Minpaku, the practice of renting out space to paying guests in private homes has been promoted in Japan to help meet the demand for short-stay rooms. Japan’s upper house passed the legislative bill, enacted on June 9, 2017 with The Act to come into force no later than one year from the date of promulgation (June 16, 2017). While this is a positive step towards increasing supply, the private rooms are limited to being leased out only 180 days per year.

In a bid to help supply the demand, Daiwa House Industry is planning to develop 3,000 serviced apartments. These will be compliant with the hotel law, so they can operate 365 days a year and avoid this 180-day limit. The apartment hotels, or serviced apartments will be located across Japan and will include kitchens, rooms for up to 4 to 6 guests, and they will allow guests to stay for as little as one night, according to the Nikkei Shimbun.

At a glance:

• Daiwa House is planning to build 3,000 serviced apartments across Japan by 2020
• They will be compliant with hotel law so they can be leased 365 days a year
• Daiwa is already negotiating for land in Tokyo and Osaka
• They expect to invest around 30 billion Yen in the next three years

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The company has already started negotiating with land owners in Tokyo and Osaka. Expecting to invest around 30 billion Yen in the next three years, they will purchase the land to build on, or offer construction services to landowners, and lease the buildings back under a sublease agreement. Estimated construction cost per apartment is around 10 million Yen.

Each serviced apartment building is predicted to have between 4 and 100 apartments, with size ranging from 40-50 sqm. The larger buildings will have a front desk and a bilingual concierge. Accommodation cost is expected to be around 30,000 Yen per apartment, so a group of 6 guests staying together would be paying around 5,000 Yen each. For longer stays, apartments will be cleaned twice a week.

Source: The Nikkei Shimbun, September 14, 2017.

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