Builders tap postdisaster rush for quake-resistant homes

Higher temblor-absorbing techniques introduced as 3/11 'changed way people think' about safety

by Kathleen Chu and Katsuyo Kuwako

Bloomberg

Ken Saishoji, a Tokyo real-estate agent, used to answer questions from potential apartment buyers about the proximity to train stations and prices, but that changed after the March disasters.

“The question almost 100 percent of the customers ask first these days is how strong the ground and the structure of the building are,” said 46-year-old Saishoji, who was in charge of selling 198 units in a 28-story building in Yokohama at broker Nomura Real Estate Urban Net Co.

Mitsui Fudosan Co. and Mitsubishi Estate Co., Japan’s two biggest developers, are adopting higher quake-absorbing methods to reduce motion during temblors in buildings taller than 20 stories. For builders such as Nomura Real Estate Holdings Inc., highlighting quake-resistant features has meant selling all apartments at the Yokohama project at prices 14 percent higher than average for the area.

“The disaster has changed the way people think,” said Nomura Real Estate President Kamezo Nakai, whose firm sells its apartments through its own real-estate brokerage. “Some may think that people will refrain from buying homes after the quake, but it’s the opposite. People want to move in to apartments they deem safe.”

Tokyo’s stringent building codes, which include rubber bearings used as foundations so that seismic energy can shift from structures, helped the city’s buildings avoid major damage from the magnitude 9.0 quake that struck of Tohoku’s coast in March, although the temblor caused liquefaction along Tokyo Bay, shattering pipes and disrupting gas, electricity and water supplies.

Contracted rates of high-rises in Tokyo, or the percentage of apartments sold before completion, dropped to 66 percent in November, falling below the 70 percent threshold necessary for builders to turn a profit, according to Real Estate Economic Research Institute Co. data released Dec. 15. The figure was down from 88 percent a year earlier. High-rises are defined by the Tokyo-based research firm as buildings higher than 20 stories.

Mitsui Fudosan is installing pipes with elasticity to minimize damage and will store three-day’s worth of electricity supply for its buildings and warehouses, it said in a Dec. 15 statement. Its 31-story Park Tower Umeda in Osaka and the 43-story, 585-unit Park Tower Shinonome in Tokyo will be the first projects in which the new measures are implemented. The developments will be completed by early 2014.

“There is rising demand for a sense of security and safe homes after the quake,” said Takeru Hasegawa, a spokesman at Mitsui Fudosan. “We have strengthened disaster prevention methods for all of our new projects from now on.”

In April, the number of high-rises offered in Tokyo fell to 104 units, the lowest in more than three years, according to the real estate institute. It recovered to 636 units in September, but the number was still 20 percent lower than the 796 that were put up for sale in February, a month prior to the quake. Data showed 315 units were offered in November.

The supply of apartments in Tokyo last year is estimated at about half the 10-year average of more than 81,000, the institute’s data show. Supply declined after lenders tightened loans in response to the collapse of Lehman Brothers Holdings Inc. in 2008.

Demand for properties in central Tokyo will remain high, said Masahiro Mochizuki, an analyst at Credit Suisse Group AG in the capital.

“Condo supply was about half of what it was before, even though demand remained the same. People who want to buy houses didn’t just disappear,” said Mochizuki. “The limited supply and rising preference for central Tokyo properties will help boost demand.”

Mitsubishi Estate’s 49-story Park House Harumi Towers, which will be completed by November 2013, will have storage rooms with emergency kits on each floor, as well as stocks of water, food and other daily necessities and a kitchen system that will allow residents to prepare meals outdoors, it said in separate statements.

Japan’s biggest developer by market value plans to increase fuel reserves for power generators in its residential buildings to last for about 24 hours, up from the previous estimate of eight to 10 hours, said Ryuichiro Funo, a spokesman at Mitsubishi Estate.

“The sales pitch has changed: We demonstrate more about what we have done in preparation for the earthquake,” said Funo.

An 8.0-magnitude quake is estimated to strike every 118.8 years on average near Tokyo, the last one being in 1854, government data showed. The chance of the next Great Kanto Earthquake striking in the next decade beneath greater Tokyo, home to 13.1 million people, has doubled since the March temblor, said geophysicist Ross Stein at the U.S. Geological Survey.

The March 11 quake triggered liquefaction in neighborhoods in Tokyo Bay, which has about 24,955 hectares of reclaimed land, and where Mitsui Fudosan, Mitsubishi Estate and Nomura Real Estate have residential projects. Liquefaction is a phenomenon where soil loses its strength after the ground shakes violently.

Apartments in the area are sought after for their views and travel time of less than 30 minutes to central Tokyo, according to a survey by NHK. The average commute in the capital was estimated at 49 minutes. Nomura Real Estate said sold all 250 units in the first phase rollout of its 600-unit complex in the Shinonome area in Tokyo Bay within a day.

“People’s preference to live in central Tokyo has strengthened” after commuters were stranded March 11, as the city’s subway system was shut down immediately after the quake, said Tadashi Matsuda, a researcher at the real estate institute. “If the developers can emphasize the safety of their buildings, then that’s positive for them amid rising interest in living in the city.”