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Tokyo housing market remains buoyant

PUBLISHED : Friday, 21 July, 2017, 9:39am
UPDATED : Friday, 21 July, 2017, 9:39am

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Japan’s housing market remains upbeat. The Strong capital appreciation, stable rental yields, a weakening yen, buoyant demand and the upcoming 2020 Olympics continue to attract international investors to Japan’s property market suggested by JLL Japan.

Japan’s overall residential property price index rose by 4.7% in January 2017 from the same period last year, according to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).

In Tokyo, existing condominium units’ average prices rose by 3.1% during the year to end-Q1 2017, according to the Land Institute of Japan (LIJ).

Tokyo is not “expensive” but “powerful”

Data from Japan Real Estate Institute indicated that Tokyo is ranked as 100 in Price Index while Hong Kong is 200. In terms of productivity, Metro Area in Tokyo is USD1,537 billion, while New York is USD1,334 billion and London is USD794 billion.

Mandy Wong, Head of International Residential Property Services at JLL Hong Kong, explained that Tokyo currently offers excellent investment opportunities for Hong Kong buyers.

“Thanks to the Bank of Japan’s negative interest rate policy coupled with the relatively weak yen, I believe that overseas investors will gain substantial returns in Japan’s real estate market," she said.

The current appeal of the Japanese market lies in its positive yield spread between real estate assets and the cost of capital. Banks are left with few investment alternatives than to lend to real estate at “ridiculously cheap” rates, according to research from PwC Asia Pacific.

Residential is currently the sector of choice when investing in Tokyo, because its high occupancy levels and stable rents making it a “quite bond-like” income stream, although the field has recently become crowed and assets are now harder to source.

Tokyo Shibuya, where all comes together

As one of the Tokyo’s central five wards which is the wealthiest area in the city, Shibuya enjoys the highest nominal wage growth from 2010 to 2016, based on data from Ministry of Internal Affairs Japan. Wage growth is expected to drive demand for purchasing and renting higher quality housing in central Tokyo.

Shibuya now is undergoing a rapid change, supported by government as a national strategic zone. Large office and retail redevelopments are re-establishing it as a major business and shopping centre with large footfall and will become a signature Entertainment City in the future. The area is also attracting high demand from the fast-growing tech industry, and the place is set to become Japan’s Silicon Valley.

Prime Investment Opportunity

If you’re eager to climb up the property ladder in Tokyo and with generous budget, Shibuya is a great option for you.

Many exciting new projects in Shibuya is now under construction, and some are expected to open doors in 2020. 

To find out more about Shibuya and other residential properties in Tokyo and other cities worldwide, click here or contact JLL International Properties. Call +852 3759 0909 or email [email protected].