00: Either folks and welcome or welcome back to Nippon Trading International's Japan Real Estate Podcast.

00:01:06: I'm your host, Ziv Nakajima again And this podcast is brought you among others by Emil Gorgies of realestate.jp.

00:01:13: He's a Tokyo real estate agent who specializes in serving international or mixed nationality families Who are looking for the perfect family home.

00:01:21: So, Emile is an Australian.

00:01:22: He's been living here in Japan for over two decades now and for about half of that time he has been buying selling and managing real estate properties... ...in Tokyo on behalf his own family and the great many happy clients And also acts as a mortgage broker on behalf of this client.

00:01:36: so he got dedicated loan officers.. ..and many Japanese megabanks.

00:01:41: And if you're a regular listener of the podcast, You probably already know him from our JREP The Japan Real Estate Experts Panel Sessions.

00:01:48: Which means that your all ready aware of fact That the man is an absolute fountain Of wisdom on all things related to real estate in japan and In particular to family homes ,the greater Tokyo metropolitan area and mortgages.

00:02:02: Most importantly he's incredibly generous with his time and advice which Is more than happy to provide at no cost or commitment To anyone asking.

00:02:09: so If u've been thinking about buying your home in Tokyo, but you've been sitting on the fence for a while or just want to have chat with a real expert.

00:02:18: Drop him online at salesatrealestate.jp.

00:02:23: Hit up today and start exploring.

00:02:39: probably doesn't need a special introduction if you're a regular listener of the podcast and definitely, If You've Been Attending Any Of The Japan Real Estate Summits In Person Or Online.

00:02:48: It's Chai Kanda founder & CEO of Shiki Properties based in Kyoto And he is also our resident panel speaker and presentation giver on the topic of the Kyoto and Kansai areas property markets as well as high-end hospitality properties and boutique hotels.

00:03:03: So we chat about his own personal history and work at Shiki.

00:03:06: We get around down on Kyoto short term stay property market which is a lot more mature and professional than other similar markets nationwide.

00:03:13: We also talk a bit about why the hybrid holiday home slash Airbnb model isn't as frequent or as profitable there anymore?

00:03:22: The clients that they serve, the budget that these clients another investors are targeting both in Kyoto and Osaka.

00:03:28: And what should investors be purchasing?

00:03:30: so Which property profiles exactly Are the ones to look into their?

00:03:34: We also talk about how the tourism market is faring there this year, and why the current regulatory and licensing landscape including some recent deal samples.

00:03:45: We riff a bit about whether one should buy ready-to-go, renovated properties or buy them old and renovate on your own.

00:03:53: And of course how's the current political climate and anti-foreigner sentiment affecting the short-term state market in his backyard specifically?

00:04:01: What it has done to service standards, to recruiting and retaining foreign talent... ...and the tourist and over tourism problem as whole.

00:04:09: And finally about Shiki's expansion into boutique hotels, winter resort hospitality projects and even residential products.

00:04:16: So really interesting conversation with a real local expert.

00:04:19: have a listen and I'll see you again on the other side.

00:04:22: All right.

00:04:22: Well good to see you Again.

00:04:24: man.

00:04:26: To the few listeners viewers who've been kind of living under rock or not attending The Japan Real Estate Summit where we are now is staple of quick brief personal professional intro.

00:04:39: Yes, sure.

00:04:39: So I'm Chai Kanda the founder and CEO of Shiki properties.

00:04:44: And so we have a management business as well as a brokerage and were headquartered in Kyoto.

00:04:49: So it deal with a lot of Machia style properties.

00:04:52: We have fifty of those that we manage As well as three boutique hotels.

00:04:57: so both sides of That businesses are growing And our brokerage business deals with a load of those properties either already purchased those properties or interested in purchasing and then we help them to find those properties.

00:05:14: And, um... We offer the full range of services including you know introduction to architect and product management of renovation through to operation, the linen cleaning, guest communication reporting and then if they decide to sell one day we can assist with that as well.

00:05:38: So you leave a drink, breathe hospitality properties basically?

00:05:43: I'm afraid so...

00:05:45: That's quite

00:05:46: accurate as well but yeah it's a twenty-fourth seven three sixty five business cost as well to run that sort of business.

00:06:02: It's not just one shift Monday-Friday, nine to five.

00:06:06: so there is a huge amount of cost and complexity involved with running the business particularly in operation side.

00:06:15: it can be a bit of thankless task but we have been doing this for twelve years now.

00:06:23: Twelve you okay.

00:06:24: How did you how?

00:06:25: Did you get up and get into it?

00:06:26: You told me a long time ago, but I kind of forget.

00:06:29: And there's other people who don't even know how.

00:06:31: what your personal background?

00:06:32: Yeah Yes So i mean personally.

00:06:35: um II grew up in sydney australia and Um, I've got a finance degree and uh law degree Both of which are not really using I guess.

00:06:44: But

00:06:46: the finance aspect must come in handy now Definitely and the law actually comes to think about.

00:06:51: yeah

00:06:52: To be honest, not too bad choices if you don't know what to do.

00:06:57: And I had a little bit of crack in both those industries.

00:07:01: but for me i was always interested in business and...I did have a job at Osaka for seven years which is fantastic way to understand how to work with Japanese people In Japan.

00:07:14: it's very good paid education If we look into that.

00:07:21: But following that, travel was always my passion.

00:07:25: And I was in Osaka and see this Airbnb thing come up... ...and thought i'll just throw my apartment on there while I'm traveling then realized the trip's become free!

00:07:38: This is quite interesting.

00:07:40: so yeah it spent a little bit of time in Kyoto when first came to Japan.. ..and even at that time walking around Looking at the older properties, which are called machia there these traditional Japanese wooden houses looking at those and thinking like you know There's something here.

00:08:00: Like this is really interesting And I had some very fond memories of my time in Kyoto some twenty years back now.

00:08:08: But as I saw Japanese tourism trending higher You know, that's gonna keep going and Kilda is gonna be a key player in the story.

00:08:20: And turns out for a change.

00:08:22: I was right on a few things.

00:08:23: in hindsight We've gone from a situation where we had ten million inbound travellers when i first started business to forty two point seven last year.

00:08:33: so Wow!

00:08:36: It has been wild ride.

00:08:38: Um, I'll also mention this but you know when i started it.

00:08:42: Uh, I had a few people tell me uh You're too late.

00:08:46: So um II always like

00:08:49: to late Too late how?

00:08:50: How do you mean the oversaturated market

00:08:52: too late to the industry?

00:08:53: yeah Yes Okay Yeah and we've with more than quadrupled.

00:08:57: so um, you know that's something I I often say When out of the opportunity To speak to an audience Is that you know people might tell you you're too late, and they are probably wrong.

00:09:14: Are a lot of your clients the ones who own and run these properties?

00:09:18: I mean not the guests...are a lot them similar to what you've described like having it place and renting out so that pays for their travel when they aren't using this kind thing or more institutional running an actual fully pledged business?

00:09:34: Yeah, and interesting you phrased it in that way.

00:09:38: So none of them are like how I describe myself initially actually... I don't think even a single one which is interesting.

00:09:46: so when i first kicked off It was basically just trying to get a few extra dollars while I was away.

00:09:56: I didn't have the proper license.

00:09:58: Most people didn't even know there was a licence at that point in time.

00:10:00: Didn't need a licence back then did you?

00:10:02: Well,

00:10:03: well i think he maybe did actually but nobody...I didn't really knew about it.

00:10:06: You're like no people.

00:10:08: It's kind of Wild West Cowboy era and they kinda blew up over those next few years And government stepped-in.

00:10:16: That is the first wave of regulation Much needed.

00:10:23: There was one year in Osaka city where the number of Minpaku increased by fifty X. I don't know if you remember hearing that but That's not a very healthy Market.

00:10:38: so, you know regulation came in and You know that kind of style of renting it out on occasion while your traveling It became less attractive.

00:10:49: And the markets really moved on.

00:10:51: So its just becomes much more professional market.

00:10:55: So there's not so much of a space for that really amateur, rent your room out while you're traveling sort-of model these days.

00:11:05: That's largely gone particularly in places like Kyoto which is very mature tourism market.

00:11:14: and yeah most of our owners are.

00:11:19: they hardly use the property at all.

00:11:21: They're very welcome to, if there would like and occasionally some of them do.

00:11:26: most of when they contact us it's already booked which means we are you know doing our job

00:11:31: great position to be in I guess right?

00:11:34: But yeah as far as i'm concerned...I mean its their house.

00:11:37: If they want to use that..they should use it.

00:11:39: but Yeah Most of them a quite serious investors.

00:11:43: And We've actually seen over The years That the Investors have become more and More sophisticated.

00:11:51: How do you mean sophisticated?

00:11:54: I Mean, I think in the early days You know it was there was a lot of domestic investors and they're just kind of seeing their news flash And jumping on board.

00:12:04: budgets were lower.

00:12:07: They weren't really underwriting the process so much.

00:12:10: It was Just build it and see what happens.

00:12:16: Yeah, yeah over-the coming years we've had The budgets have gone up, the costs are all going up as had the ADRs.

00:12:26: The demand of a guest has gone up...the whole quality market's gone up.

00:12:31: Just for the uninitiated is average daily rate right?

00:12:35: Correct?

00:12:35: yes that correct.

00:12:36: so everything just kind of crept higher and naturally level investment required to create that sort of properties going higher as well.

00:12:47: So, you've naturally got a higher level investor and because there's more money on the table, they're really having to look at the returns that can generate their yield extremely closely in most instances.

00:13:06: I think it is something where we have quite an edge properties at the moment and we've been doing it for twelve years.

00:13:16: so, We got a lot of data behind us.

00:13:18: And you know...we can tell with a fair amount of accuracy that this property, this location This kind of renovation budget..We can expect these sort result.

00:13:32: I think also over time positioned yourself to be active in the serious segment of the market.

00:13:39: I remember when we first got in touch, must have been six seven years ago.

00:13:42: i managed to slip one client in.

00:13:45: there was gotta little you know a little cheap room that is kind of renting out When he's not using kinda thing.

00:13:51: but these days You don't take this customers on anymore do?

00:13:54: And I might not have taken that property if it wasn't from your self as well Flattered to receive their contact.

00:14:05: Yeah, I mean not everything makes money you know and i think having done it for this period of time now we've got a fair feel For what's going to make money?

00:14:14: And What's not gonna Make Money.

00:14:16: so if We Feel Like It'S Not Gonna.

00:14:18: Make Money for the owner and It's not Going To Make Money For Us it's Better If We don't Try and try and manage it.

00:14:26: and You Know We try and Provide Some Guidance for People if Possible Before They Make The Purchase in A heart Will Recommend.

00:14:34: okay we understand that you would like to do this kind of thing but actually, we feel like that will be a better decision.

00:14:42: But some people are just capped by budget.

00:14:44: so naturally there is a certain budget threshold that's required in Kyoto to get good results.

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00:15:42: com.

00:15:44: Also obviously had a lower budget threshold... That's right

00:15:49: actually!

00:15:50: Can you speak a little bit about that?

00:15:51: because you do cover beyond Kyoto?

00:15:54: I mean Kyoto is where like you said it's very mature market but there are areas in potentially profitable markets, right?

00:16:03: Yeah.

00:16:04: I mean Osaka had a fantastic year last year and you know prices have gone up in Osaka as well substantially.

00:16:11: You know Very

00:16:14: hot market at the moment where we're competing very hard for properties there when we find one.

00:16:19: Yes okay And that's mostly on the residential side

00:16:23: Residential or commercial but normally not sure to maybe monthly stays But not beyond that.

00:16:27: yeah

00:16:30: Probably lucky you're not.

00:16:31: I mean it's also because having a bit of a hard time in the STR market at the moment and You know, the reason is that?

00:16:40: With the expo last year there was a massive increase in supply hotel rooms massive And this year all suckers getting hurt.

00:16:50: The most by the drop in the Chinese tourists which I don't know how much we want to go into that, but there was a few poorly selected words by the new prime minister early on in her.

00:17:04: No no!

00:17:04: We're gonna get it into.

00:17:05: the new Prime Minister definitely Don't be shy.

00:17:09: Yeah.

00:17:10: so as a result of that you know There's a substantial drop In the amount of Chinese tourists and Osaka is one Of the biggest markets or probably the biggest market terms of percentage of the type of tourist that's no longer coming.

00:17:28: So it has left a big gap in the market and... It is

00:17:35: oversupplied at the moment, what you mean?

00:17:37: For demand?

00:17:38: yes!

00:17:38: A lot of properties over the last few years were centrally located hotels.

00:17:48: so they are now dropping their rates Attractive.

00:17:54: so it's really changed the dynamic in all that.

00:17:56: That's good to know.

00:17:57: So, that's where I should be planning my next domestic holiday.

00:17:59: then

00:18:01: perhaps.

00:18:01: yeah Definitely the rates are low.

00:18:03: i mean i'm staying down there tomorrow night actually and now just checking Last night And you know?

00:18:09: It is june.

00:18:10: it Is uh low season anyway but yeah rates a rate too low.

00:18:14: so we know rates at down You know like thirty forty percent this year and an occupancy also.

00:18:24: So you multiply those and it's, like half the revenue.

00:18:27: A

00:18:27: lot less money going into the city basically

00:18:30: yeah Half of the revenue.

00:18:31: but I mean last year was a fantastic year.

00:18:33: It was absolutely You know firing from the hip.

00:18:38: so Allsaka has always been much more volatile City in terms of adults And Kyoto got a lot more stability just from that.

00:18:49: But on the other hand uh ye one of your senior staffers who gave a fantastic session at the last summit by the way kudos to her.

00:18:59: she was telling me once and you can let me know if that's still the case.

00:19:02: She was telling Me, this is about three years ago I think.

00:19:04: um If You're going for hospitality property meaning short term stay not monthly or hybrid if you are Going For Short Term Stay Hospitality Property in Osaka don't look below thirty million yen and in Kyoto, Don't Look Below Fifty Million Yen.

00:19:20: Is that still the case for something that would be profitable?

00:19:23: And easy to manage an Easy-to-Generate An Income?

00:19:25: Yeah!

00:19:27: So maybe I'll start with the Kyoto.

00:19:31: It's very difficult to find anything below fifty.

00:19:34: To Be Honest That's commercially viable.

00:19:37: You'd have to go...in The Sticks.

00:19:44: it's not going to get a good result.

00:19:47: You know, location is still super important as the quality of property and both those things are influenced by price substantially.

00:19:57: so yeah we're talking fifty all in including renovation like very tough to hit that number you have to be lucky or go with something smaller.

00:20:08: And thats point I've talked about some my past presentations.

00:20:13: The summit is that the size does matter quite a bit in terms of your return.

00:20:19: So we would highly recommend people go for about seventy square meters plus, you know eighties better than seventy.

00:20:26: nineies better then eighty

00:20:28: to cater four families and groups rather than solo or couples right?

00:20:32: Yes five six seven yeah because if

00:20:35: that's a supply demand thing as well Because they're just an oversupply over smaller places.

00:20:40: I mean If you have two person property You are competing with every hotel room in the whole city.

00:20:45: So as you go up to four people, your... The competition drops five it drops again six.

00:20:53: It drops a lot more You know because we do have these apartments in town that can cater to four or five See six?

00:21:01: It really drops and then when you get to eight it massively drops.

00:21:04: so but it is very difficult To find an eight person property in Kyoto.

00:21:10: Most of them are not so big.

00:21:13: You can't differentiate yourself by going for that sort of property.

00:21:16: And management also becomes a lot more efficient when you're managing properties, this generating higher daily rate right?

00:21:26: For the management company?

00:21:27: absolutely yeah.

00:21:29: well your expenses as a landlord are cleaning or what have

00:21:37: we see?

00:21:38: that the yield increases with a larger property.

00:21:40: So, you must get some efficiencies out of them for sure.

00:21:45: yeah I should probably go back on that budget a little bit but right now We feel like in a seventy to eighty million is probably the number you seek.

00:21:55: Okay

00:21:56: so it's gotten even higher okay?

00:21:58: To get something quality if going down into the sixties There's probably a reason that it's in the sixties like it needs some work or to be small Or something.

00:22:11: and you know, if people

00:22:12: are not familiar with Japan sixty million yen is about what four hundred and fifty thousand us at The moment right?

00:22:19: I'm afraid.

00:22:19: It's less than that these days.

00:22:21: Oh isn't okay.

00:22:23: Probably talking three eighty actually

00:22:25: Okay

00:22:26: Yeah, but its one hundred sixty years of dollar.

00:22:29: so oh i haven't been following yet.

00:22:31: ok

00:22:32: Yeah, yeah too and

00:22:33: Osaka but in Osaka you can get in cheaper.

00:22:36: You believe

00:22:37: So yep so I'll just finish my thought on.

00:22:40: Oh sorry

00:22:40: sir go ahead

00:22:41: that we do have One property at the moment.

00:22:45: We've got a couple of properties which we purchased ourselves because i thought they were super cheap And location-wise there slightly off center But still totally within their zone We've got one that's twenty nine point eight million unrenovated and we think That would need a. you know, twenty Million renovation three million for architect is what were suggesting And then I would get it up to this kind of four star premium quality.

00:23:15: Did I talk about quite a bit?

00:23:17: Which would be just about sixty all up, right?

00:23:20: Well then you need about four mil on the furniture to make it really nice.

00:23:24: So if that's... You're gonna get a. yeah It's about sixty yet is going to be sixty and so I mean That's for brand new stylish property But you do have put some time an effort into that.

00:23:39: its not ready Its not turnkey.

00:23:41: But when you say brand new in Kyoto terms, does that mean kind of renovated from the ground up or?

00:23:46: Does that mean an actual new construction?

00:23:48: so yeah brand-new renovation.

00:23:50: Sorry I should.

00:23:51: um.

00:23:52: I should be clear.

00:23:53: The properties and machi it's about a hundred years old And you know the reason you want.

00:23:59: Oh the attractiveness over much in Kyoto is at.

00:24:02: their regulations are much lower for a Machia because the city doesn't wanna protect these properties.

00:24:10: Personally speaking, I like the older properties more anyway.

00:24:14: I enjoy the character of the property.

00:24:17: Most guests would too i assume right?

00:24:19: It's part of the japan experience for them.

00:24:21: Definitely some guests value it.

00:24:23: um perhaps not all and that's fine You know it doesn't have to be forever but certainly Some guests uh enjoy as I do And you know it makes For interesting cultural experience on top Of your.

00:24:38: your stay in The city wants to protect these buildings, so they drop the regulations for these types of buildings and that's why it is an attractive investment.

00:24:48: And you know there are some STR industry undergoing regulatory changes but for me this much less risky because we know government here want to protect them.

00:25:04: if they pull a pin on accommodation usage Basically, they just don't become viable to maintain anymore because it's quite expensive.

00:25:17: So I feel like that is still one of the safest investments for a retail investor and yeah... so i think its about seventy million but the example i was giving you can probably do it for about sixty if you put in an effort and go through process yourself.

00:25:36: If you buy on the market More like seventy to pay a premium.

00:25:41: To someone who's

00:25:42: well when you say yourself this is your self buying it and renovating an operating It yourself if was one of your clients they'd need to pay the overhead for having you do what?

00:25:52: You do right.

00:25:53: no, so the sixty was was for the client

00:25:56: For a client.

00:25:57: okay

00:25:58: that's

00:25:58: right

00:25:59: I think.

00:26:00: i think Like you know we've got That One on The books.

00:26:02: uh...I Think That's A great deal.

00:26:04: you can get at ten million cheaper by you know, buying it unrenovated and by doing that people can add their own flavor into the property which owners often like to do.

00:26:18: Sometimes they just prefer hands-off but some people like make a few additions or have little input.

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00:27:20: Sorry for cutting in, I'm just afraid of...I'm going to lose that thought.

00:27:25: Would you prefer something that's already been renovated and sold as is, or would you prefer to be able to kind of optimize it?

00:27:34: To what you know works well for the guests.

00:27:36: So like...would You prefer to run renovation yourself not from a financial perspective I mean from a profit efficiency perspective?

00:27:44: Yeah i think given The choice..I Think It's nice to have some input in the renovation to make sure particularly there's enough things like storage or a layout.

00:27:56: but if I'm honest that was more of an issue in the early days, when you had a lot of architects and construction companies who weren't very experienced.

00:28:06: they would make these properties though just not fit for purpose at all.

00:28:12: And it would be a nightmare.

00:28:13: But these days... The industry is very mature here so There are not many people new to this game.

00:28:20: They

00:28:20: know what

00:28:21: they're doing.

00:28:22: Yeah, yeah look most of the properties are quite good and all you can make a few slight modifications.

00:28:29: but I mean i still think it's a great option to get something unredivated and put your own thoughts and feelings into the property and you get the result that you're looking for.

00:28:44: Okay so that's Kyoto Osaka.

00:28:48: Yeah, so jumping over to Osaka.

00:28:49: So yeah I think uh thirty was the number that um you'd mentioned and That's really crept higher.

00:28:57: i think it's gone more like a forty or even a fifty.

00:29:03: Uh in osaka You can get stuff at twenty but It's pretty cheap and nasty

00:29:11: Right?

00:29:16: You get what you pay for to a large extent.

00:29:18: So if you're going for twenties, it's gonna be location will be worse than the property would be worst.

00:29:26: and yeah we've seen some stuff go up to sixty in Osaka so its really matured alot.

00:29:34: those properties are looking quite similar to cure the properties.

00:29:38: even that wasn't there ten years ago.

00:29:43: But yeah, there's definitely a few flash sales going on right now with the challenges this year.

00:29:50: You know for The Brave Investor could take a look at it.

00:29:54: but yeah well It's a little bit difficult to predict whether we're gonna get this rebound in Osaka.

00:30:02: you know We probably need to see the war wind up and PM probably needs to go over to China.

00:30:13: I heard a rumor that's in the works, but you never know with these things.

00:30:19: Well Trumps gone maybe she is next... But let us go there because your operating on slightly different market than some of other agents and they talk to me about this sense when i say You do run a brokerage ,but you are ninety percent focused on hospitality properties right?

00:30:36: And we have seen what other agent work around the gamut.

00:30:41: so You know, people use us and then we work with these agents for any kind of purpose whether it's a holiday home or residential investment.

00:30:49: Or hybrid or short term stay.

00:30:52: We've seen since the there was two waves There.

00:30:56: first that was pre Pre current government The whole business manager visa revamp thing which kind Of completely cleared the market of everybody who had A little Airbnb in the countryside dream And then came in the new government with their... I'm hesitating to say, not to say racist but let's call it strictly anti-foreigner rhetoric.

00:31:20: With all kinds of threats that might be coming in with all kind restrictions on foreign ownership or extra taxes and whatnot.

00:31:28: And what we've seen since November last year, and it's only slightly starting to recover now as people have been sitting on their hands just being concerned.

00:31:37: Is that something you felt there aside from the tourists not being there?

00:31:41: Yeah so...

00:31:42: Or the Chinese tourist I'd say everybody else is still coming?

00:31:45: yeah yes So i'll address the impact of business first before anything.

00:31:51: but um To be honest like We've been busier than ever.

00:31:55: So yeah, like and you know most of our clients are Like I was saying on the more sophisticated in their.

00:32:04: for serious investors.

00:32:07: There's been no drop-in demand there.

00:32:10: Most most of Our clients don't live in Japan either.

00:32:13: so You Know still there's no issue investing In japan.

00:32:20: to be honest i dont think theres gonna Be any big change There.

00:32:25: they would be very silly to do so.

00:32:28: A number of things

00:32:32: Yeah, well that's right.

00:32:33: I wouldn't?

00:32:34: you

00:32:35: know Don't put it past them.

00:32:36: No no and certainly They are doing some Silly things Right now as far as i'm concerned with the visa.

00:32:43: But these things swing back And forwards a little bit yeah but yet we've seen more demand than ever not just from That kind of str More sophisticated buyer but we've been doing more and more kind of institutional grade properties, hotels developments.

00:33:03: We're getting more interest than from all different countries.

00:33:08: so for me it's continuing to increase in the hospitality investment space.

00:33:15: there is more cash flow coming in from overseas.

00:33:21: okay that's Yeah,

00:33:25: and then personally speaking I mean the changes to the immigration policy everything.

00:33:31: Um i think they're totally over-the-top quite upset about it To be honest as a you know As a mixed race internationally minded person and business owner who employs?

00:33:43: A lot of foreign born staff.

00:33:46: we have maybe sixty to seventy percent Of our stuff's foreign born.

00:33:51: everybody speaks Japanese.

00:33:53: Everybody wants to live here.

00:33:55: You know, we rely on those people to operate our business and it's definitely become difficult for People in that category now with the visas.

00:34:06: We're having trouble.

00:34:07: even today this topic was coming up And I think it's through the detriment of Japan.

00:34:14: you know japan is crying out for more labor.

00:34:16: There's labour shortages all over the place.

00:34:20: You need people to actually do these jobs.

00:34:23: I mean, you realize that now

00:34:24: tell me about it.

00:34:25: for coca finding bilingual stuff is like finding a unicorn and its been hard enough as this but don't feel there's a bit of distance there in the sense they're like i dont know.

00:34:36: These days get a cold shoulder everywhere because again The anti-foreigner rhetoric has brought a lot of closet racist stout into the open.

00:34:43: that I haven't been feeling that way earlier, but in Kyoto specifically.

00:34:48: I was getting the cold shoulder for a good few years now right?

00:34:51: So it's there's always...I'm feeling in Kyoto There is like this gap between what the business owners want and what the locals who don't actually run a business wants.

00:35:02: Right

00:35:05: Yeah i mean first up.

00:35:08: I certainly have noticed a change in sentiment.

00:35:12: You know, Japan was such a strong history of hospitality as some of the best in the world... ...I've seen those standards slipping now and

00:35:25: when foreigners are concerned definitely

00:35:28: yes that's correct tourists you know it is very upsetting to see that, like why is your service changed?

00:35:42: Other countries would be thrilled at getting this additional business and it's a generalization.

00:35:48: It certainly not everyone.

00:35:50: there are definitely operators in Kyoto many operators who are loving it.

00:35:55: you know they're totally equipped.

00:36:03: Personal social and personal business circles have not changed at all.

00:36:07: But I'm talking about the average person on the street kind of level or small business owner, right?

00:36:14: Yeah yeah i think that i think The news flow has been negative And it's got into people's minds a little bit and its you know i would say i Would say a bit.

00:36:25: i don't think It's like radical Or anything but definitely You Know the vibe Has has dropped A Little Bit And I think it's you know, I would actually blame the current government for adding to that.

00:36:40: They've added instead of fixing that and hopefully it swings back the other way because tourism is a second most important industry in Japan now... ...and i think its gonna go number one.

00:36:55: so they should be doing what can protect and grow the industry, nurture it.

00:37:03: People are bringing their hard-earned savings to Japan looking forward in having a great time.

00:37:11: Japanese should be making sure they have fantastic times getting money's worth.

00:37:15: I think that lost focus for whatever reason with mixed messages going into news or what ever And I hope they can recover from that because you know, if he don't treat people well it's not gonna come back

00:37:32: Yeah.

00:37:33: I think Well, I mean its.

00:37:34: obviously there is a lot of layers There and I feel personally the government this is leveraging that anti-foreigner fear to garner votes and end too.

00:37:45: You know get elected and reelected but To be fair The tourists are not Entirely innocent as well, right?

00:37:54: There's been some for lack of a better word shitheads coming here on the regular basis.

00:37:58: For quite sometime now.

00:37:59: Right

00:38:00: yes And certainly sound from a certain country that you and me have spent quite a lot of time You know unfortunately.

00:38:08: so yeah absolutely, you know there is a reason Why.

00:38:13: why this sentiment especially

00:38:15: Kyoto?

00:38:17: Yeah, yeah.

00:38:17: And then a lot of the poor behaviors now are on show with social media.

00:38:23: you know they're recording it and putting online so... But

00:38:25: doing it for social media that's all right?

00:38:29: Exactly which is their new thing isn't it!

00:38:31: So you know this stuff wasn't happening ten or fifteen years ago.

00:38:37: absolutely its not completely unjustified.

00:38:43: let us hope we get better behavior on both sides.

00:38:48: But you know, I think it can be easy to overstate the amount of attitude that Japanese has changed.

00:39:01: It's still just a little bit... I don't mean major issues but people should not be discouraged from coming to Japan, I've got a friend staying with us at the moment and we just did a trip all around the countryside.

00:39:15: And that attitude was fantastic for the most part!

00:39:18: No

00:39:18: i agree... i agree in japan is also starting from a place of being completely ultra polite.

00:39:24: so even the slight you know side-eye on the street it's very noticeable when it comes from a space that was completely lacking in that.

00:39:32: um It's more a case of my perspective..it was easy Even in Kyoto to just, you know Blurred out a few words and Japanese to differentiate myself from the tourist longs kind of thing.

00:39:43: You know like I actually live here.

00:39:45: don't lump me in with that.

00:39:46: It's getting a bit harder.

00:39:47: Just get the chance To show that you're not one Of those.

00:39:51: it's like your are kind of lumped-in With them before you even open your mouth.

00:39:55: but uh yeah Like you said there's a pendulum.

00:39:57: i hope i hope it swings The other way?

00:40:00: Yeah I think you described it well, maybe Japan was ten out of ten in politeness and its gone to eight-and a half.

00:40:08: And the global average is four.

00:40:10: so we're still like... It's still pretty good!

00:40:17: People shouldn't get carried away with that but i hope we can get back up towards ten You know?

00:40:25: Im certainly very happy this and call it out.

00:40:29: I don't know how many people are doing so on the Japanese side, but maybe

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00:42:46: Now back to the podcast.

00:42:49: So what are you, so recently?

00:42:51: just to wrap things up.

00:42:52: You've recently expanded or at least expanded more into boutique hotels right?

00:42:58: You mentioned that our last event in April.

00:43:01: is that a shift that your looking completely phase off these more traditional type Minpaku properties Or something like this?

00:43:10: because I know you have also started operating down in Nagano as well?

00:43:15: Yeah, yeah.

00:43:15: So it's couple a couple of.

00:43:17: I'll break that up a little bit.

00:43:18: so The boutique hotels is adding you know, so our core business still the STRs.

00:43:25: You know It's still.

00:43:27: we still spent a lot time on that but with we've taken on management more boutique hotel and they do have their added benefits in terms of operation.

00:43:44: Naturally, we've gone into brokerage of those as well.

00:43:48: But the two don't always fall together and that's totally fine as well.

00:43:52: We're fine to just broker it And you know often these institutional buyers maybe want to operate themselves or they have a some other Arrangement which is completely fine same for their STRs but yeah kind That's part of the business that we're seeing

00:44:11: some other come with an operator already in place to don't they?

00:44:15: They can I usually.

00:44:17: Almost always change, but the hotels okay yeah yeah um Usually people are selling because there and not getting their results i want.

00:44:28: And one reason then is because Operator, so it's just an

00:44:35: ideal management.

00:44:36: Okay?

00:44:36: Yeah and all of these hotels I mean most the clients are looking to value out.

00:44:41: So you know maybe they're a little bit older And then they need your renovation in a repositioning and Then whilst going through that process change the operator.

00:44:51: It's a pretty standard kind of strategy and it can work very well

00:44:57: right and not gonna.

00:44:59: Yeah, so we opened an office there about a year back.

00:45:03: And we have our manager Ben who is also at the summit and yeah he gave him a little slot then it seemed very popular.

00:45:14: I could see that

00:45:16: genuine

00:45:16: interest in.

00:45:17: you know i'm very much considering how again get them a little bit more game time next time because people want to hear Yeah, we opened the Nagano office.

00:45:29: We're basically looking to provide the same services as Kjordal which is brokerage and also management.

00:45:35: so...we've done a bit of both.

00:45:38: And for upcoming winter season..we have quite few new properties where onboarding.

00:45:44: It's totally

00:45:45: similar kind of properties.

00:45:47: I mean STR & Hotels or more either?

00:45:51: Yep, yep Both.

00:45:53: So we had one STR open up last year, and we're already taking some very nice bookings for this year.

00:46:03: Ben spent like fifteen years in Niseko so he's got a great understanding of the you know ski build needs and operations which is a totally different thing to Kyoto.

00:46:17: no comparison whatsoever.

00:46:19: So it was really helpful to have that experience And his quite knowledgeable about the Nagano areas.

00:46:25: well and you know, we feel like that's an area.

00:46:28: That's definitely gonna develop.

00:46:32: So to tie back into the discussion about minimum ticket entry level what do you see in Nagano?

00:46:38: What do you feel comfortable saying might be profitable there?

00:46:40: I think We're still kind of Feeling away a little bit with not on all.

00:46:45: but the biggest issue is this almost no supply.

00:46:50: so It's very small Market there.

00:46:54: we have one Lodge that's for sale.

00:46:58: That is like a multi group.

00:46:59: I think it's got eleven rooms or something Plus the house and that's going for like a hundred ten million at about seven percent yield foot, for example.

00:47:10: but

00:47:11: I'll take this offline with you a little bit later, but i'm just about to publish video that we did with our buddy Matt Ketchum.

00:47:20: We've got a client who's selling two onsen resorts total of thirty rooms plus two standalone villas very cheap very, very cheap.

00:47:34: But it would need a lot of work.

00:47:36: so I guess the total ticket price will probably come close to what you're talking about there?

00:47:41: Yeah yeah um yes we've got that property on the books and then sometimes some things pop up but then... There is quite a lot demand and not much supply.

00:47:55: So they go in a flash.

00:47:58: We are having look at less well-known ski fields now that might be of interest.

00:48:11: And yeah, so places like you know we're at Benzin Iyama.

00:48:15: So he's got Nozawa Honsen and Madarao.

00:48:19: then there is Myoko not so far it a couple smaller ski fields around them perhaps those Of interest and there's definitely been some buying in those areas as well.

00:48:32: So we're trying to kind of really get a feel for the The bigger picture.

00:48:36: but

00:48:36: the Aussie is love my dad.

00:48:38: our clients have been purchasing their left right and center,

00:48:41: right?

00:48:41: Yeah I thought that was the standout when i visited you know, they thought it was the most thing.

00:48:47: But yeah this supply is he's finite There and you know where thinking i mean benz got some ideas.

00:48:55: He thinks that actually Iyama there with the Shinkansen's might become more developed and people just shoot up

00:49:03: to.

00:49:05: So that is something as well, then you have probably seen issues of staff accommodation in Niseko at the moment seeing those things popping up.

00:49:16: so thats going to happen in Nagano too.

00:49:20: perhaps the staff accommodation will be developing around that Iyaman area which means some interesting real estate deals to be done there as well.

00:49:29: Would you get into development projects, like if there's no existing properties then how about buying a land parcel and turning it in to hospitality property from the ground up?

00:49:39: Yeah so that certainly cost my mind quite a bit.

00:49:44: we're actually working on one at the moment.

00:49:46: It is going to be residential Come or go and it's not quite suited to hospitality.

00:49:55: So that's gonna be our first residential development project.

00:49:59: Not

00:50:00: so you're gonna, so your handling what the brokerage?

00:50:03: And the construction and then you're going to run it as a residential property.

00:50:06: That's a bit out of your I don't want say comfort zone but out of what do usually do isn't?

00:50:13: It is who would be at first residential projects.

00:50:16: We will we'll be the local partner for a foreign investor with a lot of experience, more experience in that kind of area.

00:50:25: So we do the local work for them and then the idea would be to sell units on completion... Very interesting!

00:50:33: Yeah I'm happy to update as this project moves along.

00:50:38: it's very early days there but We're trying go over something which is quite unique.

00:50:44: so its good learning opportunity.

00:50:50: I was told that with our plans, it could be the best apartment in whole city.

00:50:55: So

00:50:56: who... because of population there can't growing?

00:50:59: Who would your typical tenant is at staff housing again

00:51:03: for That particular one.

00:51:05: we're looking to price it and i think its top floor is Jurokuoku apartment.

00:51:11: so probably a foreign buyer on the Kamogawa just near Ritz-Karlin.

00:51:18: So it's one of the most exclusive pieces of land in the city and so we were really going for that hire.

00:51:25: Holiday units?

00:51:28: Yeah, but actually... We were planning three two hundred forty five square meter units And I guess that type of

00:51:36: client

00:51:37: wouldn't be using them all the time.

00:51:40: But yeah there are a few apartments nearby with similar quality.

00:51:47: They move very Quickly and it's a foreign buyers that are coming in hearing.

00:51:53: And then if you're I'm just sorry It's just interesting for me personally.

00:51:57: so if your If you're in charge of the project, and then you're gonna be selling out the units individually.

00:52:03: That's probably lending itself to a situation where the building would be short-term stay friendly wouldn't

00:52:12: it?

00:52:16: No I would imagine it's, It will be like a ultra high net worth for the top floor and then maybe to bottom floor could be maybe domestic.

00:52:30: Personal personal use holiday units not rentals.

00:52:35: that's what i'm imagining but we'll see.

00:52:39: Yeah, keep us posted.

00:52:40: Very interesting!

00:52:41: All right well thanks for your time.

00:52:44: very good to speak to you and we will be in touch with the project updates as soon as we're able.

00:52:50: thank.

00:52:53: So there you have it, Chai Kanda founder and CEO of Shiki Properties.

00:52:57: And if you'd like to hear more from him diving even deeper into some these topics we'll link to a few his previous presentations at the Japan Real Estate Summit.

00:53:05: in this episode show notes The man really knows what he's talking about real professional and real delight to work with as well.

00:53:12: Now, we can't let you go without telling me about MailMate.

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00:53:30: JP.

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