Japan Real Estate Inquire about Japan Real Estate

Country data

Location: Located in Eastern Asia, it is an island chain between the North Pacific Ocean and the Sea of Japan, east of the Korean Peninsula
Size: Total area is 377,835 sq km (slightly smaller than California)

Population

Japan Real Estate

Population growth trends and forecast: Japan is dealing with a stagnant and aging population

Major Exports: Transport equipment, Non-electrical machinery, Electrical machinery, Manufactured goods, Chemicals
Real Estate market

Basic overview:

  • Japan’s property market, prior to the downturn, began showing signs of life after almost 2 decades of declining prices
  • City centre apartments have always been extremely expensive, most notable in Tokyo due to a lack of space and overpopulation
  • There are no legal restrictions on foreigners owning real estate property in Japan
  • Over 80% of housing transactions involve sales of new homes whereas 85% of US housing transactions involve second hand home sales

Current value

  • Price/sqm : $13,814
  • Rent/month: $7,854
  • Rental Yield: 5.69%

Recent trends or stats

  • Japanese REITs have been hard hit in the last year
  • Banks’ tightening of lending has led to the collapse of several property developers
  • Land prices fell in 2008 for the first time in 3 years

Future trends:

  • Foreign buyers may be attracted to Japanese property in the near future after the global market stabilizes
  • The commercial property space may have further to fall as vacancy rates rise and financing is still hard to come by
Economic
Overview

What is driving the market?

  • Economy has been export dependent for the last several years
  • Strong services based, industrialized, free market economy
  • Talented labour pool
  • High demand for cars and electronics from western nations
  • Major ties with the United States
GDP

Japan Real Estate

Current: GDP has contracted sharply in 2009 as the global downturn took hold, however, recent predictions predict that Japan will return to a positive growth trend by 2010
Recent trend: Average annual real GDP growth for the period between 1997 to 2007 was 1.3%

Future trend: Growth will be on a positive track once the global markets stabilize, bringing back business investment and demand for Japan’s exports. The country’s banking system avoided the subprime crisis and will be well positioned in the future
Inflation

Japan Real Estate


Current: The IMF has revised their inflation predictions for 2009 to -1.02% for 2009
Recent trend: Japan has undergone a period of slight inflation after a long stretch of deflation

Future trend: The Bank of Japan believes that there may be declining prices for the next 2 fiscal years

 
Employment (Labor)

Japan Real Estate

Current: 2008 unemployment 3.99%
Recent trend: Unemployment had been declining for the past several years

Future trend: Unemployment expected to rise in the near term
Foreign Trade

Current: Imports = $696.2B and Exports = $776.8B
Recent trend: The demand for Japanese exports has declined significantly, putting the export dependent economy into a recession during the latter part of 2008

Future trend: Japan will pursue a more active foreign policy in the next several years, with plans to increase relations and trade with the Middle East, Africa and Latin America
Currency

The currency used in Japan is the Yen. As of May 11, the yen was worth $1 USD = JPY 97.867
To view current exchange values visit www.xe.com
Interest Rates
  • The country’s monetary policy of zero interest rates arose as an attempt to revive the economy
  • The zero interest rate was designed to make it cheaper for  consumers and companies to borrow money for spending and less attractive for those to save
  • The current ‘overnight call rate’ set by the Bank of Japan is 0.1%
FDI

Current: Investment rates into Japan trail those of other major economies despite its ranking of being one of the world’s largest economies, however, the government has acknowledged this fact and has been making efforts to increase FDI

Recent trend: FDI stock in Japan has been steadily increasing for the past several years

Future trend: Japan’s FDI attractiveness may be adversely affected by the market conditions in the short term future, however, Japan’s goal of doubling the level of FDI in Japan at 5 year intervals should remain on track