Luminary Tower Ikebukuro

Buyers from Taiwan, Hong Kong, Singapore and China can’t get enough of Tokyo’s real estate offerings as the weaker Yen makes the capital city a relatively cheaper option when compared with other international capitals.

Many buyers are purchasing an investment that will provide rental income.

A broker near Ikebukuro Station in Toshima-ku said they have noticed an increase in the number of buyers from other Asian countries, particularly Singapore and Hong Kong. The buyers have been keen purchasers in a recently completed high-rise condominium just a few minutes from Ikebukuro Station.

All 219 apartments in Luminary Tower Ikebukuro have since sold out. The majority of apartments were priced from 29 ~ 75 million Yen (290,000 ~ 750,000 USD) and ranged in size from 40 ~ 75 sqm (430 ~ 807 sqft). Smaller 1-bedroom apartments can be rented out for between 150,000 ~ 200,000 Yen (1500 ~ 2000 USD) a month, and rental inquiries have been high.

The area around the JR Ikebukuro Station has a number of Chinese restaurants and is popular with Chinese and Taiwanese residents.

Foreign investors had previously focused on buying multi-tenant commercial and retail buildings and would turn up with bags of cash to purchase buildings outright. Following the onset of the global financial crisis or ‘Lehman Shock’ in late 2008 and the Tohoku Disaster in 2011, buying activity dropped off sharply. However, it is recently seeing a recovery as the lower Yen and the change in government is helping to revive the market.

It is estimated that as many as 15% of the buyers of new high-rise condominiums in central Tokyo are foreigners.

Forgotten market

Tokyo is now considered an undervalued and relatively inexpensive market. Since the collapse of the bubble economy in the early 1990s, land prices have continued to fall.

According to Jones Lang LaSalle’s Global Office Index for the first quarter of 2013, office rents in Tokyo have fallen a lot further since 2008 than rents in London, Hong Kong and New York.

In 2011-2012, foreign investment represented approximately 10% of all real estate investment in Japan. The percentage of foreign investment in London was 63%, and in New York it was 31%.

Real estate companies have recently started to hold property seminars in countries such as Singapore, Hong Kong and Taiwan to promote new condominiums to private investors.

Tokyo offers high quality apartments at a relatively cheaper price than cities such as Singapore and Hong Kong. Asian buyers are also attracted to Japan’s relatively higher rental yields.

According to the 2013 rosenka land valuations issued by the National Tax Agency, land prices fell at a slower pace this year. With the influx of foreign capital, land values in Tokyo and other major cities may finally be bottoming out.

Source: SankeiBiz, July 17, 2013.

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