OSAKA - Applications for hotel business licenses are rising sharply in Osaka as property owners seek an alternative way to operate short-term rentals following the suspension of new applications under the city's special-zone minpaku program, with the approach drawing growing interest from wealthy Chinese and other overseas investors.
Osaka City stopped accepting new applications for special-zone minpaku in May after repeated complaints over garbage, noise and other problems, as well as a surge in applications linked to obtaining visas.
A rush of last-minute applications occurred before the cutoff, raising expectations that problems surrounding the rapidly expanding short-term rental sector might ease once new applications were halted.
However, operators and investors are increasingly turning to licenses under the Hotel Business Act, which can allow condominium units and other properties to be used for accommodation in a way similar to minpaku.
An administrative scrivener who handles applications and operational support for foreign property owners showed a condominium unit near Nipponbashi Station, close to Dotonbori, that is being prepared for accommodation use.
The owner lives overseas and is from Singapore, with plans to begin operating the property by around the end of this year.
Short-term rental operators have generally relied on either the nationwide private lodging system, which limits the number of days a property can operate each year, or Osaka's special-zone minpaku program.
But the Nipponbashi property is instead seeking permission under the Hotel Business Act.
The arrangement can provide essentially the same type of accommodation service as a minpaku operation while also offering advantages unavailable under the special-zone system, including the ability to accept guests staying for only one night.
Hotels and traditional inns are generally associated with reception desks and staff stationed on site, but Osaka's regulations do not require a front desk to be located inside the same building.
Instead, an operator may establish a management office serving the role of a front desk within 1 kilometer of the property so staff can respond quickly if problems arise. Staff are also not required to remain permanently stationed at the accommodation.
At the property visited, the management office was located about 500 meters away.
The administrative scrivener said requests for hotel business license applications had been almost nonexistent until May but had since risen to about 20, with foreign nationals accounting for around 20% of them.
The increase is also visible citywide. The number of required filings associated with hotel business applications in Osaka City rose to 108 in July.
During the interview, the scrivener received a call from a Chinese woman who had purchased four condominium units in Osaka and was considering starting four accommodation businesses at the same time under hotel business licenses.
Because obtaining a hotel business license can take time, she was advised to consider operating initially under the nationwide private lodging system while waiting for approval.
The scrivener said demand remains strong and that supporting applicants who comply with the law can benefit both Osaka and Japan, adding that he intends to continue assisting operators in accordance with regulations.
Residents in areas where such accommodation businesses are increasing, however, have expressed concern that the suspension of new special-zone minpaku applications may not have stopped the spread of short-term rentals.
One resident said she had believed new operations would no longer be allowed after seeing reports about the suspension, only to find that similar businesses could still be opened through another legal framework.
Another resident living in a condominium said she would be worried as a parent if a neighboring vacant unit were converted into short-term accommodation.
The trend is also attracting attention among wealthy investors in mainland China.
A real estate company selling Japanese accommodation properties to Chinese buyers said operating short-term rentals under Hotel Business Act licenses has already become widely known among affluent Chinese investors.
The company showed a property intended for accommodation use that was being considered for sale for 1.3 billion yen.
Despite the high price, the company said Japanese real estate can appear relatively inexpensive to Chinese buyers because of the weak yen, with some properties costing roughly half as much as comparable real estate in Beijing.
Entire buildings are particularly popular with investors, and in some cases existing tenants are offered financial assistance to move out so the whole property can be sold for accommodation use.
The real estate company said it explains Japanese rules to buyers in an effort to prevent problems. While acknowledging that some people fail to follow manners or regulations, it said most buyers comply and that the company intends to take greater care as concern among Japanese residents grows.
Osaka Mayor Hideyuki Yokoyama said on September 4 that the city plans to strengthen regulations under its Hotel Business Act ordinance as applications for accommodation businesses increase.
The city is considering measures including requiring managers to remain on site and prohibiting such accommodation operations in row houses.
Yokoyama said Osaka wants to continue promoting the city's appeal while introducing measures that prevent residents from feeling uneasy about the growth of short-term accommodation.
The transactions and operations examined are legal under current rules, but the rapid shift toward Hotel Business Act licenses is raising questions over whether the suspension of new special-zone minpaku applications will be enough to address residents' concerns over noise, waste, property prices and the changing character of local neighborhoods.
Source: KTV NEWS
