NEWS

Hello everyone!

We are here to talk about the hot topic of real estate investment overseas.

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

The value of the Japanese real estate market as seen from overseas
From here, I will explain the value of the Japanese real estate market as seen from overseas.

With the global “money glut” being talked about due to the Corona disaster, the Japanese real estate market is attracting attention from overseas investors. There is a view that Japanese real estate is superior in scale and stability, and that real estate rents, especially in urban areas such as Tokyo, are high by global standards. According to data from the Japan Real Estate Institute, if the price of an apartment for sale in Tokyo is set at 100, New York, Singapore, and Beijing are about the same as Tokyo, but Hong Kong, London, Taipei, and Shanghai are more expensive than Tokyo, with figures of 205.2, 175.8, 118.4, and 116.9, respectively.

The recent depreciation of the yen makes real estate investment in Japan attractive from the perspective of foreign investors.

3.1. demand for japanese real estate is expected to continue in 2022
According to JLL's ranking of global investment by city for the first quarter of 2022, Tokyo ranks 14th and Osaka 37th. Furthermore, according to the “Global Office Rent Survey,” Tokyo's Marunouchi, Shibuya, and Shinjuku occupy three of the top 10 positions, while Nagoya and Osaka are ranked 12th and 21st, respectively, outside of Tokyo, indicating the high market value of Japanese properties.

Against this backdrop, the focus on the Japanese real estate market is expected to continue in 2022.

What will happen to inbound demand in Japan in the future?
What will happen to inbound demand, which determines the Japanese real estate investment market? Even though the Corona disaster has made it difficult to travel abroad, inbound demand is expected to eventually revive. However, the outlook will be difficult to predict due to factors such as Russia's invasion of Ukraine.

Why are foreign investors investing in Japanese real estate? The background is the global money glut and the sharp depreciation of the yen. In particular, the fact that real estate rents in central Tokyo are high even by international standards and the exchange rate is at its lowest level in the past 40 years make Japan an attractive market for foreign investors.

According to the Land Price Look Report (June 2022) published by the Ministry of Land, Infrastructure, Transport and Tourism, both residential and commercial land prices are recovering moderately from the effects of the Corona Earthquake and are firm.

In residential areas, condominium sales continued to rise from the previous year. In the commercial land market, the number of areas experiencing declines has been decreasing and several areas have shifted upward in the variable rate category due to investment demand against the backdrop of the continuing low interest rate environment.

The situation in Ukraine is difficult to predict, and uncertainty is increasing in the real estate market. Construction costs are rising due to the rising cost of materials, and prices of new properties are expected to rise in the future. If this happens, real estate investment projects in newly constructed properties will not yield well, and as a result, people will turn their attention to the used market. As a result, the market price of existing properties is also expected to rise.

While Japanese real estate prices are relatively inexpensive compared to global market prices, office and residential rents in central Tokyo are high. Therefore, for foreign investors, real estate in central Tokyo can be recognized as a real estate investment market with high added value, even in Japan, which has a strong impression of deflation.

4.1 Tokyo Highly Rated in the “Flexibility of Working Style” Index in the Corona Disaster
As mentioned above, Tokyo is ranked third overall in the Global Competitiveness Ranking of Cities (GPCI) in 2021, following London and New York. Furthermore, in terms of “flexibility of work styles,” Tokyo has jumped from 41st place in 2020 to 2nd place in 2021, and this is a major factor in its rise in the rankings.

Changes in work styles, such as changes in the office environment due to the impact of Corona and remote work, are areas where flexibility has increased, and Tokyo's flexibility in the way it works has reached the top level compared to overseas cities.

The increased flexibility in the way people work is a result of the widespread adoption of telework and work-from-home programs in the Corona disaster. Tokyo's high reputation as a global city will continue to make it an attractive real estate investment market.

With the advance of globalization, the Japanese real estate market has become inseparable from global economic trends. It is also important to pay attention to global trends and understand Japan's position in the world.


You can understand the global situation very well.

We believe this is useful information when considering overseas real estate as a source of income in the future.

Please look forward to next week's issue!


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