Chapter 52 – The Amateur Land Developer
BETWEEN FOUR WORLDS: CHINA, RUSSIA, JAPAN AND AUSTRALIA.
BETWEEN FOUR CAREERS and FOUR LANGUAGES
1. More Shangri-la
2. The Land Boom is Coming
3. The Problem Maker, IWNC
4. The Lockwood House
5. Becoming a Builder
6. Creating a Community
7. Lessons in Development Economics
8. The Japanese Weekend
9. Chiba is Cheaper
10. Have Your Own Mountain!
With the lecture circuit seemingly determined to grind on forever I realised I had a tax problem.
Almost half of everything I was earning was going to the government.
Fortunately a friendly tax official told me I could save a lot of tax if I incorporated myself. Being incorporated made it easier to claim expenses against income, he said.
(The Japanese tax regime is very generous to small corporations. Too generous. It is one reason for Japan’s fiscal problems.)
But first I had to create expenses. That turned out to be very easy, but not quite in the way I intended.
1. More Shangri-la
I described earlier the original Shangri-la we had carved out for ourselves in the early 1980’s near Yoro Keikoku, in the middle of the Boso Peninsula wilderness.
From there in the mid eighties we had moved to yet another piece of abandoned, jungle-covered farm land, near the village of Hosoo in Ohara town.
This time we were closer to civilisation, near the Boso east coast and the train-line running direct to Tokyo.
And with access to water and electricity, it was a much more liveable than our original Shangri-la.
Facing due south, the land had been neatly terraced back into the side of a large densely-forested hill.
It must all have been painfully done by hand, by the original owners going back centuries.
We were enjoying the benefits of their labor.
With views over the valley below and without sight or sound of other human beings, often I would just sit there wondering why the rest of the 100 million people of Japan were not enjoying these mini-paradises.
There too for several years we had been happy, trekking out from Tokyo every weekend to clear the jungle and grow things, dragging our two small children behind us.
We found that kiwi fruit vines grew well in the rich soil and warm climate. Before long we had a full-scale kiwi fruit plantation producing several thousand fruit a year – much more than we needed for ourselves.
At harvest time we instituted the Kiwi Fruit Picking Festival, with friends invited to collect and eat as much as they could.
That pagan rite continued for some years at what came to be known as the Kiwi Farm.
2. The Land Boom is Coming
Sometime in the late eighties someone asked me to buy a scrubby, cedar (sugi)- covered, two-acre (2,000 tsubo) hillside in the nearby village of Nakadaki, Misaki town.
I agreed, even though I did not need the extra land. I simply saw it as a cheap insurance against the land boom insanity about to move out of the cities and engulf the countryside.
(The speculators seemed poised to buy up every nook and cranny across the nation. So like everyone else, I felt I should get in quickly.)
(Which is why there was a land boom in the first place, of course.)
3. The Problem Maker, IWNC
Soon after, I ran into a hail-fellow-well-met Englishman looking for land to run an outdoor training camp for company employees. He would call it ‘I Will Not Complain’, or IWNC for short.
He had been cheated in an earlier training camp site deal and wanted to make a fresh start, he said.
Could he rent my Nakadaki land? Please!
I felt sorry for him and said yes.
It was, I would realise later, a decision that would change the entire pattern of my life for the next two or more decades.
I WILL Complain
Initially the Englishman had said he just needed the raw land. Clients would sleep in tents, cook over campfires and toilet in the jungle.
But soon the clients began to complain.
So could I install toilets, showers, sleeping quarters, a kitchen, a dining facility…. Please!
It was a tall order. But I could see the chance for tax savings since much of the construction could be expensed.
In effect, the Japanese government would be paying for half of everything I built.
But I should have realised that I would be paying the other half, and having to suffer headaches, sleepless nights, and a host of other problems well into the next millennium as a result.
4. The Lockwood House
Problem Number One came quickly.
A New Zealand company called Lockwood had pioneered an unusual technique for building attractive earthquake-proof, pre-fab houses out of carefully dried and laminated radiata pine boards.
I discovered this when a friend with a Lockwood house on the Tokyo outskirts threw a farewell party.
He had just sold his land to developers and was leaving Japan quickly, before the tax man could demand a share of his land boom capital gains.
I asked what would happen to the house. He said casually the developers would be crushing it into matchsticks, soon.
‘What a waste,’ I said, looking at the solid pine boards and quality fittings.
‘You can have it if you like,’ he replied. “The boards all slot together like kiddy’s blocks. Just pull them apart and slot them together again and, hey presto, you have a house . “
“And while you are about it you can take the curtains, too, and the furniture, and the knives and forks, and anything else you like. It is all going to be left behind when we head for the airport. We can’t take it with us.”
It was an non-refusable offer. Apart from anything else, I needed some kind of building to house those IWNC clients being made to sleep in the Boso mud.
And as an inveterate scavenger, I am quite unable to pass up anything offered for free.
But inveterate or not, could I pull down an entire house in Yokohama, transport it to Boso, and rebuild it, single-handed?
Enter the Freddy Factor
At this point, enter ‘Freddy’ (not his real name).
I had run an advertisement seeking someone to rent a small annex house on the Kiwi Farm. A dark-skinned Texan, possibly half native or Mexican, was the only responder.
‘Call me ‘Freddy’, was his catch-cry.
A former US marine MP, he had stayed on in Japan, trained himself to be a two-by-four carpenter, married a Japanese woman, taught himself spoken Japanese, and then set up his own building company somewhere to the north of Tokyo.
But then disaster had struck. First, the gangsters had got into him on a major project, he said.
Then his wife had died, leaving him to raise two children by himself and also leaving him unable to do his company paperwork (he could speak but could not read Japanese).
Forced into bankruptcy, he had to try to make a fresh start. Some cheap accommodation in the countryside would help. …
I had an idea.The Lockwood house at Yokohama was still sitting on its site, waiting for the wreckers to arrive.
Could he pull it apart? Of course, he said, with the assumed confidence I was later to get to know only too well.Could he put it together again? Again no problem, though he had still to see the house.
Would he be happy to do all this while camped out in my small Kiwi Farm annex? Certainly!
At the time it seemed like a marriage made in Heaven. Or was it Hell?
Dismantling the Lockwood House
First impression of ‘Freddy’ had been positive. Physically he was very strong.
His spoken Japanese was good. He had learned it entirely through the ear (language teachers please note).
He had a strong instinctive intelligence. Or at least it seemed that way.
Later it turned out that with the intelligence came what the Japanese call warujie (bad intelligence).
Worse, he was also an alcoholic.
I will pass silently over the enormous problems we had getting the Lockwood pulled apart and transported to Chiba.
Suffice to say that even though I had given him a contract to do the job I ended up having to do most of it myself, together with the help of Sophia students.
I will say even less about the problems we had later. Suffice it to say that at the end of a year ‘Freddy’ was still finding excuses to delay rebuilding the Lockwood.
Meanwhile the Lockwood boards and other materials we had painfully transported all the way from Yokohama were being left outside in the Boso summer heat and humidity, to warp and discolour.
Eventually, we had no choice but to part company. He had cost me dearly, and not just in financial terms.
It should have been my first lesson in learning not to take people on trust – not to assume naively that just because you do the right thing for them, they will do the right thing for you.
(My first lesson in fact was at the brutal hands of the China Clique in Canberra.)
5. Becoming a Builder
Fortunately I was able to bring up a young carpenter from New Zealand to try to rebuild the Lockwood. Slowly he managed to fit the warped planks together.
The final product looked more like a rickety barn than a house. Someone rightly dubbed it “Clark’s Folly.”
But by this time the Lockwood people in New Zealand were interested in what I was doing.
Never before had anyone been able to pull one of their houses apart and rebuild it, they said.
We had made history, of sorts. They set out to encourage me to do more building.
They promised to provide materials cheaply, and help find reliable carpenters. I set out to build one or two of their houses, experimentally.
But carpenters can only do so much. When you build a house there is a host of other problems – painting, electricity, plumbing, sewage etc.
But I was hooked on Lockwood’s unusual technology. The finished product was also very attractive – solid boards from floor to rooftop providing a warm and protective feeling.
Besides, I still had the income from the lecture circuit flowing in and had to use it somehow.
The Japanese yen was expensive. The NZ dollar was very cheap (their economy was a wreck).And the Lockwood people would send up the carpenters for the job.
All I had to do was designate a site for the house and they would do everything – from unloading the containers from NZ up to installing the sinks, also from NZ.
Some queried why a university professor was trying to enter the building business.
I would talk about the need for hands-on experience in running a company – something I was supposed to be teaching as part of a venture business and enterprise management course.
Another reason was a need to find an outlet for mental and physical energy unused in the ivory tower and on the lecture circuit.
But the main reason was I had almost nothing to do. The boards, roofing, everything was pre-cut to size. The Kiwi carpenters did everything, even sleeping on site so they could make an early start each AM, finish the job and get back to their womenfolk waiting in NZ.
The boards slotted together to create an almost unbreakable fortress.
After a violent earthquake which left Lockwoods as the only houses standing in a small town, plus a recovery in the N Z economy as the world discovered the country, Lockwood went on to become much too busy to worry about me, a distant customer.
But I made every use of them in the meantime.
Meanwhile another problem, almost on a par with the ‘Freddy’ problem, was slowly developing.
IWNC in Trouble
IWNC had always had difficulty finding customers – mainly because its ideas of how to run outdoor training courses were weird.
Participants would have to spend hours standing at the bottom of trees or cliffs, often in the rain, encouraging each other in turn to struggle to reach the top.
It was supposed to foster group solidarity.
But it was not doing much to foster client solidarity with IWNC.
Ominously, they were not getting much repeat business.
I told them about a highly successful, low cost, treasure-hunt style operation in the Hakone forests the other side Tokyo, booked out years in advance (Japanese like challenges where they can all work together in small groups to find a solution).
But the IWNC people were too stuck in their orthodox and very expensive textbook ideas on how to run outdoor training.
Financial controls were lousy too. Money poured out of the operation even faster than rain out of the Boso skies in July. So once again I faced dilemma.
It was quite likely IWNC would eventually go belly-up.
The Japanese economy was headed for a fall. Bubble-collapse was beginning to hit IWNC already-weak order book.
But in that case, what would happen to all the infrastructure I had built for them at what was now called the Nakadaki Centre?
I had two choices.One was to develop a residential complex alongside the Centre. That would be neither cheap or easy, but it would at least tie in with some of the infrastructure – the expensive water system especially.
It would also allow me to jump ships if and when IWNC went under.
The other was to put even more money into the infrastructure in the hope this would help keep IWNC afloat.
I ended up trying to do both.
The residential complex ended up as five Lockwood houses built into the side of an attractively terraced, two acre hillside next to the Centre.
The added infrastructure included a rather nice conference room and barbecue centre.
But IWNC’s order book continued to decline anyway. Eventually the operation was handed over to one of those MBA geniuses whose only concern was the bottom line.
His idea of ‘outdoor training’ was to concentrate on high-paying executives – flying their groups to exotic hotels around Asia where the only hint of the outdoors was a climbing wall at the back of the hotel near the kitchens.
We parted company, and not amicably.
I had to take him to court for unpaid bills.
6. Creating a Community
But with IWNC gone what was I to do with all the infrastructure I had built for them?
One answer was to continue the residential side of the project.
That way I could hope to get the economies of scale needed to make at least some of the infrastructure worthwhile (by now it included a rather nice tennis court, a canoe centre, and later a squash court made experimentally out of Lockwood timber).
I would try to create a community of hardy souls keen to live in the countryside. Hopefully I would end up being able to hire a manager.
I was helped greatly in all this by three young NZ carpenters, arriving one after the other, over a span of almost ten years.Without them most of the development would have been impossible. Through them I developed a great respect for the Kiwi work ethic.
Later I would try bidding for some of the houses thrown onto the local bankruptcy auction market by the Koizumi-induced recession.
I ended up with a ‘community’ of around 50-60 people, mainly foreign but some Japanese, scattered across the hills and plains of the mid-eastern Boso coastline.
Some lived there with their families, commuting in and out of Tokyo daily (the area was only an hour from Tokyo on a fast train). Others came out for weekends and holidays.
To some extent it was a success; income just managed to cover expenses. But managing all the buildings, facilities, repairs, additions, accounts, paperwork etc had become a nightmare.
And while I was able eventually to get myself a good office secretary, finding a good site manager was much harder.
One small consolation was that the progressive governor of Chiba Prefecture, Domoto Akiko, came to rent one of my Nakadaki houses.
She would bring out her top officials to see at first hand what she saw as an environment-friendly ‘model’ for developing Chiba’s many unused hillside areas.
(I had to tell her, and them, that ‘nanny state’ restrictions being imposed had since made this kind of hill-side development almost impossible.)
(Permissions for houses built on piles, the standard Lockwood technique, had become difficult. Hillside building was equally frowned on. Etc. Etc, )
One was that in the Nakadaki hill site alone I now had twenty or so houses and bungalows scattered over an area of more than four acres.They all needed water.
But thanks to Tokyo’s mistaken fiscal policies, the regional authorities had become so starved of funds they could not afford to supply town water to new developments, including Nakadaki.
So I decided to go native; I would rely on wells drilled into Boso’s thick sedimentary rocks.
I would be showing the world the meaning of self-reliance.
We ended up with four wells linked together in a complex network. Almost invariably it managed to break down when I was not around.
Efforts to educate the Nakadaki population in how to operate the system were only partly successful.
Once I found myself stuck at the end of an Internet connection in Peru trying to work out which pump was working and which was not.
My idealistic dreams about creating a community of rugged, independent-minded, outdoor-life loving souls were starting to get ragged.
7. Lessons in Development Economics
In retrospect, the Nakadaki project was one of the more foolish, but also more satisfying, things I was to do with my life.
Almost every weekend I had to trek out there from Tokyo and back, worrying about problems, tending vegetation, supervising earthworks, building more houses.
Why did I keep on with it? Because I was creating something,
The idea of having my own land and developing it was a powerful aphrodisiac.
But at the time I could also see good economic rationales, and not just in the form of tax savings. I would be creating a rental income source for myself in the future when other income sources were declining.
There would also be more tax savings via the generous five percent depreciation deduction allowed on wooden houses (yes, but when development costs eat up most of your income this is not much of a plus).
But the main economic incentive was a curious disparity in Japanese land prices, itself a reflection of a curious disparity in Japanese thinking. I could not resist wanting to take advantage of it.
Rural versus Urban Japan
Invited on the lecture circuit to tell foreign audiences how to do business in Japan, I liked to point out a curious cultural factor.
Japan was not the nationalistically exclusivist nation of much Western imagination at the time.
True, its single-minded, group-think mentality had created some areas of the economy where competition was intense and entry difficult.
But the same mentality meant there were other areas of the economy remained untouched and wide open to entry.
The foreigner with a fresh eye could easily discover those overlooked areas, move in, and succeed (as we were to discover during the post-bubble recessions when the foreigners managed to take over much of Japan’s financial industry).
One such area was sensible use of the large areas of unused countryside close to the cities.
In the US and UK, even in Australia, countryside suitable for weekend houses, bungalows or hobby farms within two, even three, hours from the large city centers was greatly sought after.
Sometimes it would sell for almost the same price as outer suburban land.
In short, a ratio of one to one.
But in Japan the ratio was almost one hundred to one.
Land in the suburbs of Tokyo was selling for around one million yen a tsubo (3.3 sq. metre) even when it was up to 90 minutes commuting distance from the center.
Undeveloped hillside land just a few kilometers further out and ideal for weekenders would sometimes be selling for as low as 10,000 yen a tsubo.
Japanese liked to live and holiday clustered together.
With Japan about to discover the weekend (in other words, Saturday did not have to be a work day), inevitably some would want to start using some of this cheap rural land close by.
It was an investment chance not to be missed. Or so I thought.
8. The Japanese Weekend
As it turned out I was only partly right.
Even with the weekend in place, the strong Japanese work and group ethic kept people in the towns.
Despite much Japanese romantic talk about their being uniquely sensitive to nature, most are not very interested in countryside to begin with.
Many are terrified by it, at least in the raw.
Even Japan’s rich have never really embraced the Western ideal of having a nice place in the country with a tennis court or swimming pool to which one could invite friends.
In Japan, expensive bars and geisha clubs were the places where you invited friends and showed status. And Tokyo’s mistaken economic policies were to keep land prices depressed for years anyway.
Speculative instincts were weak.
9. Chiba is Cheaper
Even so, I persevered. For historical and other reasons many Tokyo residents had a prejudice against Chiba prefecture.
True, Chiba’s urban and industrial areas close to Tokyo were unattractive . But none of that applied to the Boso Peninsula with its warm climate, long ocean frontage, lushly-forested hills, and lack of severe earthquake danger.
There were large areas in the centre of the peninsula, some of it near my original Yoro Keikoku ‘Shangri-la,’ where you could walk for hours through deeply forested hill country without any sign of human habitation.
And this was just little over an hour by car from Tokyo.
Just one hour from central Tokyo was the long Kujukuri (literally 99 mile) clean-sand beach. Even in summer it was largely deserted.
A few miles further down the peninsula and close to our place was our ‘secret,secret’ beach – a mile-long stretch of clean pinkish sand at the bottom of fifty-meter cliffs and accessible only though a hidden tunnel built hundreds of years ago by locals diving for abalone.
It was even more deserted.
Yet many Tokyoites would willingly spend hours, often in heavy traffic, to get to fashionable weekend resorts in the earthquake-prone Izu Peninsula to the southwest of Tokyo rather than make the much faster trip to nearby Boso.
Easily developable Boso land was selling for only a fraction the price of similar land in the more popular but more distant Izu.
Even allowing for Japan’s conservative group-think, people must soon come to realize Boso attractions, particularly since a good network of highways and bridges was making it much more accessible than before.
Or so I thought.
Prejudices change very gradually in Japan. My predicted Boso boom was also to be very slow in comin g.
For me as an inveterate developer there was yet another incentive for getting involved with Boso – the ease of hillside development.
Boso has hills – lots of them, rolling one after another far into the horizon. Most have hard rock foundations.For some strange reason the Japanese do not like using hills, especially when they are covered with jungle.
Foreign tourists taking the bullet train west from Tokyo towards Osaka often say how surprised (and delighted) they are to see mile after mile of tree-covered hillside country facing the railway line in what is supposed to be Japan’s most crowded industrial area.
10. Have Your Own Mountain!
True, large-scale resort developments usually have no choice but to use ‘mountain’ land (in Japanese even a low hill is called a yama – mountain).
But they will then cut down most of the trees and bulldoze the area into as many flat building blocks as possible, leaving any remaining hillsides for a golf course.
The idea of an individual buying and developing a ‘yama’ as his own weekend resort is seen as little short of ridiculous.
Apart from anything else, how does one cope with landslides, jungle and snakes?
My claims made little impression on Japanese friends – that the jungle, once cleared, could be replaced by gardens; that Japan’s only dangerous snake, the mamushi, preferred to live in damp rice fields rather than in the hills; and that if there were to be landslides the person at the bottom of the hill was in greater danger than the person at the top of the hill!
The average Japanese would much prefer to buy a small block of developed flat land at the bottom of the hill.
The foreigner usually thinks opposite. He will prefer the hill — better views, more privacy, cleaner air
… Ideally he would like to have the whole hill for himself.
Nor was developing one’s yama quite the problem most assumed it to be.
The Boso locals had no bias against foreigners buying their hills. Many were only too happy to sell – to get out of debt, send kids to university etc. .
Without too much haggling one could get an entire yama, all for oneself for little more than a few million yen – three or four thousand US dollars!
In Boso, often it would be covered with the very attractive, sub-tropical forest which extends in an arc from southern Japan, through Taiwan and into Nepal – non-deciduous trees with lustrous, dark green leaves, attractive even in the middle of winter.
Without too much damage to the environment it could be developed.
And in those days it could be done by oneself, including the gaining of permissions, in the allegedly difficult and exclusivist Japan where many foreigners liked to think that even renting a small apartment was a hassle.
(Incidentally, there are absolutely no legal barriers whatsoever to foreigners owning and developing land in Japan.)
(A foreigner I know once registered ownership in the name of a dummy company on the Isle of Man!
(He only got into trouble when he tried to sell it. There had been a slight change in the address of the dummy company and the authorities required massive documentation to prove it was still the same dummy company!)
The Koizumi-Takenaka recession saw tens of thousands of house owners thrown out of their homes by the banks which had been only too happy to lend large sums during the Bubble, just a few years earlier.
A neat two-story house with a developed garden would be put on the auction-tender block with a reserve price as low as two-three million yen.
(During the Bubble era frenzy the same banks might have loaned up to twenty million yen with the same property as collateral, telling the owner land prices were bound to double and they should use the money to buy more land.)
Cleaned up and rented out, the rental return on one of these purchases could be as much 10-15 percent, at a time when the cost of housing loans was little over three percent.
Even so, no one was buying. That the Koizumi recession had pushed the Japanese too deeply into their collectivist, doomsday mentality to realise these bargains said volumes about their emotional mentality.
The bargains were hard to resist.
Meanwhile the lecture circuit remained busy. I was still running around from one end of the country to the other trying to tell audiences the reasons for the quite unnecessary recession they were being forced to suffer.
Government and other committee work continued. I was still having to spend hours every week in stuffy offices listening to endless reports and empty debates (I justified it to myself by saying I was getting an inside view of Japan Inc. in action).
And as explained elsewhere, university commitments were to continue for much longer than I had expected.
All this plus the never-ending trips to Boso to watch over various projects meant I was giving far too little attention to other things more important – writing, reading, research, improving my Japanese, enjoying my Latin American connection, family, friends, relationships.
More on that to come.