Intellex, a property renovation giant, announced their entrance into Kyoto’s guesthouse market. The company will start buying traditional machiya townhouses, renovate them and operate them as licensed guesthouses for tourists who want to rent an entire house for the duration of their stay. The project cost is estimated at 480 million Yen (approx. 4.5 million USD) to be spread across five guesthouses.
Their first guesthouse is a 100-year old, 2-storey machiya house located alongside Chawan-zaka, the road that leads up to Kiyomizu Temple. It has a total building size of 111 sqm (1,194 sq.ft) and can host groups of up to 10 guests. Nightly rates range from 36,000 ~ 60,000 Yen and up, depending on the season and number of guests.
This follows a number of major companies that are keen to tap into Kyoto’s booming guesthouse market, including lingerie company Wacoal, Shikoku Railway, and Sankei Building.
Intellex will raise funds for their project through their Asset Sharing scheme which offers small lot ownership. Individual investors can buy ‘lots’ in an investment project and receive dividends over the course of the investment term. The dividends may be paid out from rental income.
These small lot ownership schemes for real estate, sourced through crowd-funding platforms, are becoming popular in Japan, and are governed under the Specified Joint Real Estate Venture Act. This Act was introduced in December 2017 to protect investors in these schemes and only companies with proper permission under this Act can engage in these transactions.
Investors can buy lots in Intellex’s guesthouse project for 1,000,000 Yen per lot, with a minimum investment of 10 lots (10 million Yen). The anticipated dividend is undetermined, although estimated to be over 5% based on five guesthouses. Dividends and return of principal are not guaranteed. Intellex says this form of investing offers individuals the chance to become involved in larger real estate acquisitions that they may not normally have access to, and without the hassle of maintenance and rental management that comes with being a landlord. An investor can transfer their lots to another party, but this requires the permission of Intellex and existing investors are given first right of refusal to buy the lots. Intellex’s previous Asset Sharing projects have included hotels, apartment buildings and office buildings in prime locations in Tokyo.
Source: Intellex News Release, March 19, 2018.