Boasting one of the largest populations and the third-biggest GDP in the world, after many years of economic stasis Japan is now poised to shrug off its deflationary mantle and reposition itself as a stable, risk-free destination for real estate investment in Asia. With mid to long-term investments performing well and renewed interest in the economy from foreign investors, a shortage of incoming supply and high residential occupancy rates provide numerous benefits to investors seeking stable yields. In addition to having the world’s largest metropolitan area GDP, Tokyo’s population continues to grow exponentially, providing real estate investors with a vast pool of potential tenants in one of the world’s most recognisable and iconic cities.JAPAN: KEY STATISTICS
|Population||127,368,088 (July 2012 est.)|
|Urban population||67% of total population|
|Land area||364,485 sq km (slightly smaller than California)|
|Climate||varies from tropical in the south to temperate in the north|
|Major cities||Tokyo Metropolitan Area||36.507 million|
|Currency||Yen / ¥ (JPY)|
|GDP per capita||JPY 3.41 million; US$ 36,200 (2012 est.)|
|Real GDP growth||2.2% (2012 est.)|
The first and biggest hurdle to investing in international real estate is the legality of land ownership, and Japan provides an exceptionally easy market to invest in. Private ownership is permitted and there are no legal restrictions imposed on overseas ownership of land or buildings in Japan. Neither temporary nor permanent residency are required to purchase, own, or sell a property in Japan.WHY INVEST IN REAL ESTATE IN JAPAN?
One of the most attractive points about investing in the Japanese real estate market is that it is fully open to foreign investment, and non-resident overseas nationals are free to acquire, hold, and dispose of land and buildings.
A common misconception is that Tokyo is one of the most expensive cities in the world to purchase real estate, which was certainly true at the peak of the economic bubble in the 1980’s but less true today. Using luxury residential property prices as an example, US$1mil would purchase 71 sq m in Tokyo, compared to only 48 sq m in Shanghai, 38 sq m in Singapore, and 19 sq m in Hong Kong. Against expectations, Tokyo is far more affordable than commonly believed; other regions in Japan, even more so.
In comparison to other markets in Asia, and especially to the developing regions of Southeast Asia, the real estate market in Japan remains very stable and, coupled with the low interest rates, provides highly attractive cash-flow dividends. Providing such mid to long-term stability, yields compare favourably with other mature markets.
The average occupancy rate for residential condominiums built within the past 5 years is 97.5% and residential occupancy rates over the prior three years have remained impressively constant, fluctuating between 95% to 100%.
Due to market stability, high occupancy rates, controllable capital growth, and affordable prices, government intervention in the Japanese property market is minimal and policy risk remote.
As a service-orientated culture, Japan’s reputation for being safe, clean, and hygienic is well earned; building maintenance is high grade, property crime is low, and problem-tenants are a rarity.
The political landscape of Japan has been a paradigm of bureaucratic stability for many years, though one adverse effect has been a lack of drive in the economy as a whole. Since the Abe administration took office in late 2012, the markets have reacted favourably as he follows through on his promise of reinvigorating the economy through a three-pronged approach of quantitative-easing, fiscal stimulus, and a strategy for growth. Political demonstrations or acts of violence are almost unheard of.In 2009/10 Japan was ranked 150 out of 165 countries in the Economist’s Political Instability Index.
Overlooked by statistics, though an integral part of Japan’s business narrative, the indelible culture of trust plays a pivotal role in transactions between different parties. As a key component of Japanese culture, trust is mirrored in business practices, leases, and tenancies. Investors can be assured of timely rental payments, smooth tenancies, promises being upheld, and complete transparency in all transactions. As your property manager, Marimo is proud to uphold this reputation.
Roundtrip transaction costs are competitive, as are property tax and stamp tax. Due to a lack of inflation and the rapid devaluation of the yen since Q4 2012, prices are increasingly affordable and there are many favourable deals in the marketplace. In terms of market size, Tokyo is particularly attractive and has the highest GDP of all metropolitan areas worldwide.
Construction and architectural quality are key considerations when making a decision on a long-term real estate investment. Buildings constructed after 1981 all conform to Japan’s stringent building regulations covering construction quality and seismic performance. Drawing on Marimo’s deep architectural heritage, we uphold the quality, resilience, and engineering of our developments to the highest possible standards.
Managing income-producing properties overseas can be a challenging task, and at NEXT we intend to make doing so as painless as possible by providing full asset management of our clients’ properties for a competitive fee, including leasing, financial reporting, and building maintenance.
|GDP  (2012 est.) $12.38|
|GDP per capita  (2012 est.)|
|Population  (July 2013 est.)|
|Inflation Rate  (2012 est.)|
|Commercial Bank Lending Rates  (31 Dec 2012 est.)|
|Corporate Tax |
|Non-resident Income Tax  (2012)|
|None||GST 7%||GST 10%||None||VAT 5%||None||VAT 20%||Consumption Tax 5%|
|Stamp Duty |
|1%-3% of the contract value||Varies between states||4.25% of the purchase price [Property over HKD 20million]. Payable by purchaser||0.1% of the property government assessed value. Payable by purchaser||1% for first MYR 100,000, 0.2% for next MYR 400,000, 3% for amount exceeding MYR 500,000 purchase price||Varies depending on sales price. payable in equal by both parties|
|Agency Fees |
|1.0% of purchase price. Payable by vendor.||1.5%-2.0% of the purchase price. Payable by vendor||2% of the purchase price. Payable by both owner and purchaser (1.0% each)||Up to 6% of the purchase price.||2.75% on the first MYR 100,000, 2.0% on the residue over MYR 500,000 of the purchase price. Payable by vendor||Up to 3% of purchase price + JPY60,000 when the sales price is over JPY 4 million|
* Our multinational team accepts both written and spoken queries in English and provides language support for speakers of Mandarin and Bahasa Malaysia.
Each of us investment team members are expert professionals at property investment advisory, with an acquired know-how of Japanese property investment. We are more than happy to support you by helping you develop your ideas about the properties in the pursuit of your goals. Also, our multinational team welcomes any inquires in English and can provide additional support for speakers of Mandarin and Bahasa Melayu.