Recently, there has been growing attention on a market that sits somewhere between traditional housing and hotels.
“More than housing, less than a hotel.”
Today, I would like to take a closer look at this new market that is now attracting attention.
A Growing Market Between Housing and Hotels
The hotel-side option: Apartment hotels
When we talk about “more than housing, less than a hotel”, I previously wrote an article about “apartment hotels”.
An apartment hotel is a type of hotel designed for stays of several days to several weeks.
The rooms are equipped with features normally associated with apartments, such as a kitchen, washing machine and cooking utensils.
Among the different types of “more than housing, less than a hotel” properties, apartment hotels are closer to hotels.
They mainly target tourists, including visitors to Japan, who stay for several days to several weeks, often in groups.
As regulations on private lodging, or minpaku, become stricter in many municipalities, it seems that more operators are choosing to apply for hotel or ryokan business licenses and run properties as apartment hotels instead.
The housing-side option: Flexible living
“Flexible living” refers to rental housing intended for medium- to long-term stays, usually from one month to less than two years.
These properties are typically furnished, equipped with home appliances, and include utilities and internet fees in the rent.
The Nikkei also covered this topic on both April 24 and April 25.
The flexible living business featured in the Nikkei articles, including Mitsubishi Estate’s initiative, is not simply about stylish medium- to long-term rental housing.
According to the articles, these properties also offer resident-only networking events and various experiences.
The article also included the following points.
Around 80% of residents are foreigners, such as corporate expatriates and international students, and the occupancy rate exceeds 90%.
It also noted that flexible living is expected to be highly profitable.
While it is cheaper than a hotel, the rent can be about twice that of a normal rental apartment depending on demand, supply, and length of stay.
At present, most of the actual residents appear to be foreign expatriates and international students.
At the same time, because this model can maintain both high profitability and high occupancy, it has recently become a topic of interest as a type of investment business.
How Is It Different from a Monthly Apartment?
When people hear that flexible living means a furnished rental home with appliances, utilities, internet included, and a contract period of one month to less than two years, many may wonder:
“How is that different from a monthly apartment?”
In Japan, monthly apartments became widely known from the 1980s onward, partly through television commercials featuring dogs and cats.
They became established as housing for company employees on temporary assignments or long business trips.
However, the monthly apartments of that time had a strong image of being “a place to live for a short period with only the bare minimum”.
Many were used as company expenses, and price and convenience were prioritized over the appeal of the interior or facilities.
Also, this was not the social media era we live in today.
The idea of a “beautiful room” or a “nice place to live” was probably much weaker than it is now.
Weekly and monthly apartments still exist today, of course.
But because of that older image, some people may still associate them with interiors and facilities that feel a little too plain for longer stays.
Another point is that traditional monthly apartments did not usually have events or opportunities for residents to interact with one another.
How Is It Different from a Share House?
Furnished rooms, home appliances, utilities and internet included, stylish interiors and events for residents.
In that sense, flexible living may seem similar to some share houses.
Share houses themselves have a fairly long history.
Since the 2000s, there has been an increase in share houses with stylish interiors and stronger community management.
There have also been more cases where corporate training facilities or company dormitories have been converted into share houses.
Although share houses have suffered from negative impressions due to issues such as illegal housing arrangements and the “Kabocha no Basha” scandal, many different types of share houses still exist today and remain popular.
The difference is that in flexible living, even if there is interaction among residents, bathrooms, kitchens, and other essential facilities are generally not shared.
Also, many rooms appear to be designed not only for single residents, but also for multiple people living together.
Why Are Foreign Residents and Investors Paying Attention Now?
The real difficulty foreigners face when looking for housing in Japan
For foreign expatriates and international students, ordinary rental housing in Japan can be quite difficult to rent.
I think this is one of the major reasons behind the growing interest in flexible living.
At our company, we actually receive quite a lot of inquiries from foreign customers.
The most common inquiry is:
“I can’t rent a place, so I want to buy one”.
The next most common requests are:
“I would like someone to negotiate a rental contract for me”, or
“I would like someone to find a place I can rent”.
We also receive inquiries from people who want support with the procedures between renting a place and actually moving in.
Among these inquiries, there are also many cases where communication with the property management company does not seem to be going well, or where the customer does not fully understand how the Japanese rental housing system works.
To be honest, what surprises me most is how many people say, “I can’t rent a place, so I want to buy one”.
It suggests that quite a few people who want to live in Japan have enough assets to consider buying property. At the same time, it also shows how high the hurdles of rental contracts can be.
Some people hesitate after hearing explanations such as:
Buying may be possible, but selling the property when they return to their home country may be difficult.
If it is a condominium, the management association system may be complicated.
Guarantors, initial costs, furniture and appliances, contract periods, language support.
Even if the rent is higher than the market rate, flexible living may be chosen because it solves many of these issues at once.
I myself lived abroad for several years and experienced looking for a place to live in another country.
Because I was in a regional city, there were no Japanese real estate agencies or foreigner-friendly agencies like those often found in large cities.
I had to search through ordinary real estate websites and local bulletin boards.
At first, it was difficult because I did not have a bank account and because of issues related to my residence permit.
I was also anxious because I could not view the property in person.
I did not know how much utilities and other costs would be after moving in, or even how to make those contracts.
I was also worried about possible problems after moving.
In the end, I lived for about a year in a place that was somewhat similar to a share house in Japan.
It was a large detached house owned by a retired woman, and I rented one room in it.
Utilities were included, and I paid the rent in cash.
Differences from Japanese Rental Housing
This may depend on cultural differences, but in some countries and regions, many rental properties come with furniture and basic home appliances from the beginning.
On real estate search websites, the impression of the interior itself often seems to become part of the property’s appeal.
When I looked at the room introduction pages for Mitsubishi Estate’s flexible living properties, there did not seem to be what Japanese people would normally call a “floor plan”.
Instead, the pages mainly showed room photos and descriptions.
On Japanese real estate websites, floor plans are considered essential.
Many people in Japan look at properties by focusing on specifications such as layout, distance from the station, building age and floor area.
On the other hand, overseas real estate websites may place more emphasis on photos, interiors, and the atmosphere of the room — in other words, “what kind of life could I have here?”
I felt that this way of presenting the rooms was also designed with foreign residents in mind.
In Japan, there is still a strong assumption that rental housing means no furniture, a two-year contract, a guarantor company or guarantor, and a large initial payment when moving in.
Of course, this system has worked for Japanese rental housing for a long time, and it is not necessarily a bad thing.
However, for people coming from overseas, people staying in Japan for only a few months to a few years, or even people within Japan whose work and lifestyle are becoming more flexible, this system can feel quite heavy.
Flexible living seems to be a new option that has entered this gap.
It is not simply “furnished rental housing.”
It reduces the effort required before moving in, lowers the hurdles of the contract, and provides a place where people can start living with peace of mind, even for a limited period.
When seen this way, it feels natural that flexible living is popular among foreign expatriates and international students.
Potential as an Investment Property
From an investment perspective, flexible living is certainly an attractive field.
It can be expected to generate higher rent than ordinary rental housing, while not requiring services as heavy as those of a hotel.
By providing furniture, appliances, internet, and utilities as part of the package, the property becomes a convenient “ready-to-live-in” home for residents.
Because fixed costs are clear, residents can also estimate their living expenses more easily after moving in.
I also think the reason for higher rent is not simply that furniture and appliances are included.
For residents coming from overseas, it is important to be able to look at room photos and feel, “I could live here”.
Rather than the bare minimum furniture and facilities often associated with traditional monthly apartments, residents are looking for a certain level of design, cleanliness, and an interior that helps them imagine everyday life.
In other words, in flexible living, the product may not be only the building itself.
Furniture, lighting, curtains, appliances, and even how the room looks in photographs may all become part of the product.
There may also be Japanese residents who need this kind of housing: people who suddenly need to move, people looking for temporary housing for several months to several years, or people who hesitate because of the initial costs of moving and buying furniture and appliances.
However, I do not think this model can be created simply by placing furniture in an ordinary rental apartment.
If move-ins and move-outs become frequent, the interior and facilities need a certain level of durability.
Furniture and appliances must not only look good, but also be easy to replace and maintain.
If foreign residents are expected, the operation system also needs to be prepared, including contracts, guidance, trouble support, and explanations of daily living rules.
In other words, flexible living is a type of housing that needs to be considered not only as a “building”, but also as an “operation”.
Conclusion
Even within the same category of “more than housing, less than a hotel”, apartment hotels may be described as the hotel-side version.
Flexible living, on the other hand, may be the housing-side version.
It is easier to move into than ordinary rental housing.
It is closer to everyday life than a hotel.
But it is also slightly different from traditional monthly apartments or share houses.
This form of housing, located somewhere in between, is now beginning to attract attention.
Japanese rental housing has long been designed on the assumption that people will live there for a long time.
But from now on, there will likely be more people who stay for only a few months, people who stay for several years, and people who move across borders.
In that situation, what will be needed may not be simply renting out a room.
It may be preparing a home in a way that allows people to begin their life there more easily.