Navigating the Waters of Japanese Real Estate

Realty & Development in JapanJapan is considered among the most prosperous nations in Asia, at times even the world. The real world stats reveal anything but that, however. According to Deutsche Bank, the Japanese economy is barely growing; wages have been stagnant for too long and housing prices continue to rise. But, while the locals aren’t really benefiting from this situation, potential investors see a great opportunity in the real estate market.

The Current Situation

Internal demand largely drives Japanese residential property, despite nationwide housing demand being projected to remain weak. Overseas investors, on the other hand, have their interests piqued. Investors are eyeing property opportunities mainly in preparation for the 2020 Olympics, as well as the Paralympic Games. In addition, the market is currently putting focus on properties with spectacular views, or those within striking distance of famous landmarks.

Real estate firms, including Sumitomo Realty & Development, stand to benefit greatly from this trend. Experts contend that the current standing of the Japanese Yen has a hand in this. At the onset of 2014, the Yen experienced a circa-18 percent drop against the dollar. This, in turn, made properties in Japan a better value for foreign investors. Furthermore, the government’s decision to loosen the rules on employment passes allows in more foreign workers. Not to mention, long-term visas for potential retirees over 60 years old are now available.

Where The Fields are Greener

Tokyo is ripe with real estate opportunities. Real estate agents identify 5 districts which are considered ideal for those merely looking to move. These are Nakano, Komagome & Tabata, Sumiyoshi, Kamata, and Asakusa. Asakusa is the place to be for an investor looking to profit, considering the market’s current focus on good views and tourist spots. Rental prices in this area are typically high, since residences are located around Sensoji Temple and other sights.

What are the Perks?

There’s greater choice and quality in property investment in Japan, in comparison to the rental market. Rental rates are also higher in contrast with mortgage repayment costs, which are typically 5-6 percent less. Due to this, borrowers have the option to steadily reduce their mortgage and build up equity.

It’s also worth noting that the high-net-worth demographic is a hot market as well. According to Deutsche Bank, many of these individuals invested in pricey city centre condos as a way to save on taxes. Experts say this is due to inheritance tax countermeasures, which involve properties getting taxed at a lower amount than the purchase price, with cash getting taxed at full value. What this means for investors is that buyers are willing to pay full price for properties.

The current state of Japanese real estate provides numerous opportunities for investors to earn good profit. Of course, the only way to reap its full benefits is to grab the chance while it’s still there.