Japan has an interesting and unique culture combining it with it’s advance technology and superior products making it one of the most appealing countries to visit for people from all corners of the World.
Japan’s population is currently at 220 million and is the third largest economy in the world with GDP per capita reaching all time high of USD48,557 in 2017. In particular, Tokyo, with Greater Tokyo population of estimated over 36 million (25% of Japan’s population) making it the most populated metropolitan area in the world and is one of the top global cities.
Japan’s real estate market has had a long history with foreign investors. Tokyo was considered the first core market in Asia for many foreign institutions since late 1990’s and is crowned the world’s busiest real estate market in Q1 of 2018 according to JLL. Despite the recovery from the 2008 global financial crisis, the commercial property prices is still below it’s 2007 peak according to DWS while many of main Asian cities had surpassed.
Since 2012, the Japan government had drafted plans to further push Japan to be a top destination in Asia. This can be evident from hosting of 2020 Tokyo Olympics, the bid for Osaka 2025 World Expo and the legalization of Integrated Resorts (Casino) targeting to open between 2024-2026. All these international events and attractions targets to double annual tourist arrivals in Japan within the next 10 years. To support this sharp influx of tourist will require people and physical space to support the businesses, hotel and service industry. As a result, we expect all real estate sector including Hotels, Residential, Office, Retail and Logistic spaces will benefit.
At the same time, the real estate market is experiencing a low interest rate environment, fair property prices supported and relatively stable and inexpensive currency. According to JLL in 2017, the yield spread over debt cost of real estate is by far amongst the highest of all major markets in the world including Hong Kong, Shanghai, Singapore, Seoul, Sydney, London and New York. For all these reasons, we believe Japan currently is one of the most attractive real estate investment market in Asia.
