Japan

Market Overview

Population:
127 million
Capital :
Tokyo
Area :
377,873 km
Official Language :
Japanese
Religion :
Buddhists and Shintoists
Life Expectancy :
82 years
Main Exports :
Automobiles, electronics, electrical machinery and chemicals
GDP Per Capita :
USD 38,559

Economic Insight

  • Japan is famous for its extremely efficient transport system
  • Has a highly educated labour force with traditionally low unemployment
  • Japan is the second most technologically powerful economy in the world after the US
  • Japan as seen a prolonged period of near zero interest rates
  • Exports to China and EU have increased making Japan less dependent on the US economy

Property Market

Japan's residential property market had experienced a major asset bubble during the late 1980s (where prices nearly tripled from 1985-1991) followed by a ‘lost decade' of declining prices. The market then entered into a slight bull run with residential and commercial prices in Tokyo increasing at healthy levels. The introduction of REITs into the Japanese market also renewed investor interest in property investment. Before the tightening of credit in the global markets, regions of Japan were experiencing healthy land price growth.

Rents for higher end properties (rent over JPY 600,000) have plummeted 30% over the last 2 years, according to Erik Oskamp of Akasaka Real Estate.  However, The Real Estate Economic Institute reported that the number of new condominiums supplied in Tokyo and surrounding cities rose 40.8% year on the year to 7,388 units in December (2010), marking the 11th straight month of increases.  Tokyo’s housing market is showing small signs of a slow recovery in comparison with other regional areas.  Improved economic growth in China and the United States will help Japan’s economic recovery as 20% of Japan’s exports are destined for the two countries, and this will have a knock on effort to the Japanese housing market.   Rental yields this year in Tokyo can be expected to be between 5.1% - 6.2%.