Condominium Management Market in Japan: Key Research Findings 2020
Yano Research Institute (the President, Takashi Mizukoshi) conducted a survey on the domestic condominium (property) management market, and found out the current market status, trend of market players, and future outlook.
The domestic condominium administration fee market in 2018, based on the condominium administration fees, is likely to rise by 2.9% on a Y-o-Y basis to attain 745.9 billion yen. Although the number of newly built condominiums for sale by lot has been on the slight decline (source: estimation by Ministry of Land, Infrastructure and Transport), increase of the administration fees due to rising prices of each condo lot brought about stable growth of the market.
Meanwhile, the domestic condominium public-space repair market in 2018 rose by 7.5% from the previous year to achieve 669.3 billion yen, based on the amount needed in repair works for condominium public spaces. The backdrop against this is increasing number of those condominium stocks that require repairing and soaring unit price per construction works.
Property Management Fees on the Rise
Personnel expenses for maintenance and cleaning of condominium properties are on the rise because of manpower shortage.
In the past, the request of raising property management fee by a management company was hardly accepted by a management association which is made up of all the condo owners in the building. Therefore, the management company had to make effort in streamlining to absorb the rising labor cost. However, such a situation has changed during the past several years: Because of the recent generous tendency of accepting increase of property management fees by the associations, as soaring personnel expenses have been widely known, the management companies are pressing ahead with substantial raise of the fees by obtaining agreement from the associations to alleviate their burdens, i.e., to reduce the number of inspections and cleaning tasks as well as unnecessary services, in addition to requesting of raising the fees.
Since the personnel expenses are likely to rise and keep being at peak for some time, the management companies are projected to continue requesting to raise the property management fees, accordingly. Therefore, the property (condominium) management fees are expected to keep the gradual rising tendency.
In addition to the structural problems such as decreasing population, declining birthrate and a growing proportion of elderly people, shortage of lands for new condos to be built and expansion in the pre-owned homes market are likely to somewhat depress the supply of newly built condominiums, but the supply of newly built condominiums is expected to increase again, boosting the entire condominium management market.
The public-space repair market is also expected to expand, because of increasing cases of small-scale repairing stemming from aging degradation and of existing condominium stocks waiting for large-scale repairing works to be done.
Both the markets of property (condominium) management fees and public-space repair are projected to grow from the mid and long-term perspectives.
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