Buying in Japan: Seminar Feedback

[Lincoln]

Hello all.... I am residing here in Tokyo and am very happy to hear the details that AL posted on the feed back from the seminar at the Canadian Embassy about Buying Property In Japan. I actually attended the seminar as well and found the amount of interest on the topic from Canadians, new Zealanders, Americans, Germans and Australians very positive. It was booked out with around 250-enthusiast foreigners attending.

I was very surprised with the amount of foreigners who had already taken the plunge and own property here. Most seem to be residents and live in the property as opposed to an IP. But by the prices obtainable through the auction system with the right research seems like there are potentially some very good investment opportunities inner city or around the major towns.


So I’m glad to hear all feedback on the topic and currently looking into a LOC on my Aussy IP to make the move when the time comes.

My two cents, Cheers Lincoln

 

[astroboy]

Folks,
Don't get me wrong, I was under the false impression that foreigners couldn't invest in Japanese property.
Thanks AL and Patosan for clearing that up. I have no problem with investing in property outside Australia, though the risk factor is raised a couple of bars.
Regards,
Astroboy

 

[Patosan]

The latest figures on land property prices in Japan was on the news Monday Mar 22.
Yes still downward trend; residential -5.7% comercial -7.4%.
The national average has declinesd for 13 years straight !!!!!!


There were some areas of growth ... very localised pockets in Tokyo, Nagoya and Saporo mainly. Example Tokyo's Minato (port) area is having a condo boom, Tokyo's Shibuya ward has recently had a few more international brand shops enter so values are positive there. Areas near a recently successful Co, e.g. Toyota in Nagoya.

So it looks like we'll have to be very careful exactly "where" to buy for growth.
The decline has got to end soon ... right ?
... I wonder.

 

[always_learning]

So it looks like we'll have to be very careful exactly "where" to buy for growth.
The decline has got to end soon ... right ?
... I wonder.

The point I came away from the seminar was that "A Grade prime" areas price declines have well; stopped declining.

The other point is exactly how much further prices can fall at what level do returns mean that anyone would be foolish not to buy? ie. is 10% too little, 15% (easy to find), or 35%. Lets say you can buy a place with a 15% yeild, pay 3% p/a interest another 3%, allow for 80% occupancy, in costs leaving a IP that (15%*.8) -3% -3% = 6% clear profit. Not bad, but of course in a zero/low growth we have zero or even worse negative capital gains. So in all honesty capital gains could be a long way off (or not).

I have seen many "B"/"C" grade office space available at very cheap high returns ie 20%+, however this 20% assumes full occupancy at a rate that the REA who is selling imagines is possible. From one building I saw I doubt any company would want to do business there and if they did the price would have to be very cheap....so the 20%+ yeild would probably be only 33% of that ie 7% and the chance you could be hit with expensive repairs costs considerable.

It is just early stages but I see many oppurtinies, whilst concurently agree that there are many dangers for newbee's.

 

[Aceyducey]

Something else to think about is that if you can get good positive cashflows from these properties what's the problem if the values don't recover for another 10-20 years.

The money is still going into your pockets & you're positioned for when prices do recover.

Cheers,

Aceyducey

 

[Bi1lmurray]

hantai

I tend to take the opposite view..come to Japan to make money using Xrate
Low IR as leverage for IP in Oz. i.e. try to live cheaply as poss and save while renting your Principle place of Residence in OZ as extra equity for IPs
never forgetting most of us are in JP for the short term.

In JP they have what I call the builtin Rip off System, they never rip you of directly, but its always there as some hidden service charge etc..

Also think about buying cars to repatriate in a years time as a hedge against
the Xrate..

Don't forget they are over due for a big wobbly..

 

[always_learning]

I have been monitoring the market in Tokyo, Japan. There is now reports of a "puchi bubulu" (cute term for a small price bubble) happening in the absolute prime "landed" residential realestate in Tokyo, for example prime suburb "Azabu Juban" (like Double Bay in Sydney or South Yarra in Melbourne) has now registered 100% gains this year with more buyers than sellers. Returns were 8% now 4%.

Now is the time to act to purchase near prime realestate in the areas around these "absolute prime" areas as they have yet to move up significantly.

...but it is just my opinion....It could all blow up and sink lower.

 

[rodimus]

hows the property market and growth doing in Japan?

 

[always_learning]

There was some patchy growth in good areas starting early this year, now in the last 4 months there is mounting evidence that absolute prime landed residential has moved up significantly (it was never cheap). Since booms almost always start in the prime areas and move outwards, I am suggesting that now could be a good time to invest in near prime residential. The media in Japan are reporting that many "Foriengers" :eek are pushing up the prices in these prime areas.

However the the vast majority of lesser areas and regional cities: stagnation and decline.

 

[retired]

Hi
I am keen for the idea of puting together as sydnicate to be dicussed more
as this would suit me share the load
glenn
formaly recovery

 

[retired]

Hi AL
how can I look at the auction site in English
do you have any IP if so do you have a PM?
if not do you know one that speacks english?
retire formay recovery

 

[ggumpshots]

If you are totally insane , then I suggest investing in Japan for property.
I have been here for a long time and the first rule here is never assume
Whatever you have assumed you can assume its wrong.

I am trying to be as negative as posibble as there are just too many weird and unknown things that happen in the property market......does anyone know the pop decline for the next 10 years....what is the life of a building here...
how impossible is it to remove a tenant......are laws that are on the books actually carried out....guess which is the lowest form of life here apart from car salesman...
you want a pm to speak english...........dont hold your breath....
What about a 50% capital gains tax.........do I have your attention!!!!!
I bet there are bargins but I bet you cant do your due diligence...............hey maybe Im wrong
Maybe warren buffets rules dont apply........ ie Invest in what you can understand!

 

[Lucifer_au]

What are rental yields like (i.e. not growth yields)? I guess they are more than metting the 11 Sec solution?

Also what are tennacy laws like? (I guess it's not too bad with tennats because of the concept of 'face'). Lastly with the Japanese liking new buildings, can more comment be given on that issue (for example whats the average, etc).

Very interesting thread!!

Rgds.
Lucifer_au

 

[always_learning]

What are rental yields like (i.e. not growth yields)? I guess they are more than metting the 11 Sec solution?

Also what are tennacy laws like? (I guess it's not too bad with tennats because of the concept of 'face'). Lastly with the Japanese liking new buildings, can more comment be given on that issue (for example whats the average, etc).

Very interesting thread!!

Rgds.
Lucifer_au

Yeilds are 7-12% in general, the big plus is interest is >3%. Interest only loans may be tough.

Japanese do like new buildings, this is historical thing as earthquakes, volcano's, cyclones, termites and wood rot (fungus) and just plain low building quality tend to shorten the life of the traditional wooden home to around 30 years. In fact once a home is more than 10 years old the bank starts to value the building at zero and will only lend (LVA) on land value.

Tenancy laws are strongly in the tenant side, but the cost of moving in is high (6 months rent all up in cash), in Tokyo there is not such a feeling of necessity of home ownership like Australia ( it's around but not as much).

Population will decline over the next 30 years. However there are two markets that are interesting the "Walk to lifestyle" (which is already showing price growth) and "Low upfront cost forienger" market (more a business based on property).

It is also my understanding that there is no capital gains tax on residential property.

 

[see_change]

Hi Al

Was wondering if you can update people on how you and the market in Japan are going.

Given all the interest in the USA , is there an upswing in investor interest in Japan at this stage?

See Change

 

[Lilith]

Is there any first home purchase incentive for Japanese citizens in Japan? I am married to a Japanese citizen who has since birth moved overseas and therefore never purchase a property back "home".

For rental yields, is it better to buy a house or a unit/apartment (or mansion as the japanese call them)? Thanks

 

[Patosan]

Just an update on prices in Japan,

Government figures were released recently ... they sounded very upbeat ... given post bubble history.
It was the first time in 13 years that the decrease was less than 5%, it was approx 3.5% for the year.
In fact Tokyo saw it's first increase ... under 1% ... but an increase.
Could the bottom be near ?