https://en.santandertrade.com/establish-overseas/japan/foreign-investment?

&actualiser_id_banque=oui&id_banque=0&memoriser_choix=memoriser#why

http://www.mofa.go.jp/policy/economy/japan/invest/

http://www.parabolaconsulting.com/blog/japan-welcomes-foreign-investors

Investing in Residential Apartment Buildings in Japan

http://resources.realestate.co.jp/buy/investing-in-residential-apartment-buildings-in-japan/

http://resources.realestate.co.jp/buy/snapshot-of-second-hand-condominium-market-in-japan/

http://resources.realestate.co.jp/buy/tokyos-growing-population-what-it-means-for-renters-
and-investors/

http://resources.realestate.co.jp/buy/why-investor-interest-is-growing-in-japans-regional-real-
estate-markets/

Japans most expensive parcel of land for 30 years running

http://resources.realestate.co.jp/news/japans-most-expensive-parcel-of-land-for-30-years-
running/

As we read Japanese real estate data and news, its easy to get lost in the details of changes
in average home prices and whether rent in Tokyo is up or down, and so forth.

In this article, we take a step back and look at the forest so we dont get lost in the trees.
Specifically, just a simple point: Japan has the third largest economy in the world, and some
of its regional economies are larger than the entire economies of many countries.

http://resources.realestate.co.jp/news/international-comparison-of-gdp-of-japans-prefectures-
tokyos-gdp-is-bigger-than-indonesias/

http://resources.realestate.co.jp/buy/most-expensive-places-to-buy-an-apartment-in-japan/

How (un)affordable is it to buy a home in Japan?

Tokyo Kantei recently announced the results of its average income multiple
survey for 2014, which compares the average annual income versus the
average price for new and used condominiums for major markets in Japan.
The key takeaway is that homes are becoming less and less affordable for the
average income earner in Japan.

Also of note is that the income multiple (for newly-constructed condominiums)

for greater Tokyo was 10.61 in 2014, the highest level reached since the real
estate bubble of the 1990s.

Prices of Newly-Constructed Condominiums Outstripping Average Income

In 2014, the average income multiple nationwide for newly-constructed

condominiums was 7.17, the fifth consecutive year in which the multiple
increased.

The average income multiple for newly-constructed condominiums is

calculated by dividing the average price of a 70-square meter (about 753
square feet) condo by the average income in a particular market.

For example, in 2014, for Japan as a whole, the calculation would be:
30,690,000yen (about $247,600 at todays exchange rate) divided by
4,280,000yen (about $34,500) = 7.17.

The lower the multiple, the more affordable it is for the average income-earner
to buy a home.

In 2013, the income multiple for Japan, as a whole, was 6.59, which means
that the multiple increased by .58 (up 8.8%) in 2014.

In 2014, greater Kyoto had the highest income multiple in Japan (in terms of
newly-constructed condos) at 10.98. Tochigi prefecture had the lowest income
multiple at 4.89.

Greater Tokyo (10.61) and its surrounding prefectures (Saitama (9.24), Chiba
(8.44) and Kanagawa(10.11)) notched the highest income multiples in Japan.

In greater Tokyo, the income multiple increased from 9.79 in 2013 to 10.61 in
2014, a jump of 8.3%.

The average income in Tokyo decreased from 6,310,000yen to 6,290,000yen,

while the average price of a newly-constructed condo increased from
61,740,000yen to 62,900,000yen.

Basically, average incomes in Tokyo are decreasing at the same time that the
average price of new condominiums is increasing.

The news is not much better for the average person looking to buy a new
home in most markets across Japan. Only in eight markets tracked by Tokyo
Kantei did the income multiple decrease year-on-year: Iwate (7.10 in 2014),
Ibaraki (5.89), Tochigi (4.89), Gunma (6.10), Yamanashi (5.38), Nara (6.47),
Kochi (5.05) and Kagoshima (7.02)prefectures.

Income Multiple in Second-Hand Condo Market Also Accelerating

In 2014, the income multiple in the second-hand condo market also increased
nationwide, a trend that has been evident since 2010, according to Tokyo
Kantei.

The income multiple for Japan as a whole increased by .34 (up 7.4%) to 4.92
for second-hand (defined as ten-year old) condominiums. This number was
derived by dividing the national average price of a used condo
(21,010,000yen) by the average national income (4,270,000yen).

The most unaffordable market in 2014, as measured by the income multiple,

was greater Tokyo, where the multiple hit 7.61 (compared to 10.61 for newly-
constructed condos).

The most affordable market in 2014 for second-hand condos was Kagawa
prefecture, where the income multiple was only 3.27.

Median Multiples in Other Countries

How does this compare to other international markets?

The Median Multiple has been recommended by the World Bank and the
United Nations to compare affordability in urban housing markets across
countries.

It is calculated by dividing the median house price in a given market by gross

annual median household income.

Note that this methodology differs from Tokyo Kanteis, which uses average
prices and incomes, but it is still instructive to compare the two multiples to
get a general idea of just how affordable or unaffordable houses are in Japan.

According to the Demographia International Housing Affordability Survey,

A Median Multiple of 5.1 and over indicates a market that is severely

unaffordable

A Median Multiple of 4.1 to 5.0 indicates a market that is seriously

unaffordable

A Median Multiple of 3.1 to 4.0 indicates a market that is moderately

unaffordable
 A Median Multiple of 3.0 and under indicate a market that is affordable

In its 2015 survey, the Demographia International Housing Affordability found

that

For the second year in a row, the United States had the most affordable
housing among major metropolitan markets, with a moderately affordable
Median Multiple of 3.6. Canada (4.3) Ireland (4.3) Japan (4.4), the United
Kingdom (4.7), and Singapore (5.0) had seriously unaffordable housing.

Three national markets were severely unaffordable, with Median Multiples of

5.1 or above. These included China (Hong Kong), with a Median Multiple of
17.0, New Zealand, at 8.2 and Australia at 6.4

Whatever, methodology we look at, Median Multiple or Income Multiple (as

defined by Tokyo Kantei), Japan as a whole cannot be said to be an
affordable market for the average person.

This is borne out by Japans relatively low home-ownership rate, compared to

many other developed countries. According to Japans Ministry of Internal
Affairs and Communications, in 2013 the home-ownership rate for Japan as a
whole was 61.9%. The rate for greater Tokyo was only 46.2%.

According to Wikipedia, average home ownership rates of many developed

markets tend to be higher than Japan: for example, 90.3% in Singapore
(2013), 90.0% in China (2012), 67.0% in Australia (2011), and 64.5% in the
United States (2014). However, the rate for Hong Kong is unsurprisingly low,
at 51.0% (2014). Germany and Switzerland also have low home-owership
rates, at 53.5% and 44.0%, respectively.

Some international property investors have pointed to Japans relatively low

home-ownership rate as a point for investing in income-generating (rental)
properties, especially in expensive urban areas.

Sources: Tokyo Kantei press release (Japanese), Financial Sense, SUUMO

(Japanese), Wikipedia
To Invest or Not Invest in Japan: Survey of Private Real Estate Funds
Sumitomo Mitsui Trust Research Institute (SMTRI) conducts a periodic survey of asset
managers that manage private real estate funds focused on Japanese property. This article
summarizes some of the results from the most recent survey (January 2015).

Core investment

The majority of funds (57%) surveyed follow a core investment strategy. Core investment is
an investment style in which stable long-term investments are targeted by investing in sound
properties generating steady income flows.

By property type

By target property type, private funds are targeting: industrial (28%), retail (22%), office
(20%), residential (17%), hotel (11%), health care facilities (1%), and other (1%). SMTRI
notes that the share of office and residential as target property types declined from the
previous survey, which was released in July 2014. This is because there is a limited number
of office and residential properties meeting the funds requirements, and in order to
achieve their planned cash flow targets asset managers have had to shift their investments to
other categories.

Target Areas

In terms of target area, the share of 23 Wards of Tokyo declined from 36% to 24% (July
2014 share versus January 2015 share). SMTRI explains that due to tight competition for
properties in Tokyos 23 wards, funds have had to shift their focus to other areas such as
Tokyo metropolitan area, which is defined as Tokyo except for the 23 wards, Kanagawa,
Saitama, and Chiba prefectures (23%, up from 20%); Kinki area, which is defined as
Osaka, Kyoto, Hyogo, Nara, Wakayama and Shiga prefectures, (23%, up from 20%), and
Nagoya (15%, up from 13%).

Investment period

The average investment period of the funds currently under management is 7.7 years and the
targeted investment period of the funds scheduled to be launched within a year is 6.9 years,
suggesting that investment periods are getting longer in general.

Sources of capital

By sources of the capital being managed, the largest share came from Europe at 27%, then
Asia (excluding China and the Middle East) at 25%, North America at 17%, Asia including
Australasia at 11%, the Middle East at 9%, Australia at 8%, and Other at 3%.

Reasons for Investing or Not Investing in Japan

As for reasons that funds are investing in Japan, the majority of respondents chose relatively
attractive due to the yield gap and allocation as part of the global portfolio.
The main reasons that foreign investors gave for NOT investing in the Japanese property
market include country risks, such as lack of growth potential in GDP, consumption,
population, etc. and earthquake risk. Lack of attractive investment opportunities was also
in the top three responses.
Watch out for hidden hazards of buying land

When we were looking for property we consulted topographical maps prior to

checking a particular piece of land in person. Understanding the elevation of a
plot is important if youre buying land near the coast or along a river. In the
event of flooding or a tsunami, its obviously better to be located on higher
ground. Older topographical maps are also helpful because they can show
you the contours of the land before it was developed for residential housing.

Because of Japans mountainous terrain and vast tracts of farmland, housing

developments are often carved out of rolling hills, with the valleys filled in
using dirt taken from the hilly portions. In such cases, the filled-in portions can
be unstable in the event of earthquakes and torrential rains, so knowing the
original topography is useful when you talk to a realtor about land stability.
If youre looking in a city or a more developed suburban area, its also helpful
to consult hazard maps, which many local governments make available to
residents. One of the main purposes of these maps is to tell people where to
go in the case of an emergency, but they also indicate low-lying areas that are
more susceptible to flooding. In a highly developed city like Tokyo, such maps
are invaluable, since the original topography has been paved over. Just
because these features are now covered in concrete, doesnt mean they are
not affected by natural phenomenon.

There are many hills and slopes in Bunkyo, Minato, Setagaya and other Tokyo
wards that, despite being supported by retaining walls (yheki), can still
deteriorate in the event of heavy rain or major seismic activity mudslides
dont just happen in rural areas. In many cases, these structures were built in
accordance with older building standards and have not been renovated
because they are on private properties. Individual ward governments are
trying to get landowners to renovate their retaining walls, especially if they
face public roads, but offer little in the way of incentive. Setagaya Ward, for
instance, will simply steer you toward a financial institution that can set up a
property improvement loan.

Consequently, even in cities its a good idea to understand the geological

situation under the home you are interested in buying, and while hazard maps
can give you an idea of these dangers, they arent always complete. Not
surprisingly, homeowners dont always like hazard maps, since they think the
information they contain could lower property values for areas that are
deemed to be higher risk. Some local governments just leave off private
property and only provide information about public property, thus defeating the
whole purpose of a hazard map, which is to inform residents of potential
problems.

There are also different kinds of hazard maps. A naisui hazard map shows
those places where storm drains may overflow in the event of a heavy
downpour, while kzui hazard maps indicate areas that can be easily flooded
by nearby rivers, even when there is a levee separating the residential
neighborhood from the body of water. The eastern portion of Tokyo, for
instance, is veined with rivers and much of the land is actually below sea
level. In the past, these areas were occasionally inundated by flash floods
caused by typhoons, and while certain measures have been implemented to
alleviate flooding, such as higher levee construction, it is almost impossible to
prevent flooding in extraordinary circumstances, so local authorities try to
promote awareness for flood preparedness and evacuation. As more and
more high rises are built in low-lying areas, neighborhood associations have
made arrangements for residents of houses to evacuate to nearby multistory
apartment buildings in the case of flooding.
Place names can also be good indicators of the quality of the land and what might
happen to it in an emergency. Shibuya means tight valley and Tameike was
obviously built on a pond. If a place name contains the morpheme numa, which
means marsh, it not only may be more susceptible to flooding, but also could liquefy
in the event of an earthquake. By the same token, a place name with dai in it
usually indicates high land. Developers, however, often change the names of areas
where they are building houses in order to make it seem safer. What was once a
marsh, for example, can suddenly become a hill (oka).

The unfortunate fact is that its difficult to completely avoid hazards in a country as
disaster-prone as Japan, so its important to not only understand evacuation plans for
your particular area, but also those measures that residents themselves can carry out
to lessen the effects of a disaster.

Make sure storm sewers on your property are clear of debris. If you live along a river
or in a very low-lying area, keep sandbags in storage. If you do have to evacuate
during a flood, beware of falling into ditches and manholes whose covers may have
been pushed away by water surges. Typhoon season is upon us.