Happy new year 2019 ! Year of Boar.
New year has just begun and I would like to quickly review the market using some statistics.
The data always tells you the fact. How to read the data is a key for success.
It is too early to know if housing is in another bubble in Japan (I don’t think so)
It will depend on what happens with the global economy. Unfortunately, bubbles are only recognized with 100 percent certainty
in 20/20 hindsight.
The national average standard price of land
According to the government announcement, the national average standard price of land (基準地価) published in September 2018
by the Ministry of Land, Infrastructure and Transport, land lots for all uses excluding forest lands nationwide
went up by 0.1% compared with the previous year, rising for the first time in 27
years since 1991. The average rate of residential areas was down 0.3% nationwide, falling for 27
consecutive years, but the rate of declines shrank 0.3% from the previous yearRead more
JLL-Japan (JLL is an American professional services and investment management company specializing in real estate) recently held the conference in Tokyo with 400 participants from 250 companies.
JLL reported very bullish news about Tokyo market as follows:
“Tokyo overtook London as the world’s busiest real estate market in the first quarter of 2018, with mega-deals and an unusually positive economic outlook driving demand.
Investment volumes in the Japanese capital more than doubled to US$9.1 billion in the three months to March (2017: US$4.3 billion), just beating New York (US$9 billion) and way ahead of third-placed London (US$5.9 billion).
Global deal volumes rose 15 percent to US$165 billion, making the start of 2018 the biggest quarter for commercial real estate deals since 2007. Asia Pacific transactions rose 34 percent to US$40 billion.”
Tokyo will continue to see the many office construction sites till 2020 and it would make the rental growth slow but the rents have been steady and are still rising.
According to a report by the prominent Japanese real estate consulting firm ‘Sanki shoji’, the vacancy rate of offices in upscale locations in Tokyo as of September 2018 stands at only 2.33 percent (down 0.12 percent from the previous month) and the rents have been steadily rising in last twelve months.
Cleanup, rescue operations underway in Japan after severe rains kill over 200 people and strand thousands in the recent flooding and landslides in west Japan.
On Mar 11, 2011, a devastating 9.0-magnitude quake struck under the Pacific Ocean, and the resulting tsunami caused widespread damage and claimed tens of thousands of lives.
It also sent three reactors into meltdown at the Fukushima nuclear plant, causing Japan’s worst postwar disaster and the most serious nuclear accident since Chernobyl in 1986.
The devastating tsunami hit sites along the Tohoku coast.
A public beach just opened in Rikuzentakata on July 20, 2018 for the first time in eight years, underscoring the destruction of sites.
In 1703, an 8.2 magnitude earthquake（Genroku earthquake) along the Sagami Trough triggered a tsunami that rippled towards Japan’s then capital, Edo. It is estimated that a couple of thousands lives were lost.
Japan has a lot of natural disasters and many foreign investors are worrying about it.
A major earthquake is expected to strike sometime along the Nankai Trough, a submarine trench running off the Japanese archipelago from around Shizuoka Prefecture in Honshu to the seas east of Kyushu.
How at risk is Tokyo Bay from future tsunami by Nankai Trough earthquake ?
The Nankai Trough is a 700-kilometer-long sea-bottom depression that runs about 100 km off the southern coast from Shizuoka Prefecture to the Shikoku region.
The results are in. You will be surprised to learn that Japan’s real estate price -at least some spots are- is breaking the record set during the bubble period.
On July 2, 2018, the National Taxation Bureau announced the average value of a square meter of land for tax assessment as of January 1 2018.The nationwide average price went up by 0.7% from the previous year and it increased for three consecutive years. By prefecture, growth is high in the three major metropolitan areas such as Tokyo (up 4.0%), Osaka (up 1.4%), Kyoto (up 2.2%), Aichi (up 1.5%)The rate of growth is higher in all three major metropolitan areas than the previous year.The rate of growth in core local prefectures is rather high such as Hokkaido (up 1.1%), Miyagi (up 37%), Hiroshima (up 1.5%), Fukuoka (up 2.6%).Average price in Okinawa was up 5.0% and it is the highest rate of increase in Japan.
Here are some key facts.
In Tokyo metropolitan, the average price went up 4.0%, the five consecutive years.
Ginza Chuo-dori has broken its record high for the second year in a row.The top appreciation in Tokyo was 15.8% at Aoyama Street, Minato-ku, Aoyama 3, which is also an upscale residential area. A number of luxury brand flagship stores are located in the area.In terms of growth rate, Aoyama regained the top place for the first time since 2007.The second spot is Adachi-ku Senju 3’s Kita-Senju Station West Exit Square and it went up by 14.5%.In addition to the revitalization of the area due to the effect of a few universities campus being relocated, the convenience to the center of Tokyo boosted it.
These are the some major and the most expensive spots in Tokyo 23 wards.
(price per square meter ‘000 yen and the growth rate)Read more
(Nomizo -no-taki(Nomizo fall), Chiba pref)
Is a tidal wave finished in Japan ? It is about time to to buy a property ?
Japan’s one of the major online web sites for the investment properties ‘Kenbiya’ recently announced the latest market trend on the properties that are registered on the site in Japan.
It is not an official report by the public sectors but the research shows the quick snap shot of the market trend.The research results cover the period between April 2018 and June 2018
on properties in Japan for each market segment.
Let’s take a closer look at the result.
Overview on all Japan
The gross yield of registered properties is almost unchanged at 7.69% ( minus 0.02 points compared with the previous term).
The average price fell slightly to 14.24 million yen (-3.85% from the previous term).
Residential apartment building
The gross yield of registered properties rose slightly to 8.91% ( plus 0.13 points). The average price is 67.4 million yen ( minus 2.06% from the previous term).
The average price for the apartment buildings declined for the first time since 2013.
Residential condo building
Registered yield slightly increased to 8.06% (plus 0.09 points).
The average price slightly went up to 16,329,000 yen (plus 0.66%)
Are you bullish or bearish ?
Two surveys by the major institutions revealed that both institutional investors and individual investors are bullish about the real estate market in Japan.
In the survey released by the Japanese real estate research institute in May, real estate price has been rising steadily due to the recovery of corporate performance and the expectations for the Tokyo Olympic Games and Abenomics.
The survey was conducted mainly for institutional investors.
However, 72 % of respondents say the real estate investment market is seeing the peak for the time being.
83.2% of respondents say many deals with remarkably low yields are appearing, compared to 68% in the previous survey in October 2017.
As for the view on investment in the next coming year, 90% of respondents say they will actively continue to make investments, up one point from the previous survey.
It indicates that the general consensus is still bullish.
Only 8% of respondents say they will be stopping the making new investment. Regarding the real estate market, attention is paid to interest rate trends in the United States and the monetary policy of the Bank of Japan.
As a whole investors’ willingness to invest is very positive
Regarding market expectation, the majority of institutional investors say that the market will expand in the next 6 months in both Tokyo and Osaka.Read more
(Kamogawa city in Chiba) (Kominka-tradtional Japanese folk house-)
Are you curious about where the most attractive city in Asia to invest is ?
CBRE, renowned global real estate company, recently published a report on Japanese investment market called “CBRE Investors Survey 2018” According to the report while domestic investors’ willingness to invest remains high but the marker can see a somewhat prudent attitude and a move to seek an alternative investment.
Foreign investors targeting the Asia-Pacific region ranks Tokyo as the most attractive city and local cities (7 cities in the region such as Osaka, Fukuoka as one category) in Japan as the seventh place.
In 2018, the interest from overseas investors to Japan is expected to further grow.
Here are key points from the report
While Japanese investors have increased willingness to sell, the intention to acquire is somewhat lower.
According to the report, 63% of investors in Japan said they would acquire the same volume as in 2017, an increase of 5 points from 58% in the previous year.
Meanwhile, 29% of investors responded that they will increase from the 2017 acquisition, a 9 point decrease from 38% in the previous year.
The overall result is that more than 90% of investors are still assuming investment trajectory shall be equal to or higher than the previous year. Nonetheless, the trajectory also decreased by 5 points from 96% in the previous year. The willingness to acquire assets seems to be somewhat declining.
On the other hand, the willingness to sell is somewhat increasing.Investors who said they would sell the similar volume as the previous year, is 62%, decreased by 7 points from the previous year,34% of total said they would increase sales from the previous year, an increase of 14 points from 20% in the previous year.Overall, 96% of the total is projecting plan to sell equal to or greater than last year.
(Historic village in Hida-Takayama)
It is not secret that Japan is a surprising combination of peace and chaos, old and new and has just the right amount of anorak.
Inbound tourism continues to thrive as a record 28.7 million tourists visited Japan in 2017, up 19 percent from the previous year and apparently keeping the nation on track for the government’s target;40 million in 2020.
Challenges remain such as a tight supply of accommodations that cater to overseas guests and a heavy concentration of visitors from East Asia.
According to JNTO (Japan National Tourism Organization), the estimated number of international travelers to Japan in April reached to 2.9 million with an increase of 12.5% compared to the previous year, recording the best April ever. The estimated number of international travelers to Japan in 2018 reached to 10 million (+15.4% from 2017).
(Number of Inbound tourists by year)
(Inbound tourists by country in 2017)
That said, Hida-Takayama (飛騨高山）has become one of major tourist destinations among the foreign tourists
but it is not that popular destination for average Japanese.
I have recently read an interesting article about Israeli tourists in Hida-Takayama and would like to share the Takayama city’s
strategy how they become one of the most popular tourist places among foreigners especially Jews.
According to Takayama city statistics, the number of Israeli visitors has increased from mere 2,833 in 2013 to over 10,000 mark for the first time in 2016. The number has more than triple.
Total number of Israeli visitors to Japan during 2016 was about 30,000 so one-third of them visited Takayama.
In 2017, the total number of Israeli guests to Japan increased to 32,000 from previous year (up 7%)
(Chic Hida-Takayama old town village with historical kominka)
Recruit Sumai Co., operator of the Suumo residential information website, recently released the ranking of locations
(and train stations) where people in the Kanto region want to reside in 2018.
(Kanto region in this report covers Tokyo, Kanagawa, Chiba, Saitama and Ibaraki)
They released the same report for Kansai region (including Osaka, Kyoto and Kobe as well.
The survey began in 2010 and has been conducted every year.
7000 people in the Kanto area responded and they are in the
age between 20 and 49. People over 50 years old are not surveyed, which naturally distorts the statistics.
Here is the ranking for 2018 and data in 2017 and 2013 are also illustrated for a comparison purpose.
Do you want to buy a house or invest in Japan ?
If you’re considering an international investment property, step one is to find a good real estate agent who understands the country’s regulations,
especially if you’re not fluent in the local language.
Next question is what sort of criteria for judgement do you have in your mind for finding a property ?
If you don’t know what you’re looking for, you’ll never find it.
How about crime rate ?
Japan is safe.
Having lived in Kobe, Kawasaki, Tokyo, Sydney, Gold Coast, London
and travelled over 25 countries, I can assure it. And crime rates are an important indicator to analyze when looking for an investment property.
Buying the property in a high crime country or area can be risky not only to you, but also to your investment or even to your tenants.
High crime generally reduces the values of properties in a given area.
A study in USA for example, found that a 10 percent reduction in homicides resulted in an 0.83 percent increase in housing values the following year.
Needless to say, people in Japan do care about the safety in the neighborhood.
I am not saying that you can’t make money in areas with higher crime.
There could be a good number of investments in areas with a relatively high crime rate. There are still?plenty of good people in those areas that you can make money renting or selling to.
But the important thing is to know what you are getting into.
It is important up front to decide what kind of risk tolerance you have and what types of areas you are willing to invest in.
But how safe is Japan ?
Once you’ve decided on what kind of areas(countries) you are looking to invest in,
you can start to research them. Always ask Google first.
Here is the some statical data on some developed countries by UN, GLOBAL STUDY on HOMICIDE 2013.
UN GLOBAL HOMICIDE DATA 2013