Japanese Real Estate Market Status

  • Most of the land and housing prices have recovered from the worst after the subprime crisis.
  • The government has introduced the economic policies to create a buyer friendly environment for home buyers. The mortgages up to seven times annual salary have been approved with nearly no criteria. (1.4% fixed for 35 years. Restrictions for non-Japanese may apply.)
  • It has been noticeable that the Chinese indiviual investors have been buying the Japan properties in the past six months.
  • The German, Singaporean and US funds have formed the large scale real estate funds aiming at Japan in the past six months.

Causes of Land Pricing Rise

japan land price

*Price Variation for Residential Lands and Pre-owned Apartments. (Excerpts from the survey data by Nomura Real Estate Urban Net)

There are yet many companies and funds became bankrupt due to the economic downturn, and behind the scenes, there are the sales of the properties from them.

Though the Japan real estate market has clearly hit the bottom, the distressed properties can still be observed.

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Characteristics of Japanese Real Estate Market

  • The rental market has remained significantly stable as compared to other countries.
  • The real estate is considered as the income gain products and few investors are targeting the capital gain.
  • The borrowing rates from the banks are the lowest in the world at 1.5% for a floating interest rate and 1.9% for a five year fixed rate.
  • The capitalization rates in the central Tokyo area are approx. 6-7%.
  • Given the above fact, the rental incomes are generally greater than the monthly payments for the real estate mortgage for individuals.
  • Generally Japanese investors limit their investment amount upto 200 million yen in cash or 500 million yen including the loans
  • The size of the institutional investors and the investment funds must be at least 1 billion yen.
The mortgage with the world lowest interest rates will be available

Getting a good discount will be possible given that there are less competitions for the properties in a range of 500 million to 1 billion yen.

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Points for This Investment

Point 1
We are targeting the properties forced to be sold immediately due to the economic downturn. (Short sales, foreclosures and auctions etc..)
Point 2
There are possibilities you can purchase at a discount price given that there are less competitions for the properties in a range of 500 million to 1 billion yen. (At the time of sales, you will have a long-term sell-out plan and only sell your property at a proper price and will never rush.)
Point 3
You will be targeting the low-risk high-return investment with minimum risk of loss of principal. (High rental yields, low interest rates & management fees)
Point 4
Tax benefits. (The tax imposed on both income and capital gains will be only 20% for the non-residents in Japan.)

You will be targeting the IRR of more than 10% for the investment periods of 5 years.

It will be prioritized in capital protection with LTV of around 60%.

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