Japan’s property market lures more Asia investors
With local prices up in the stratosphere, more investors from Singapore, Hong Kong and China are finding attractive opportunities in key cities in Japan, where they can own freehold land.
Compared with buying property anywhere else in Asia, Japan offers possibly the easiest entry point for buyers, say property agents.
Offshore buyers can own freehold land in Japan – as opposed to Hong Kong and the mainland, where all the land is on government leases, and the Philippines and Thailand, where foreigners can own condominiums, but not the land under the building.
Furthermore unlike places such as Canada and Australia, Japan doesn’t discriminate by imposing extra fees, taxes and regulations on foreign buyers. In comparison with all of the above, an investment home in any Japanese city is also far cheaper, and the net yields higher. This adds up to make Japan an inviting and relatively safe place to invest.
Although South East Asian and North Asian tourist are now frequent travelers to Japan, they didn’t start buying property in any great number until the late 2000s – and then, if they did, it was more likely to be in a Niseko ski resort.
Then economic factors swayed in investor's favour – the weakening yen stretching foreign dollars further; Prime Minister Shinzo Abe’s ambitious growth policies – and a buying spree began which continues today.
Neo Cheung Wing-tat, CEO at Convoy International Property Consulting, says that government initiatives to “sell” Japan – under Abe’s policies – opened Hong Kong investors’ eyes to the possibilities.
“They then found that Japanese banks are more open to lending to foreigners – in the past this was not an option. Flight frequency has increased, and as more people travel to Japan, they began to think about buying a flat and renting it out.” At the peak, in 2013, yields in Tokyo were about 5 to 6 per cent, compared with 3 per cent in Hong Kong and below 2 per cent in Taiwan, Cheung says.
Today’s buying prices are around 30 to 40 per cent higher than in 2013, although this year the pace of growth has slowed to about 1 per cent, and the rental yield has softened to an average of 3 to 4 per cent. But since it’s now possible to finance their deals, property in the key cities – including Tokyo, Osaka, Yokohama, Kyoto – remains attractive to Hong Kong buyers.
“People buy overseas property for different reasons: in the UK it’s for their kids’ education; in Australia they might plan to retire there later,” Cheung says. “With Japan, it’s more about the [investment] numbers.”
Tokyo, the capital, remains a primary target as it’s a city of 15 million people, with low vacancy rate. “If you have a flat in Tokyo, it’s pretty easy to find a tenant,” Cheung says.
Second pick would be Yokohama. It’s only 30 minutes by train to Tokyo, offers a nice environment close to the ocean, and the prices are 30 per cent cheaper. A casino resort mooted for Yokohama remains on the cards.
Osaka, a former industrial city and one-time financial centre, has become a tourist hot spot. Its local government is also bidding to boost the city’s growth with a new casino, convention centre, hotels, shopping facilities and a variety of exhibition halls –proposals yet to be approved.
In Kyoto, an historical city which retains much of its traditional culture, development has been restricted. It’s high on investors’ lists as a second home or vacation home location, but while demand is high, supply is low.
Niseko has seen the highest growth out of any town in Japan, with Asian buyers especially hungry for ski-in ski-out properties.
The ability to own freehold property in any of these cities is appealing to buyers in Asian cointries, where for the price of a small flat you could buy a whole building in Japan.