A complete turnaround in the real estate market? The impact of deregulation. Part 1.

A complete turnaround in the real estate market? The impact of deregulation. Part 1.

Previously we talked about the influence on the real estate market that the lifting of the ban on Guest houses, and the measures against vacant houses had. Another policy expected to have a large impact is the "National Strategic Special Zones”. This relates to the government aiming to take special measures such as relaxation on floor-area ratio etc, in specific areas such as Tokyo, and Kansai etc. ?

However at current, security and consumption tax related discussions take up much of the government's time, and deregulation policies etc. related to growth plans have thus far been progressing slowly. Also with respect to the strategic zones, there have been roughly 10 proposals of similar policies for upgrades to skyscrapers etc. authorised so far, but "Real estate Floor Area Ratio Relaxation" remains untouched upon. If floor ratio regulations were relaxed, it would lead to active and sales and price increases, and already construction plans anticipating this relaxation are surfacing, with a focus on Tokyo. The progress of the policy is all that remains.

The point is, what the timing of this bold relaxation on floor-area ratio constraints will be. So far it has been delayed constantly, making it much maligned by international and domestic investors, but if the Liberal Democratic party win this summer's House of Councillors election, the bold regulation measures seem likely to finally be put through. At the end of the House of Councillors election, there is no national election for a while, making it possible for them to push forward with the policy without worrying about opposition. Considering this, it seems likely that there will be some form of announcement regarding deregulation before the Extraordinary Diet session is called in September.

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