Frontiers of Real Estate Science in Japan

In Part I, entitled Real Estate and the Legal System, we analyze owner-unknown land issues, land acquisitions, and real estate auctions.

The use and value of real estate such as land and buildings are significantly affected by public laws and regulations related to urban planning and construction, the environment, and taxation; for example, contract laws such as the Act on Land and Building Leases; private laws regulating torts, collateral enforcement, and so on; tax laws that regulate transfer taxes, ownership taxes, and transaction taxes; and regulations surrounding land use and urban infrastructure development. This paper discusses, therefore, the relationships between these laws and real estate, identifies problems in the laws associated with real estate in Japan, and proposes improvements.

First, in recent years, owner-unknown land issues have become a serious concern in Japan. The Japanese registry does not always reflect the actual rightful owner, primarily because such registration is only a perfection requirement in civil law and registration involves a great deal of time and money. For example, because a large extent of land is registered to owners from nearly 100 years ago, it has changed hands many times through inheritance, which means that today, it is extremely difficult to determine the actual owner (inheritor) without spending a great deal of time and money. However, if the profits to be obtained from the land do not justify such expense, the land remains unused as “owner-unknown land.”

Buying and selling land under Japanese civil law requires an agreement from all landowners including in the case of shared ownerships; therefore, even if the land has high returns, if it is “owner-unknown land,” it cannot be used effectively. With a focus on unknown-owner land, in this section, four writers provide multifaceted perspectives on the causes thereof, the defects in the current system, and the possible solutions.

Eminent domain, the system which allows the acquisition of land against the land owner’s will for public projects, is widely institutionalized in many countries. It works to mitigate the owner-unknown land issues as far as lands are acquired by public projects.

Further, real estate auctions are often held when liens are placed on land and/or residences for housing loan defaults. The Japanese civil auction system, which was institutionalized at the end of the nineteenth century, stipulates that a tenancy that is behind on a mortgage may resist a purchase unconditionally as long as the mortgage default period is within 3 years (short-term lease protection system/former Civil Code Article 395). This system was intended to avoid the unstable use of mortgaged properties and to promote the effective use of real estate; however, because the majority of users and the beneficiaries of this system were in fact anti-social groups, it was used to demand money unjustly from debtors and buyers, thus preventing the effective use of the mortgaged properties.

When the protection of short-term leases was abolished in 2004, these types of interferences are said to have decreased drastically. However, successful bids for auctioned real estate properties continue to be lower than in general transactions. Therefore, here, we provide a quantitative analysis of these situations and propose further auction system improvements.

Below, we introduce the outlines of each theory in Part I.

This paper describes how and why owner unknown lands have been increasing in Japan’s shrinking population and proposes some ideas on the solution to the relating legal issues.

The problem of land with unknown ownership is becoming increasingly evident with Japan’s declining population, low birth rate and aging population. This paper examines the need for the titling system using perspectives from economics and considers what sorts of titling system works for which types of society and looks at ways to deal with the problem of land with unknown ownership. A series of previous researches such as Miceli et al. (Eur J Law Econ 6:305–323, 1998; J Urban Econ 47:370–389, 2000) categorize the titling systems used in many advanced countries as either registration systems or recording systems. In terms of broad categorization Japan’s titling system is categorized as a recording system. However, since the details of registered information are confirmed through various registration procedures, the system also has aspects that resemble a registration system. This can be interpreted as having selected the titling system’s strength that considerably lowers the level of litigation risk. In that case, transaction costs become very high. This could be the cause of the excessively small current level of Japanese real estate transactions. Furthermore, the result of selecting the recording system in Japan, which is a system with a very high strength, could explain why nobody takes insurance to cover the risk of title litigation. In Japan, it is highly likely that the full-fledged population decline, low birth rate and aging population will lower the profitability of land. In that case, a titling system with low strength is likely to be the best for society as indicated in the analysis above.

The increase of land plots with unknown owners, namely, land plots whose owner’s name and address are not easily identifiable through repeated inheritance, etc., has emerged as a prominent social issue. The major reason for this phenomenon is the Civil Code that unconditionally allows the sharing of real estate by an unlimited number of co-owners, for one thing, and the registration system of real estate that does not require the true owner to register and thus does not show the real rights of real estate, for another. To reduce the increase of land plots with unknown owners as a proactive measure and to utilize them as a reactive measure, it is necessary to establish the one-owner principle with a ban of the sharing of real estate even through inheritance, to abolish fixed asset tax on buildings and houses, to require the new owner of real estate to register the right upon the transfer of ownership and for the registration office to make it public, to amend the Land Expropriation Act to facilitate the purchase of the land plots for public purpose without owner identification, to create an institutional arrangement that allows the will of the owner to be fictionally replaced, and to amend the Civil Code to allow the disposal of shared real estate by the majority of the co-owners.

Abandoned and unclaimed land has emerged as a major policy issue in Japan, where the population is dwindling and property values are falling in many areas, including big cities. This article analyzes this alarming issue using the results of a nationwide survey conducted by the author targeting 1719 local authorities, which revealed a disconnection between the existing landownership system and rapid demographic change. Policy initiatives are needed to address three basic challenges, namely, how to get people to register title transfers when they inherit real estate; how to protect and manage land that has no immediate prospect for use; and how to improve the data collection and management infrastructure.

The Land Acquisition (Amendment) Act of 1991 in Malaysia for economic growth has institutionally enabled arbitrary land acquisition. This paper reveals what is the fundamental determinant of the negative effects on the legal system concerning land acquisition for economic growth. As a result of this study consideration, the article of property rights within the limits of the law enables governments to have a broad discretionary power and liberalizes policies governments can implement. However, this study concludes policies that make light of personal assets will obstruct economic growth in the long run.

This paper shows the effect of a series of system revisions of judicial real estate auction in the 2000s on three factors: bid acceptance ratio, number of bidders, and highest bid. Using multiyear data of auctions from multiple district courts, I estimate the improvement of the three factors by the revision.

Furthermore, comparing real estate auction data with voluntary sale and general real estate trading data, I find that the selling price in auction was greatly lower than the price in voluntary sale even after the system revisions. Based on the empirical results, I suggest about necessity of further system revisions.

This introduction summarizes chapters of Part II. In Chap. 9, Yamamoto (Jpn J Real Estate Sci 31:88–96, 2018) has compared between the street method, the asset valuation adopted for the imposition of property tax in Japan, and the computer-assisted mass appraisal (CAMA) method generally adopted in North America focusing on education and training of valuators. In Chap. 10, Yamazaki (Jpn J Real Estate Sci 31:97–101, 2018) argues that one of the major causes for relatively low density use of land in the city in Japan is the land tax system. He focuses on property tax and examines defects of the tax from view of economist. In Chap. 11, Kobayashi (Jpn J Real Estate Sci 31:129–138, 2018), taking an actual example, has examined difference between precise legal interpretation of ‘exemption from real estate acquisition tax due to purpose of use’ and taxation practices conducted by local administrative bodies. In Chap. 12, Shirakawa and Okoshi (Jpn J Real Estate Sci 31:88–96, 2017) have shown that the real estate companies were committed to transactions as dual agencies to whatsoever degree, and analyzed attributes of real estate brokerage companies which are able to be dual agencies and how such dual agency affects contract price.

In Chap. 13, Ueno (Jpn J Real Estate Sci 31:97–105, 2017) has analyzed impacts of the macroeconomic conditions on the land price gradient curves which are estimated using real estate data of the Tokyo Metropolitan Area in 1970, 1976, 1985, 1988, 1994, 2008, 2010, and 2016. In Chap. 14, Komatsu (Jpn J Real Estate Sci 31:110–118, 2017) has analyzed impacts that refurbishment of existing apartment has on possible increase in rent using the multinomial probit model and the Tobit model. In Chap. 15, Hanazato (Jpn J Real Estate Sci 31:119–128, 2017) has shown that around 90% of condominium reconstruction cases are predictable using the estimated discriminant function in terms of objective real estate data only. In Chap. 16, Ota et al. (Jpn J Real Estate Sci 31:109–119, 2018) have analyzed determinants of rent for rental house, office, and shop within 10-min walking distance from Shibuya Station in Tokyo. Multiple regression analyses are conducted and have shown that space syntax (SS) measures (Hillier and Hanson, The Social Logic of Space. Cambridge University Press, Cambridge, 1984) significantly affect rent as well as conventional location attributes.

This paper examined and compared the situation of and problems with professional practices in fixed assets valuation and assessor education between North America (the United States and Canada) and Japan. Because professional practice in tax assessment takes place within individual municipalities in North America, the opportunities for external experts to participate in the practice are limited. Moreover, external institutions and universities that provide professional education educated the assessors who were in charge of these professional practices. As a result, the costs of professional practices in tax assessment and assessor education and training have been kept low. In Japan, there has been no foundation through which to foster experts within individual municipalities, so much professional practice is outsourced; consequently, this practice has become ineffective and unstable. Thus, Japan can refer to the North American system of providing complete professional tax assessment services within each municipality, as well as the fostering of experts through external organizations.

We present the desirable tax reform on the property tax on land and housing in Japan. Since the property tax on housing, building, and equipment becomes an obstacle to the capital formation on land, it should be abolished. Conversely, the effective rate of property tax on land should be increased so as to attain the revenue neutrality for local government. The abolition of tax on housing induces the higher land price which can bear the increase in the property tax on land, so that such a tax reform would benefit all individuals.

When an incorporated educational institution acquires real estate to establish a school, real estate acquisition tax is tax exemption. There are two interpretations of these tax exemption requirements: interpreting that real estate acquisition to establish a school is a requirement for tax exemption and interpreting that the establishment of a school is a requirement for tax exemption requirement. This paper discusses these tax exemption requirements, along with their accreditation standards and limited interpretation.

In residential real estate market, agents have an incentive to steer their clients to their own listings or buyers rather than offering the best value transaction, which is derived from allowing dual agency and information asymmetry among buyers, sellers, and agents. We estimated the commission levels and sale prices of real estate brokers through a questionnaire survey and found that seven out of ten brokers are closing dual-agency deals and lowering sale prices. We could not find any effects of the number of employees, location of office, and major types of contract on dual agency.

The purpose of this paper is to investigate the relation between residential land value and the distance to the center of the Tokyo Metropolitan Area from 1970 to 2016. The result shows three trends in the relation: (1) residential land value had increased at all standard sites even while the interest rate was kept high; (2) when the interest rate has become lower, the shorter the distance to the center became, the higher residential land value has increased; and (3) recently the areas where residential land value fluctuate has become narrower. This paper discusses about these trends.

In this study, we evaluated the premium rent of refurbished apartment houses in Greater Tokyo. We found that as a residential building’s age increased, the premium rent decreased. Male tenants in the age group of 20–30 years showed the highest willingness to pay (WTP). In addition, a high degree of residential satisfaction and the sense of expense toward rent had negative effects on the WTP toward premium rent.

This paper discusses the application of discriminant analysis on real estate data as a feasible estimation method for condominium reconstruction. The proposed method was used in order to verify its prediction capacity managing data from the real estate and resulting in 89.4% accuracy. This method revealed and highlighted the structure of four explanatory variables in terms of prediction impact. Further, it has been clarified that only three out of these four explanatory variables mentioned above were selected and constantly used in order to explain each analytical model.

The determinants of residential, office and commercial rent are each analyzed by taking the 10 min walking distance area around Shibuya Station in Tokyo as the research target area. Conventional physical and quantitative factors such as distance from the nearest station, the width of the frontal road, age of the building, the number of floors, total floor area, contracted floor area, building structure etc. are included in the multiple-regression analysis as well as qualitative factors such as the visible area representing visibility on a main street and the integration value representing street network centrality—easy accessibility from other locations such as any intersection points—based on the space syntax measures (SS measures) used in the analysis by Jake Desyllas from University College of London. It is shown that both SS measures affect the rent for all the residential, office and commercial uses with the statistically significant level of 5%. It is quantitatively confirmed that the residential rent increases in a secluded location, and the office and commercial rent rise in a location with high street network centrality and good access, which would suggest that the SS measures are crucial important rent factors for residential, offices, and commercial uses in other places in Japan.

In Part III, titled “City Planning and New Technology,” we discuss two topics, namely, compact cities and real estate technology in Japan.

Promotion of compact cities is regarded as a high priority issue in urban policies in the era of population decrease. The Act on Special Measures concerning Urban Reconstruction in 2014 was revised to institutionalize the framework for the Location Normalization Plan, a plan for local governments to build compact cities to manage population decline and aging urban infrastructure while placing less burden on environment. Three chapters are devoted to issues related to this movement. In Chap. 18, Ishikawa (2020) discusses how urban functions can be guided by residents’ perspectives. To build a compact city, various day-to-day services must be placed proximal to residential areas; however, some services must be placed at a certain distance from residences because of land use restrictions. Therefore, we must determine the uses allowed in residential areas. In Chap. 19, Morimoto (2020) discusses the history of major contributions made by the development of transportation facilities to urban spread, the important role of traffic facilities to guide land use toward desirable purposes, and impact of self-driving vehicles on land use. In Chap. 20, Ogushi (2020) explains how the Location Normalization Plan in Niigata City was formed in detail.

Real estate technology refers to real estate business-related services that use new technology. Several new services based on new technology have been introduced in the field of real estate in Japan. Three chapters are devoted to issues related to real estate technology. In Chap. 21, Narimoto (2020) explains the outline of real estate technology services in Japan and identifies legal problems associated with handling of information. In Chap. 22, Nishio and Ito (2020) report on creating a sky view factor calculating system that uses Google Street View. Sky view factor is a term that refers to a configuration factor for the amount of sky in a hypothetical hemisphere. In Chap. 23, Kiyota (2020) explains the transition of neural network research and characteristics of deep learning and introduces a system that detects category inconsistencies in real estate property photographs submitted by real estate companies by using deep learning and a system that detects indexes associated with ease of living based on property photographs.

This article discusses the development of compact and functionally integrated urban environments from the perspective of local residents, focusing on their psychological evaluations of mixed land use and performance-based regulation. It demonstrates the significance of residents’ perceptions and attitudes in the achievement of flexibility required for urban planning in a shrinking society. To promote planned concentration of various functions in an urban area in an appropriate way, as in the development of compact cities in a multi-polar network advocated by the Location Normalization Plan, it will have more importance than ever to conceive planning that takes the characteristics of both a region and its residents into account.

Location normalization plans that are currently being established across the country encourage a loose approach to land utilization guidance by establishing the areas where urban function guidance and residential guidance apply. We will consider some hints as to how to proceed with urban downsizing by looking back at how urban areas expanded during the period of population growth. It is important that the characteristics and roles of each transport system are reorganized and that they are skillfully incorporated into cities. In particular, the formation of transfer points between main line transport systems and branch line transport systems is a key to the formation of compact cities.

In the case that the amount of investment differs between the designated area and other area, the impact on land prices will be unavoidable. In Niigata City, the plan has just been completed. From now on, we need to pay close attention to how to make land use more appropriate by policy guidance and how it affects the land price.

In this paper, I will introduce the types of real estate tech services already provided in Japan and give concrete examples, as well as explain the real estate crowdfunding, which is attracting particular attention, including laws and regulations. I will also discuss the legal issues in the use of data and personal information that are expected to arise in real estate tech services in the future.

In recent years, big data entered use in various fields. Google Street View (hereinafter called “GSV”) can be regarded as open big data, and its images can be obtained using API. The streets can be viewed 360° horizontally and 290° vertically from each point on the web. In addition to those, zooming up is available, and the viewpoint can be moved approximately 10 m forward or backward to/from the current point. The original image to provide the view is the panoramic image associated with the latitude and longitude information on the street consecutively at intervals of 10 m, and they exist as massive data on the web. We determine the area of the sky using these images from GSV. In this research, we calculate the sky view factor (hereinafter called “SVF”) in an extended area by defining the area of the sky with the SVF and utilizing the computer.

This article describes frontier efforts to apply deep learning technologies, which is the greatest innovation of research on artificial intelligence and computer vision, to image data such as real estate property photographs and floorplans. Specifically, attempts to detect property photographs that violate regulations or were misclassified, or to extract information that can be used as new recommendation features from property photographs, were mentioned. Besides, this article introduces an innovation created by providing data sets for academic communities.