Setting up a business in Japan
is quite an easy process, especially when having specialized professionals in company formation in Japan
by your side.
An important aspect, though, to take into account is if you should buy or rent an office for your Japan company, since the local legislation requires a company to have a business address in the country.
Buy or rent an office in Japan?
The differences between buying or renting an office are commonly the same in all countries. With around 60% of Japanese citizens owning their homes, there are just as many renters. Here are a few advantages and disadvantages of buying versus owning an office in Japan.
Pros of buying an office in Japan:
• Japan has low interest rates and quite high real estate yields, therefore the mortgage repayments generally are smaller than the rent you would pay for the same real estate. This implies that for the same rent, you could buy a larger or better real estate, or you could purchase a similar property with much smaller monthly payments;
• You will have the chance, if you buy and sell at the right moment, to make profit from the transaction, even though that is obviously not guaranteed;
Cons of buying an office in Japan:
• You will have to maintain the property yourself;
• Less flexibility, meaning that in case you start to dislike the real estate, there are important costs involved with selling it;
• A large amount of cash is necessary for the deposit at the buying time.
Pros of renting an office in Japan:
• Flexibility: you can easily move your offices depending on your future preferences and needs;
• No maintenance issues.
Cons of renting an office in Japan:
• The real estate cannot be changed according to your needs or preferences;
• Most of the rental leases are for two years, which means you will have to keep your office in the same place for at least that amount of time;
• There is the risk of a rent increase or termination of lease by the proprietor;
Where to rent an office in Japan?
Tokyo is not only the main location where to start doing business in, but also the mega city where in excess of 35 million people, more than 30% of the entire population of Japan, lives.
The land prices in Tokyo have dropped considerably with more than 70% in the past 10 years. Therefore, new office spaces are entering the market, placing further pressure on the rent prices to decrease.
An office space in central Tokyo costs between USD 4 to USD 12 per square foot at the present, per month. Even though the office rents have decreased, smaller proprietors still hope that the prices will reach the highs they did back in the 1980s.
If you would like to learn more about the Japanese office space rent
, or for assistance related to starting a company in Japan
, please contact us