1
Undergo a pre-contract review
2
Sign a basic money trust agreement
3
Deposit trust funds in a trust account
4
Instruct us to purchase real estate
5
Pay taxes and public dues
6
Receive and transfer profits
7
Reinvest or exit the SBIST scheme
4
Instruct us to purchase real estate
Estimated time required: 2 to 9 months
Now that the trust account is open and the investor has deposited the trust funds, we can start making investments for them. We are ready to invest in a large selection of real estate across Japan — including in Tokyo, Osaka, and Hokkaido — and our team works closely with each investor to help them invest with confidence.
Before we walk an investor through the process for making real estate transactions through the SBIST scheme, we want to look at an example of a currently popular area of investment and the reasons it has grown in popularity.
One example of a popular area of investment
One area that has been attracting a lot of attention is investment in Special Zone Minpaku. Although the Japanese word “minpaku” lacks a formal legal definition, it generally refers to simple lodgings such as houses and apartments, but also office buildings. Special Zone Minpaku are areas that have been designated for use for these types of lodging facilities.
When it comes to the operation of lodging facilities, Japan’s Hotel Business Act puts them in three categories — Hotels and Inns, Common Lodging Houses, and Boarding Houses — depending on the size of the property. Facilities with up to four rooms or those with bunk beds are classified as Common Lodging Houses.
"there is currently so much interest in these properties in Japan"
To give some background information as to why there is currently so much interest in these properties in Japan, minpaku became popular with overseas guests through the rise of platforms like Airbnb. However, if someone wanted to operate a facility designated as a Common Lodging House, they had to obtain permission under the Hotel Business Act, which also came with numerous restrictions, including limits on where they could operate. As a result, the minpaku business was slow to gain traction in Japan.
In 2018, the enactment of the Private Lodging Business Act (also known as the “Minpaku New Law”) made it possible to operate minpaku without the need for special permits and it relaxed restrictions. This development is expected to fully establish the minpaku business in Japan and help to alleviate the shortage of lodging facilities as the number of annual tourists to Japan continues to grow.
Osaka Prefecture has introduced a Special Zone Minpaku system where, within special zones, the regulations under the Hotel Business Act and the Minpaku New Law are significantly relaxed, creating a much more favorable environment for people to operate minpaku. This system is expected to bring a number of benefits, including promoting tourism to the prefecture and revitalizing the local economy.
Osaka is Japan’s second-largest city and a popular tourist destination. It is undergoing several urban redevelopment projects, including improving infrastructure and creating new tourist spots. Additionally, international events, such as Expo 2025, and the planned opening of integrated resorts are expected to lead to a significant increase in tourism and further boost the demand for minpaku in the coming years.
The process of real estate transactions through SBIST
Currently, CastGlobal Trust only invests in land that has been designated as Special Zone Minpaku, which will be developed with buildings for overnight stays. Although, at present, we are focused on these preparatory stage investments, in the future, we aim to handle long-term investments in properties that can be rented out.
The specific process of purchasing land through the SBIST scheme is as follows:
Our partner company, which specializes in Special Zone Minpaku, proposes optimal land for investment.
For each plot of land we invest in, CastGlobal Trust creates a project between our company, as the SBIST trustee, and our partner company, as the property management company. After calculating the total investment and projected revenue, we execute a property management contract.
CastGlobal Trust invests the funds for each project that have been entrusted to us in an investor’s trust account through the SBIST trust agreement.
Once a number of verifications have been made, a real estate purchase agreement between the landowner and our company as the SBIST trustee is signed, leading to the acquisition of the property.
In accordance with Article 185–215 of Japan’s Trust Act, investors need to become security holders. Since CastGlobal Trust is a qualified issuer of the required securities, this is a quick procedure for us. At this stage in the process, we will enter the investor’s name in the Beneficial Interest Register, which we prepare and maintain. The investor’s name is also recorded in the trust inventory section of the registration certificate as the principal settlor under the SBIST trust agreement.
After purchasing the land, the following activities are conducted:
- Boundary confirmation
- Subdivision of the land according to the number of units to be built in the Special Zone Minpaku
- The building design phase begins, and construction confirmation applications are prepared
The holding period is approximately two to six months, but can sometimes be up to nine months. These activities take place during that time.
Once all preparations have been made for houses or buildings to be built, the land purchased through SBIST will be sold to the partner company, finalizing the profits of one project under the SBIST scheme.
Although Phase 4 involves a number of steps, CastGlobal Trust’s lawyers, judicial scriveners, accountants, tax accountants, and real estate transaction specialists conduct specialized reviews and are involved throughout the process.
