The trend of investing in real estate to ensure a steady return and secure their future income has held true in most advanced economies for generations. Yet, the tide is turning. After the financial crisis in 2008, the housing marketing in the Americas, Northern Europe and some countries in Asia have left climbing the property a distant dream for many.
However, Japan presents a safe – and accessible housing market. It's low property prices and high yield are unmatched. Plus, with the depreciation of the yen against the USD has meant that the market is extremely attractive.
Understanding Japan’s Safe Haven
Japan has held the title of the “world’s largest creditor” for years now. This begs the question then, why should someone invest in a country with so much outstanding debts owed? Quite simply, because the value of foreign assets held by Japanese investors is significantly larger than the value of Japanese assets owned by foreign investors.
Net foreign assets were at 339 trillion yen at the end of 2015, which makes Japan both the largest creditor nation and most indebted nation. Suffice to say, although currency may fluctuate – the market is unlikely to crumble anytime soon!
In fact, the property market has been steadily on the rise for the past 11 years, with the Ministry of Land, Infrastructure, Transport and Tourism reporting the fastest climb in property prices in 2018.
Young Investors Discover Japan Real Estate
For those struggling to find a worthwhile investment in Europe and the Americas, Japan presents the opportunity to set-up a stable rental income. Instead of relying on speculative capital growth projections, you’re guaranteed a steady income from a thriving rental market in Japan’s popular tourist and metropolis centres.
What’s on the Market?
Investors can find anything to suit their preferences – and budget in Japan. Apartments can be found for as low as $25,000USD. And with climbing foreign investment, there are plenty of options for apartment buildings and commercial properties throughout Japan. Typically, rental yields vary from 6% to 10% so an investment of $25,000 could quickly earn you a tidy sum of $250 a month if done right.
Tokyo is a hotspot for both foreign and domestic investment with the upcoming Rugby World Cup in 2019 and the Tokyo Olympics in 2020. As it stands, properties in this area can expect a 6% yield and properties on the market are likely to sell within a few days – this trend isn’t expected to slow down soon either!
Yet investors who fail to look outside Tokyo will miss out on the most promising of Japanese markets. The northern reaches of Japan experienced a rise in residential land prices of 50% and commercial land prices also increased by an astounding 58.8% in 2018.Why? Because the Hokkaido region is internationally recognised as one of the best ski destinations in the world. That, combined with the proposed extension of the bullet trains and increasing air routes to the area has elevated Hokkaido to the international stage.
Investing in Hokkaido
Now international hoteliers have already started to invest in Niseko – one of the primary ski resorts in the area. The Ritz Carlton, Hilton, and W hotels have also made plans to develop hotels in the area in the coming year.
Despite being dubbed the “Aspen of Asia” this area is not quite as expensive to invest in as it first appears. Compared to its European and American counterparts, land per square metre comes in below €14,000 a square metre.
Properties such as Snow Dog Village and Raku Ichi offer the opportunity to invest in properties at the middle-tier of the market with a guaranteed yield. Their sleek yet functional apartments are perfect for families or for groups of friends – whether to rent out or for personal use.
Language and Cultural Barriers
Of course, Japan has its own unique language and culture that it has retained for centuries. A culture that differs dramatically from that of the west sometimes. When it comes to buying a property there are some steps that cannot be missed out.
That’s why we have put together this guide to buying property in Japan. Plus, here at JNW properties, we are experienced in guiding investors through the purchase process – it comes with the territory.
Get in touch with us to find out more about our investing in Japan or our current properties.