Resicom – Holiday Investment – 04-21 – LB

Land Of The Rising Property Market

Japan’s property market is experiencing a boost, fueled by the upcoming 2020 Tokyo Olympics and increased interest from overseas property investors, among several other key factors.

According to the latest reports from the Land Institute of Japan (LIJ) residential sales rose during the first five months of 2016.The number of existing condominiums sold in Tokyo rose 5.4 percent, reaching 16,152 units, in comparison to the same period last year, whilst existing detached house sales were up 14.3 percent year on year.

In Osaka, residential sales for existing condominiums in also rose by 0.3 per cent to 7,508 units in the first five months of this year, while existing detached house sales were up 8.4 per cent.

The growth in Japan’s property market has largely been attributed to factors including the upcoming 2020 Tokyo Olympics, as well as the introduction of Abenomics, Prime Minister Shinzo Abe’s own brand of economic stimulus. The latter is particularly beneficial to foreign investors, with the quantitative easing introduced by Abe’s economic reforms deliberately marking the yen down.

Senior Investment Manager at property investment firm IP Global, Elizabath Chu, explained: ‘Abenomics has clearly been positive for real estate investment, leading to better liquidity, deregulation in urban development and lower property taxes for investors. The message from the government is that Japan is very much open for business. Many foreign and local banks are also easing lending to foreign investors and opening more doors into Japanese property.’

Tokyo has the world’s largest metropolitan economy in the country – worth US$1.6 trillion – and is also the world’s largest metropolitan area. It has a population over four times the size of London or New York. Although cross-border ownership of Tokyo real estate currently remains relatively low at 12 percent in comparison to London at 61 percent and New York at 32 percent, this could be set to change. Japan’s political and economic stability, high standard of living, established infrastructure and high standards of building construction and maintenance make it a relatively stable investment option.

According to a research report from HJ Real Estate’s, there has also been growth in Japanese tourism, a trend that is set to continue, especially in the face of the Olympics. The report says: ‘There has been an increase in tourist arrivals to Japan – 10 million in 2012, 20 million in 2015, and they are targeting 40 million in 2020. The factors that can be attributed to the significant increase in tourist arrivals are: the weakening of the yen, as well as the Government’s reformulating of Visa policy for tourist visa.’

This, alongside the 2020 Tokyo Olympics and the 2019 Rugby World Cup is likely to lead to increased infrastructure development, and is set to further boost Japan’s property values, potentially by between 20-30 per cent from 2016 to the 2020 Olympics. This is reflected through past host cities: Beijing saw a 20 percent increase, while Athens recorded a 75 percent jump.

However, despite this growth, for foreign buyers, Japan remains relatively inexpensive. The average price of a three-bedroom apartment in Tokyo’s 23 wards and surrounding prefectures was ¥53 million (US$440,000) in April, a small price when compared with HK$8.4 million (approximately US$1 million) for a 600 square foot apartment on Hong Kong Island, or US$554,000 for homes in New York, proving that Japan is an excellent investment object.

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