According to the Nikkei Shimbun, Asia’s wealthy have taken a bullish approach to Japan’s property market and are actively purchasing luxury condominiums in Tokyo.

Citing Abenomics, a weakening Yen and over-heated foreign real estate markets, foreign buyers are clamouring to buy what they consider relatively inexpensive high-end apartments for investment or personal use.

Some real estate agents are anticipating sales to increase by 50% this year as they hold a growing number of seminars and sales events in Singapore and Taiwan. Japanese developers are also beginning to target offshore buyers in their marketing efforts.

One of Taiwan’s largest real estate agencies, Sinyi Realty, has been holding monthly property seminars in Taipei. Between 40 and 50 prospective buyers would normally attend each seminar, but following the drop in the Yen attendance numbers have doubled to over 100 each event. In 2012 they sold 174 new and secondhand apartments with a total sales volume of 8.4 billion Yen (average price of 48.2 million Yen per apartment) and in 2013, they are expecting to sell 260 apartments with a total value of 13 billion Yen. 

Jones Lang LaSalle have teamed up with several developers including Tokyu Land Corporation and Mitsui Fudosan to market their condominiums to investors in Singapore. The majority of buyers are in their 30s and 40s, have a budget between 50 and 70 million Yen and are looking to rent out the apartment for a rental return. There are also buyers with budgets exceeding 100 million Yen who are looking to purchase a personal residence. JLL are expecting to sell 200 apartments this year, and are also planning to hold a sales event in Hong Kong. 

Foreign investors are also seeking to buy entire residential buildings. In 2012, iii-investments, a fund management company of a German bank, purchased four rental apartment buildings for 5.7 billion Yen in Tokyo and Yokohama. 

It has also been suggested that foreign capital and foreign developers will soon start to develop new condominiums which may then be marketed directly to foreign buyers.

The driving force for the growing interest in Japanese real estate is the price difference between property in Japan and property in other Asian markets. Tokyo, once known as having the most expensive real estate in the world, saw prices crash following the burst of the bubble in the early 1990s and prices have remained relatively flat since then. Meanwhile, Hong Kong and Singapore are experiencing over-heating property markets where some inner-city apartments can cost as much or more as similar ones in Tokyo. There are currently no restrictions on real estate purchases by foreigners in Japan. 

Source: The Nikkei Shimbun, March 12, 2013.

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