The expected deregulation of “guest houses”.

The expected deregulation of “guest houses”.

Previously, we touched on the rapid increase of tourists coming to Japan. Due to this increase, tourism related industries are seeing significant benefits. Along with these positive effects, there are several downsides such as the lack of infrastructure and facilities with multi-language support, and problems maintaining law and order, etc.

Among these issues, a serious one is the lack of accommodation. In large cities such as Tokyo and Osaka, or tourist destinations like Kyoto, hotels are continuously near fully booked, and making a reservation is a difficult affair. Private think-tank Mizuho Research Institute has calculated that while approximately 9500 rooms will be added by the 2020 Olympics, over 4300 more will be needed.

The Japanese government’s ace in the hole when it comes to combating this issue is the deregulation of “guest houses”, allowing tourists to stay in privately owned condominiums etc. If this bold deregulation goes forward, it is likely that construction and renovation of condominiums aimed at the guest house market will increase drastically.

Further, REITs (Real Estate Investment Trusts), etc. are expected to increase investment in guest house properties. In any case, the lifting of the ban on guest houses is almost certainly a major factor in the liquidation of the real estate market. The Japanese government’s actions towards deregulation aimed at guest houses are something worth paying attention to.