On Dec. 23, 2023, South Korea became a 'super-aged society.' The proportion of residents aged 65 and older (10,244,550 people) among South Korea's registered population exceeded 20%. The United Nations (UN) classifies a society as aging if the population aged 65 and older is more than 7% of the total, as aged if over 14%, and as super-aged if over 20%. Accordingly, ChosunBiz introduces overseas businesses focusing on seniors and the societal problems caused by a super-aged society, centering on Japan, which entered a super-aged society 19 years earlier in 2004. [Editor's note]
In Japan, 13.8% of all dwellings are 'vacant houses.' According to the Japanese Ministry of Internal Affairs and Communications, the number of vacant houses reached 9,002,000 as of October 2023, increasing by more than 510,000 from 8,489,000 in 2018. However, the market anticipates that there are even more uncounted vacant houses. The Nomura Research Institute estimates that approximately 11,000,000 vacant houses exist in Japan, and that by 2033 they will account for over 30% of all dwellings.
The increase in vacant houses in Japan is attributed to population aging and declining birth rates. The Japanese Ministry of Internal Affairs and Communications announced that as of October 1, 2023, Japan's population, including foreigners, was counted at 124,352,000. Japan's population peaked at 128,057,000 in 2010 and has been declining for 12 years. The number of elderly people aged 75 and older increased by 713,000, surpassing 20 million for the first time. Although the number of elderly people aged 65 and older decreased by 9 million, their proportion of the total population reached a historic high of 29.1%.
In contrast, the number of newborns in 2023 decreased by 32,000 from the previous year to 799,000, marking the lowest record for the eighth consecutive year. Japan's total fertility rate is 1.2 (as of 2023), the lowest since related statistics were compiled in 1947. This falls short of the replacement fertility rate of 2.1 needed to maintain the current population.
When vacant houses proliferate, property prices in the surrounding area collapse. According to a survey by the 'Japan Akiya Consortium,' which consists of 14 companies and research institutions aimed at solving the vacant house issue known in Japan as 'Akiya,' the Japanese real estate market suffered losses of approximately ¥3.9 trillion ($35.9 billion) over the past five years due to the decline in housing prices near vacant houses. The presence of overgrown weeds and concerns over public safety have led to a decrease in land prices within a 50-meter radius.
Accordingly, ChosunBiz interviewed Seigo Umemoto, CEO of Renobank, which remodules vacant houses into livable dwellings to revitalize the secondary housing market, in writing on the 15th. CEO Umemoto, a graduate of the Chuo Graduate School of Strategic Management, worked in sales, corporate planning, and new business at Recruit for 15 years before serving as the head of various new business developments, including vacant house and crowdfunding projects at FANTAS Technology from 2020. He then acquired the vacant housing division 'Tas Reno' at FANTAS Technology and established Renobank in March 2023.
─Why did you establish Renobank?
I gradually became convinced while creating new businesses that they should not merely generate revenue but also contribute to society. Based on this belief, I wanted to contribute to solving the social issue of vacant houses. Renobank genuinely understands customer desires and provides transparent remodeling proposals to help them create the dwellings they expect.
─Renobank aims to reduce vacant houses. Why is it a problem in Japan?
Vacant houses deteriorate the surrounding landscape and worsen sanitary conditions due to overgrown weeds. They also increase the risk of crime due to unauthorized entry, structures may collapse due to aging, and there is a fire hazard due to the risk of arson. Vacant houses negatively affect the property values of nearby homes.
─According to the Japanese Ministry of Internal Affairs and Communications, the number of vacant houses as of October 2023 is 9,002,000. What is the composition of vacant houses in Japan?
In Japan, vacant houses are broadly divided into four categories. Of the total vacant houses, 4.43 million are 'rental vacant houses,' 3.85 million are 'other vacant houses,' 380,000 are 'second homes' used as vacation houses, and 330,000 are 'vacant houses on the market.' Among these, 'other vacant houses' are the core of the social issue of vacant houses. The Ministry of Internal Affairs and Communications defines 'other vacant houses' as 'real estate that is currently unused and not available for rent or sale in the market.'
─What type of vacant houses is Renobank focusing on?
Renobank focuses on the 330,000 vacant houses on the market. Additionally, it offers services aimed at changing the use of 1.9 million 'other vacant houses,' which constitute 50% of those houses. The key to solving the vacant house issue is how much we can reduce 'other vacant houses.' The large number of 'other vacant houses' is because owners tend to think 'transactions are a hassle' or 'I don't want to spend money on remodeling.' Therefore, it is necessary to provide economic incentives for vacant house owners to sell their properties. Renobank aims to reform the distribution structure for vacant houses, mainly rediscovering the value of used single-family homes.
─You mentioned that economic incentives should be provided to vacant house owners to reduce 'other vacant houses.' However, from the owner's perspective, while the value of the house may decline if left idle, there are no costs incurred. Remodeling incurs expenses. How can one gain more benefits than the costs incurred?
As mentioned, vacant house owners bear only minimal costs, even if they leave their properties unattended. The main burdens are property taxes and urban planning taxes; however, these do not impose a financial strain on them, contributing to the increase in vacant houses. Thus, the Japanese government provided subsidies for removing or reinforcing vacant houses or inspecting their conditions to prevent them from being abandoned. They also created a website where owners can register their vacant houses for free and conducted surveys on vacant houses. A subsidy was also provided to encourage corporations to manage vacant houses. Last year, they enacted legislation to eliminate special tax benefits related to property taxes and urban planning taxes in case of leaving a house vacant. However, despite these efforts, vacant houses continue to rise. Therefore, it has been concluded that economic incentives for property owners to sell their vacant houses are necessary. If a corporation purchases a vacant house, they can add value through remodeling and then resell it; if an individual purchases, they usually reside there after remodeling. Individual investors can profit by using vacant houses as rental properties or lodging facilities.
─What services does Renobank provide?
There are three main services. First, 'Tasurinobe' is a real estate search website specializing in used single-family homes, including vacant houses. Artificial Intelligence (AI) analyzes real estate data to calculate remodeling areas and costs and suggests remodeling methods to users. Regular individuals often struggle to estimate remodeling costs just by looking at the sales prices of used single-family homes, but using Tasurinobe allows them to understand the costs needed to make a used single-family home livable. The second service, 'KodatenoValue,' calculates expected sales prices, rental prices, and remodeling costs necessary to rent out vacant houses when users input information about the properties. The third service, 'Vacant House Consultation Desk,' provides consultation through both online and in-person meetings, suitable for overseas investors looking to purchase vacant houses in Japan.
─Depending on the condition and form of vacant houses, what are the typical places and costs where remodeling occurs?
Remodeling primarily targets structure (pillars, walls, roofs), plumbing facilities (toilets, kitchens, bathrooms, sinks), finishing (flooring, wallpaper, ceiling finishes), and other installations (distribution boards, gate posts). Generally, it is advisable to remodel houses that have exceeded their lifespan. For example, remodeling a house built 30 years ago may cost around ¥1,000,000 (approximately $9,208) while a house that is 10 years old may require about ¥2,000,000 (approximately $18,42). Additionally, costs vary based on the materials used. Tasurinobe calculates remodeling costs based on the unit prices of the most widely available materials in Japan. The total remodeling cost for an 80 square meter apartment is approximately ¥15,000,000 (approximately $138,000). However, if only essential parts are remodeled, costs can be reduced to about ¥1,000,000 to ¥3,000,000 (approximately $9,208 to $27,620). Tasurinobe presents various remodeling costs to assist vacant house buyers in making rational and effective decisions.
─Who primarily purchases the 330,000 vacant houses on the market?
Corporations and brokers seeking to buy, remodel, and then resell vacant houses often purchase them. While there is no data on each proportion, based on real estate listing sites, it appears that most buyers of vacant houses intend to resell them. Companies looking to resell will only purchase vacant houses that can be bought at lower prices than the market. In other words, unless vacant house owners are willing to sell at discounted prices, vacant houses cannot be purchased. This structure means the businesses aiming to resell vacant houses can only purchase a limited number of properties.
─You mentioned that there are more vacant houses purchased for resale than remodeled for personal residence. It was also stated that companies wanting to buy vacant houses are only interested in those priced below market value. Isn't it unrealistic to think that remodeling can resolve the vacant house issue?
You hit the nail on the head. As you mentioned, simply remodeling cannot solve the vacant house problem. However, consider the various ways vacant houses can be utilized. They can be demolished to utilize the land, converted into hotels or restaurants, or made available for rental or personal residential use. Among these, rental and personal residential purposes are the most in-demand. Renobank believes that if vacant houses can be transformed for rental and personal residential use, it can contribute to solving the vacant house issue. Additionally, if individuals can handle vacant houses similarly to corporations, it could help in resolving the issue. Renobank provides ways for individuals to prepare for remodeling. This could shift the traditional flow of vacant house distribution from 'vacant house owners → corporations → general buyers' to a new C2C (customer-to-customer) model of 'vacant house owners → general buyers.' This new approach presents the potential to resolve the vacant house issue more efficiently while also providing better value to both owners and buyers.
─What does Renobank consider to be the most effective way to reduce vacant houses?
As mentioned earlier, I believe the most effective method is enabling individuals to independently purchase existing single-family homes. This approach not only solves the vacant house problem but also empowers individual buyers with greater choices and autonomy in the real estate market. Renobank aims to provide the necessary tools and information to support individuals in proactively pursuing the purchase and utilization of existing houses.
─How many startups related to vacant houses, like Renobank, exist in Japan? What is Renobank's competitive edge?
I understand that there are over 100 startups related to vacant houses. Several startups use sales methods that combine real estate and remodeling, similar to Renobank's Tasurinobe. Compared to these, Tasurinobe is specialized in single-family homes, and users can search for real estate directly on the Tasurinobe website while also confirming the estimated remodeling costs for each property. Currently, there are very few real estate search platforms that are specialized in single-family homes. To my knowledge, Tasurinobe is the only service that provides solutions combining real estate and remodeling targeting single-family homes.
─How many vacant houses has Renobank restored so far?
Since its establishment in 2023, and during the time of FANTAS Technology from 2017, Renobank has restored a total of more than 190 vacant houses. This equates to an average restoration of about 27 vacant houses per year.
─Do you have overseas customers?
Yes, there are overseas customers, including those looking to purchase vacant houses for investment, those planning to relocate to Japan, and those intending to buy vacation homes. Among them, some customers aim to use their purchased vacant houses as short-term rental lodgings. Renobank previously provided services for overseas customers through its website. However, due to more inquiries than expected, this service is currently temporarily suspended.
─There is an increasing number of vacant houses in South Korea as well. What advice would you give to Korea?
(According to the '2022 Status of Vacant Houses' released by the Ministry of Land, Infrastructure and Transport, there are 132,000 'target vacant houses' in the country that have not used electricity or running water for over a year. Of these, 61,000 are located in regions severely affected by population decline.)
It seems that in Korea, transactions are mainly conducted based on new houses, and a culture of remodeling used single-family homes has not yet taken root. If my understanding is correct, similar to Japan, Korea may also face vacant house issues due to stagnation in the distribution of used single-family homes. To prevent this, it is crucial for vacant house owners to list their homes in the market as quickly as possible. If houses become outdated and their value depreciates, it becomes difficult to market them, exacerbating the vacant house issue. In Japan, after the vacant house problem became a social issue, the government took considerable time to assess the status of vacant houses. During that process, values of vacant houses fell, and the number of houses that became unmanageable increased. I believe that promoting vacant house distribution is the first step to prevent a similar situation in Korea. If proactive measures are taken in the early stages, it could contribute to preventing the vacant house issue and fostering a healthy cycle in the housing market.