NEWS

Hello everyone!

This is a story about overseas real estate investment, a hot topic right now.

We will continue the series today. Some of the contents are the same as last week's report, but please read on.

As real estate has built a certain value as an investment target in recent years, cross-border real estate investment has become more and more popular.


Among the many changes in global conditions since 2020, the Japanese real estate market has attracted the attention of foreign investors.

This article introduces global real estate market trends and Japan's position in the market, and explains why the Japanese market is attractive to foreign investors.

1. Overseas Real Estate Investment Market Trends
With the financial commercialization of real estate, real estate is attracting worldwide attention as an investment target.

Originally, stocks, bonds, and other assets were the mainstream investment targets, and real estate, with its low liquidity, was difficult to trade across countries. However, the development of real estate securitization schemes such as J-REITs in Japan has made global real estate transactions easier.

The real estate market expanded globally amid these trends, but the subprime mortgage crisis in the U.S. in the 2000s caused the market to temporarily stagnate.

In the U.S., the number of subprime loan users (housing loans for people with relatively low creditworthiness) was increasing against the backdrop of the housing boom at that time, but from the latter half of 2006, delays in repayment and foreclosures increased sharply as housing prices fell, and loan companies went bankrupt. Since subprime loans were also incorporated into financial products as loan claims, their impact spread to the entire financial market.

Although the real estate investment market shrank as a result of the subprime crisis, conditions have gradually recovered due to monetary policies implemented in various countries, and in recent years, the amount of overseas real estate investment transactions by investors has also expanded significantly.

According to a survey by Jones Lang LaSalle (JLL), a comprehensive real estate services company, global real estate investment in 2021 will grow 54% year-on-year to $1.25 trillion, a record high since the statistical survey began, indicating that cross-border investment (investment across borders) is becoming more active. Cross-border investment (investment across national borders) is becoming more active.

Cross-border investment is on the rise, with real estate investment from Japan to overseas on par with the previous year, and investment directed from overseas to Japan returning to pre-Corona Disaster levels.

2 Japan's Position Overseas
How well is Japan positioned in terms of cities from the perspective of foreign countries? The following is an explanation based on the “Comprehensive Ranking of World's Cities” data.

2.1. 3rd place in the World Comprehensive Urban Competitiveness Ranking in 2021
The “Global Comprehensive Ranking of Cities” (GPCI) by the Mori Memorial Foundation evaluates the comprehensive strength of the world's major cities from multiple perspectives in the six areas of economy, research, development and culture, interaction, livability, environment, transportation, and accessibility.

It ranks 48 target cities around the world, and in 2021, Tokyo ranked third overall, following London and New York. The ranking is the same as the previous year, but Tokyo has overtaken London and New York, especially in the area of “flexibility in working styles,” and its score has increased.

2.2 Challenges in the Economy
Tokyo's future challenges lie in the economic sector. The top four cities in the economic sector are New York, London, Beijing, and Tokyo, with no change in ranking from the previous year.

However, the downward trend in stock exchange market capitalization, for example, has been a factor in lowering the score in the economic sector, and it is likely that Tokyo's challenge will be to increase its GDP growth rate in the future. It is said that the key to achieving this goal will be to enhance tourist attractions and other areas.


This is a good indication of the global situation.

We think this is useful information for those who are considering overseas real estate as a source of income in the future.

Please look forward to next week's issue!



instagram

realestatejapan