analysis of japan

8/13/2019 Analysis of Japan

1/16

COUNTRY

ANALYSIS OFJAPAN

February 6

2014

The country Analysis of Japan, What are the economical and

geographical factors. And which business will be suitable for the county

EDIM Assignment Submitted By:

WILSON D ARANJO

PRN: 12092

PGDM: MARKETING (2012-2014)

Business of Real Estate In Japan


2/16

[COUNTRY ANALYSIS OF JAPAN] February 6, 2014

Real estate in Japan 1

INTRODUCTION:-JAPAN

BACKGROUND:

In 1603, after decades of civil warfare, the Tokugawa shogunate (a military-led, dynastic

government) ushered in a long period of relative political stability and isolation from foreign

influence. For more than two centuries this policy enabled Japan to enjoy a flowering of its

indigenous culture. Japan opened its ports after signing the Treaty of Kanagawa with the US in

1854 and began to intensively modernize and industrialize. During the late 19th and early 20th

centuries, Japan became a regional power that was able to defeat the forces of both China and

Russia. It occupied Korea, Formosa (Taiwan), and southern Sakhalin Island. In 1931-32 Japan

occupied Manchuria, and in 1937 it launched a full-scale invasion of China. Japan attacked US

forces in 1941 - triggering America's entry into World War II - and soon occupied much of East

and Southeast Asia. After its defeat in World War II, Japan recovered to become an economicpower and an ally of the US. While the emperor retains his throne as a symbol of national unity,

elected politicians hold actual decision-making power. Following three decades of unprecedented

growth, Japan's economy experienced a major slowdown starting in the 1990s, but the country

remains a major economic power. In March 2011, Japan's strongest-ever earthquake, and an

accompanying tsunami, devastated the northeast part of Honshu island, killing thousands and

damaging several nuclear power plants. The catastrophe hobbled the country's economy and its

energy infrastructure, and tested its ability to deal with humanitarian disasters.

GEOGRAPHY: JAPAN

Location:

Eastern Asia, island chain between the North Pacific Ocean and the Sea of Japan, east of the Korean

Peninsula

Area:

Total: 377,915 sq. km

Country comparison to the world:62

Land: 364,485 sq. km

Water: 13,430 sq. km

Note:includes Bonin Islands (Ogasawara-gunto), Daito-shoto, Minami-jima, Okino-tori-shima

Ryukyu Islands (Nansei-shoto), and Volcano Islands (Kazan-retto)
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2147&alphaletter=A&term=Areahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2147&alphaletter=A&term=Areahttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2147rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=62#jahttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2147rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=62#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2147&alphaletter=A&term=Area


3/16



Area - comparative:

Slightly smaller than California

Climate:

Varies from tropical in south to cool temperate in north

Natural resources:

Negligible mineral resources, fish

Note: with virtually no energy natural resources, Japan is the world's largest importer of coal and

liquefied natural gas, as well as the second largest importer of oil

Land use:

Arable land: 11.26%

Permanent crops: 0.81%

Other: 87.93% (2011)

Natural hazards:

Many dormant and some active volcanoes; about 1,500 seismic occurrences (mostly tremors but

occasional severe earthquakes) every year; tsunamis; typhoons

volcanism: both Unzen (elev. 1,500 m) and Sakura-jima (elev. 1,117 m), which lies near the

densely populated city of Kagoshima, have been deemed Decade Volcanoes by the International

Association of Volcanology and Chemistry of the Earth's Interior, worthy of study due to their

explosive history and close proximity to human populations; other notable historically active

volcanoes include Asama, Honshu Island's most active volcano, Aso, Bandai, Fuji, Iwo-Jima, Kikai,

Kirishima, Komaga-take, Oshima, Suwanosejima, Tokachi, Yake-dake, and Usu

Environment - current issues:

air pollution from power plant emissions results in acid rain; acidification of lakes and reservoirsdegrading water quality and threatening aquatic life; Japan is one of the largest consumers of fish

and tropical timber, contributing to the depletion of these resources in Asia and elsewhere
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2023&alphaletter=A&term=Area%20-%20comparativehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2023&alphaletter=A&term=Area%20-%20comparativehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2059&alphaletter=C&term=Climatehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2059&alphaletter=C&term=Climatehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2111&alphaletter=N&term=Natural%20resourceshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2111&alphaletter=N&term=Natural%20resourceshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2097&alphaletter=L&term=Land%20usehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2097&alphaletter=L&term=Land%20usehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2021&alphaletter=N&term=Natural%20hazardshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2021&alphaletter=N&term=Natural%20hazardshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2032&alphaletter=E&term=Environment%20-%20current%20issueshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2032&alphaletter=E&term=Environment%20-%20current%20issueshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2032&alphaletter=E&term=Environment%20-%20current%20issueshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2021&alphaletter=N&term=Natural%20hazardshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2097&alphaletter=L&term=Land%20usehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2111&alphaletter=N&term=Natural%20resourceshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2059&alphaletter=C&term=Climatehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2023&alphaletter=A&term=Area%20-%20comparative


4/16



GOVERNMENT: JAPAN

Strategic location in northeast Asia

Government type:

A parliamentary government with a constitutional monarchy

Capital:

Name: Tokyo

Geographic coordinates: 35 41 N, 139 45 E

Time difference: UTC+9 (14 hours ahead of Washington, DC during Standard Time)

Legal system:

Civil law system based on German model; system also reflects Anglo-American influence and

Japanese traditions; judicial review of legislative acts in the Supreme Court

ECONOMY: JAPAN

Economy - overview:

In the years following World War II, government-industry cooperation, a strong work ethic

mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped

Japan develop a technologically advanced economy. Japan's industrial sector is heavily dependent

on imported raw materials and fuels For three decades, overall real economic growth had been

spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the

1980s. Modest economic growth continued after 2000, but the economy has fallen into recession

three times since 2008. A sharp downturn in business investment and global demand for Japan's

exports in late 2008 pushed Japan into recession. Government stimulus spending helped the

economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive

9.0 magnitude earthquake and the ensuing tsunami in March disrupted manufacturing. Theeconomy has largely recovered in the two years since the disaster, but reconstruction in the

Tohoku region has been uneven. Newly-elected Prime Minister Shinzo ABE has declared the

economy his government's top priority; he has pledged to reconsider his predecessor's plan to

permanently close nuclear power plants and is pursuing an economic revitalization agenda of

fiscal stimulus and regulatory reform and has said he will press the Bank of Japan to loosen

monetary policy. Measured on purchasing power parity (PPP) basis that adjusts for price
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2128&alphaletter=G&term=Government%20typehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2128&alphaletter=G&term=Government%20typehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2057&alphaletter=C&term=Capitalhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2057&alphaletter=C&term=Capitalhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2100&alphaletter=L&term=Legal%20systemhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2100&alphaletter=L&term=Legal%20systemhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2116&alphaletter=E&term=Economy%20-%20overviewhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2116&alphaletter=E&term=Economy%20-%20overviewhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2100&alphaletter=L&term=Legal%20systemhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2057&alphaletter=C&term=Capitalhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2128&alphaletter=G&term=Government%20type


5/16



differences, Japan in 2012 stood as the fourth-largest economy in the world after second-place

China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. The

new government will continue a longstanding debate on restructuring the economy and reining in

Japan's huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on

exports to drive growth, and an aging and shrinking population are other major long-term

challenges for the economy.

GDP (purchasing power parity):

$4.576 trillion (2012 est.)

country comparison to the world:5



Note: data are in 2012 US dollars

GDP - composition, by end use:

Household consumption: 60.9%

Government consumption: 20.5%

Investment in fixed capital: 21.2%

Investment in inventories: -0.6%

Exports of goods and services: 14.7%

Imports of goods and services: -16.6%

(2012 est.)

Agriculture - products:

Rice, sugar beets, vegetables, fruit; pork, poultry, dairy products, eggs; fish

Industries:

Among world's largest and technologically advanced producers of motor vehicles, electronic

equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods.
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2001&alphaletter=G&term=GDP%20(purchasing%20power%20parity)https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2001&alphaletter=G&term=GDP%20(purchasing%20power%20parity)https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=5#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2259&alphaletter=G&term=GDP%20-%20composition,%20by%20end%20usehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2259&alphaletter=G&term=GDP%20-%20composition,%20by%20end%20usehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2052&alphaletter=A&term=Agriculture%20-%20productshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2052&alphaletter=A&term=Agriculture%20-%20productshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2090&alphaletter=I&term=Industrieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2090&alphaletter=I&term=Industrieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2090&alphaletter=I&term=Industrieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2052&alphaletter=A&term=Agriculture%20-%20productshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2259&alphaletter=G&term=GDP%20-%20composition,%20by%20end%20usehttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=5#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2001&alphaletter=G&term=GDP%20(purchasing%20power%20parity)


6/16



Unemployment rate:

4.4% (2012 est.)

country comparison to the world:38

4.6% (2011 est.)

Population below poverty line:

16% (2010)

Taxes and other revenues:

33.8% of GDP (2012 est.)


Inflation rate (consumer prices):

0% (2012 est.)


-0.3% (2011 est.)

Exports - commodities:

Motor vehicles 13.6%; semiconductors 6.2%; iron and steel products 5.5%; auto parts 4.6%;

plastic materials 3.5%; power generating machinery 3.5%

Imports - commodities:

petroleum 15.5%; liquid natural gas 5.7%; clothing 3.9%; semiconductors 3.5%; coal 3.5%; audio

and visual apparatus 2.7% (2011 est.)

https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html
https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2129&alphaletter=U&term=Unemployment%20ratehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2129&alphaletter=U&term=Unemployment%20ratehttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2129rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=38#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2046&alphaletter=P&term=Population%20below%20poverty%20linehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2046&alphaletter=P&term=Population%20below%20poverty%20linehttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2221&alphaletter=T&term=Taxes%20and%20other%20revenueshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2221&alphaletter=T&term=Taxes%20and%20other%20revenueshttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2221rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=73#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2092&alphaletter=I&term=Inflation%20rate%20(consumer%20prices)https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2092&alphaletter=I&term=Inflation%20rate%20(consumer%20prices)https://www.cia.gov/library/publications/the-world-factbook/rankorder/2092rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=4#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2049&alphaletter=E&term=Exports%20-%20commoditieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2049&alphaletter=E&term=Exports%20-%20commoditieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2058&alphaletter=I&term=Imports%20-%20commoditieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2058&alphaletter=I&term=Imports%20-%20commoditieshttps://www.cia.gov/library/publications/the-world-factbook/geos/ja.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/ja.htmlhttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2058&alphaletter=I&term=Imports%20-%20commoditieshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2049&alphaletter=E&term=Exports%20-%20commoditieshttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2092rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=4#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2092&alphaletter=I&term=Inflation%20rate%20(consumer%20prices)https://www.cia.gov/library/publications/the-world-factbook/rankorder/2221rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=73#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2221&alphaletter=T&term=Taxes%20and%20other%20revenueshttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2046&alphaletter=P&term=Population%20below%20poverty%20linehttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2129rank.html?countryname=Japan&countrycode=ja&regionCode=eas&rank=38#jahttps://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html?fieldkey=2129&alphaletter=U&term=Unemployment%20rate


7/16



A KEEN EYE FOR REAL ESTATE

As Japanese corporate sentiment gets a boost from "Abenomics" the country's sluggish property

market is showing signs of life, with office prices in Tokyo expected to surge 10 percent over the

next 18 months, according to one of the world's largest real estate funds.

AXA Real Estate, the property arm of Europe's second largest insurer that has 45 billion euros

($59 billion) of assets under management, is now looking at buying office space in Tokyo, says its

global head of Asia Frank Khoo.

He forecasts higher demand for commercial property in the coming months stemming from an

improvement in corporate profitability in Japan.

"The weak yen is going to help the exporters and smaller manufacturers as well; this should lift

confidence and translate into higher demand. With higher demand we should see vacancy coming

down and rentals going up," Khoo said.

"Companies are going to use current low rental rates to move from outer Tokyo into inner Tokyo

for better quality buildings [in turn pushing rentals up]," he added.

He forecasts vacancy rates will fall to 4 percent in 2014 from 8 percent currently, adding that

office rents, which have largely remained flat for the past three years, will climb 1-2 percent this

year and 2-4 percent next year.

Tokyo's central business district is currently ranked the world's fifth most expensive market to

rent office space in, according to global real estate services firm Cushman and Wakefield, down

from third place in 2012.

Investors have flocked into Japanese real estate investment trusts (REITs) in recent months on

hopes "Abenomics" - or Prime Minister Shinzo Abe's economic revival plan that pushes for both

monetary and

fiscal stimulus - would drive a

recovery in the property market.

Shares of REITs including Japan

Real Estate Investment and

Nippon Building Fund have

surged more than 50 percent

year to date.


8/16



"The REITs are back in the market acquiring assets," Khoo said.

In further evidence of rising optimism over the property sector, Japan's Nippon Prologis REIT

which owns and manages warehouses across the country, raised $1.08 billion through an initial

public offering in February after pricing the stock at the top of the range.

Khoo added that with Japanese government bond yields look set to remain low, there has been a

shift in attitude towards investing in property among both institutional and retail investors.

"If you look at the mom and pops, they are really hungry for yield. With 10-year Japanese

government bonds below 0.6 percent, if you can get a 4 percent yield in commercial real estate, or

3.5 percent investing in a Japanese REIT, I think money will go that way," he said.

Original Source URL:

http://www.cnbc.com/id/100687192

INVESTMENT REQUIRED

Investing in Japanese real estate is better here on a cash flow basis than other countries. Basically

what this means is you buy a property, find a renter and your expected yield should be net 8% to

make it a worthy investment. If youre able to borrow 100% of the purchase price from a bank

then you basically own a property and get 8% cash in your bank at the end of every month using

none of your own capital. Buy a building with many units and it spreads out your vacancy risk as

an investor thanks to volume.

Japanese tenants are moving from the rural areas into the suburban areas surrounding Tokyo. In

adjacent areas like Saitama, Chiba and Kanagawa prefectures, there are many opportunities to

purchase high cash flow producing real estate that can rent to tenants for under JPY 100,000.

REASON I CHOOSE THIS OPPORTUNITY

After almost two years of house price falls, Japans housing market is now gaining momentum,mainly due to the economic policies of Prime Minister Shinzo Abe, who came to power in

December 2012. These economic policies, which are now affectionately referred to as

Abenomics, include increasing public infrastructure spending, devaluation of the yen and

aggressive quantitative easing by theBank of Japan (BOJ).
http://www.cnbc.com/id/100687192http://www.boj.or.jp/en/http://www.boj.or.jp/en/http://www.cnbc.com/id/100687192


9/16



In TokyoMetropolitan Area:

The average price of new condominium units soared by 9.2% y-o-y to JPY686,000(US$6,931) per square meter (sq. m.) in June 2013, based on figures released by theLand

Institute of Japan (LIJ).

The average price of existing condominium units rose by 5.9% to JPY399,700 (US$4,039)per sq. m. during the year to June 2013.

The average price of existing detached houses was up by 1.5% to JPY32,130,000(US$324,644) over the same period.

In Osaka Metropolitan Area:

The average price of new condominium units rose by 8.8% to JPY542,000 (US$5,476) persq. m. during the year to June 2013.

The average price of existing condominium units increased by 5% to JPY250,000(US$2,526) per sq. m. over the same period.

The average price of existing detached houses was down by just 0.5% to JPY20,000,000(US$202,081) over the same period.

Land prices are also rising. During the year to June 2013, the average price of land in Tokyo

Metropolitan Area rose by 5.2% to JPY204,500 (US$2,066) per sq. m., while in Osaka Metropolitan

Area the average land price increased by 2.3% to JPY132,000 (US$1,334) per sq. m.

Residential construction activity is picking up. The number of new dwelling starts in Japan

increased by 8.6% to 451,063 during the first half of 2013, compared to the same period last year,

according to theMinistry of Land, Infrastructure, Transport and Tourism (MLIT).

Property sales are rising sharply. In Tokyo, the total number of condos sold rose 16.7% to 19,070

during the first half of 2013 compared to the same period last year, according to LIJ. In Osaka, the

number of condos sold rose by 14.4% to 8,758 over the same period.

Total outstanding real estate loans in Japan increased 2.6% y-o-y to JPY444 trillion (US$44.86

trillion) in Q1 2013, according to theBank of Japan (BOJ).
http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/listhttp://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/listhttp://www.mlit.go.jp/english/http://www.boj.or.jp/en/http://www.boj.or.jp/en/http://www.mlit.go.jp/english/http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/listhttp://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/list


10/16



House prices are expected to continue to rising in the

remaining months of 2013, according to local property

experts. Moreover, Tokyos successful bid to host the

2020 Summer Olympics is expected to boost property

demand and the construction sector during the next 7

years. The international rating agency, Moodys, has

recently revised the outlook on the countrys real estate

sector from negative to stable.

The Japanese economy grew by an annualized rate of 3.8% in Q1 and Q2 2013. The economy is

expected to expand by about 2.8% for the whole year of 2013, up from a 2% in 2012 and a 0.6%

contraction in 2011.

Analysis of japan Residential Property Market

Yields continue to rise in Tokyo

Rental yields in Tokyos five central wards have continued to increase. Its a trend we spotted last

year, and it is strengthening.

Yields in Tokyo range from 5.12% to 6.47%. Theyre a little higher on smaller apartments, but not

much. Not bad for a city like Tokyo.

Prices per square metre range from around $9,300 to $12,700 down on last year because the

Yen has fallen. Expensive, but that is what global cities cost. In Yen terms residential prices

continue to strengthen. Thats likely to continue so long as Abenomics is in place. More money inthe system means lower interest rates means increasing asset prices, especially prices of assets

that produce nice incomes, like Tokyo property.
http://www.globalpropertyguide.com/Asia/japan/Price-Historyhttp://www.globalpropertyguide.com/Asia/japan/Rental-Yieldshttp://www.globalpropertyguide.com/real-estate-house-prices/Jhttp://www.globalpropertyguide.com/Asia/japan/Rental-Yieldshttp://www.globalpropertyguide.com/Asia/japan/Price-History


11/16



This is going to be interesting.

Assuming that Abenomics

really leads to a revival of the

Japanese economy, rising

incomes will continue to

support rising rents.

Looking good for Japanese

residential property!

Effective rental income tax is low in Japan

Rental Income:Rental income of nonresident individuals is subject to 10% tax.

However, effective rental income tax is low, ranging from 3.4% to 5.9%. Nonresident taxpayers

are taxed on their net income; depreciation and income-generating expenses such as maintenance

and repairs are deductible from the gross rent.

Capital Gains:Netgains realized from selling short-term real properties, i.e. property held for less

than 5 years, are taxed at 30%. Net gains on property held beyond five years are taxed at 15%.

Inheritance:Inheritance is based on residency status but foreign individuals inheriting property

located in Japan are still subject to inheritance tax, which is levied at progressive rates.

Residents:A permanentresident taxed on his worldwide income at progressive rates, from 5% to

40%.

Moderate roundtrip buying costs in Japan

The total roundtrip transaction cost is around 9.26% to 9.45%, inclusive of the 3.15% agents fee

plus an additional payment of JPY63,000 (US$682). The acquisition tax differs for land andbuildings at 1.50% and 3%, respectively.

Japanese landlords get key money

Tenancy laws passed in 2000 shifted the balance of power from tenants to landlords, making

Japan strongly pro-landlord.
http://www.globalpropertyguide.com/Asia/japan/Taxes-and-Costshttp://www.globalpropertyguide.com/Asia/Japan/Taxes-and-Costs#rental-incomehttp://www.globalpropertyguide.com/Asia/Japan/Taxes-and-Costs#gainshttp://www.globalpropertyguide.com/Asia/Japan/Inheritance#inheritancehttp://www.globalpropertyguide.com/Asia/Japan/Living-There#residenthttp://www.globalpropertyguide.com/Asia/japan/Buying-Guidehttp://www.globalpropertyguide.com/Asia/japan/Landlord-and-Tenanthttp://www.globalpropertyguide.com/Asia/japan/Landlord-and-Tenanthttp://www.globalpropertyguide.com/Asia/japan/Buying-Guidehttp://www.globalpropertyguide.com/Asia/Japan/Living-There#residenthttp://www.globalpropertyguide.com/Asia/Japan/Inheritance#inheritancehttp://www.globalpropertyguide.com/Asia/Japan/Taxes-and-Costs#gainshttp://www.globalpropertyguide.com/Asia/Japan/Taxes-and-Costs#rental-incomehttp://www.globalpropertyguide.com/Asia/japan/Taxes-and-Costs


12/16



Rents: Rents are freely negotiable. Aside from two to three months security deposit, landlords

receive key money worth one to two months rent.

Tenant Eviction: Automatic renewals of leases were abolished in 2000, making eviction easier. If

the tenant prematurely ends the contract the landlord can charge one months rent.

Healthy economic growth in 2013

Japan is the worlds third largest economy, a major aid

donor and one of the primary sources of global capital and

credit, with a population of 127.6 million in 2012 and GDP

per capita of US$46,736. The country is the worlds fourth

largest exporter and fourth largest importer, and has the

worlds largest electronics industry.

From 2000 to 2007, the Japanese economy grew by an average of 1.5% annually. However due to

the global financial meltdown, the economy contracted by 1% in 2008 and by another 5.5% in

2009. The economy returned to growth in 2010 with real GDP growth of 4.7%. Then Japanese

growth contracted again, shrinking by 0.6% in 2011 due to the impact of the Great Tohoku

Earthquake (magnitude 9.0) last March 11, 2011. In addition the economic slowdown in China,

Japans largest export market, exacerbated the situation. Then theres the anti-Japanese feeling inChina sparked by the dispute over Diaoyu/Senkaku Islands. In 2012, the economy had GDP

growth of 2%.

The Japanese economy is projected to grow robustly in the coming years mainly due to the

economic policies advocated by Prime Minister Shinzo Abe, who came into power in December

2012. These economic policies, which are now widely referred to as Abenomics, include the

following:

Inflation targeting at 2%

Correction of the excessive appreciation of the yen Setting negative interest rates Radical quantitative easing Expansion of public investment


13/16



Buying operations of construction bonds by Bank of Japan Revision of the Bank of Japan Act

Robert Feldman, head of Japan economic research at the Morgan Stanley, projects that the

Olympic Games will add around 0.7% to 0.8% of GDP over 7 years.

The Japanese economy grew by an annualized rate of 3.8% in both Q1 and Q2 2013. The economy

is expected to expand by about 2.8% for the whole year of 2013.

In July 2013, the nationwide annual inflation rate rose to 0.7% from a year earlier, its second

consecutive month of gains and the largest increase in consumer prices in five years, mainly due to

increased manufacturing. Consumer prices have continuously fallen in the past four years, with

annual inflation rates of -1.3% in 2009, -0.7% in 2010, -0.3% in 2011 and -0.04% in 2012,

according to theInternational Monetary Fund (IMF).

Because of Prime Minister Shinzo Abes efforts to correct the excessive appreciation of the yen, the

domestic currency weaken sharply to JPY97.82 = US$1 in August 2013. Abes decision

immediately reaped rewards when exports increased by 10.1% in May 2013 from the same period

last year, the fastest annual rise since 2010, based on figures from the Ministry of Finance.

However, Japans trade deficit is growing, mainly due to the weaker yen and the countrys soaring

energy import bill. In August 2013, the countrys trade deficit ballooned to JPY969.9 billion

(US$9.8 billion).

http://www.globalpropertyguide.com/Asia/japan

DEMAND

Housing demand and housing prices in Japan.

Chihiro Shimizu,Reitaku University

Japan has experienced the housing bubbles and subsequent collapses of the bubbles in succession

The house price in Japan continued to decline for 20 years after the collapse of bubbles. The one of

reasons for this, housing demand based on population had dropped at the same period. We

focused on the relationship between the demand for houses and house prices based the panel data

in Japan. Shimizu and Watanabe (2010) indicated that there is no significant relationship between

the demand for houses and house prices in Japan. In this sense, it is hard to explain whether there

is a bubble and the size of the bubble according to prefecture (state) using demand elements. This

suggests that it is possible that the concept of demographics having an impact on the demand for

houses, which thus caused the house prices to increase, is not effective in explaining the price
http://www.imf.org/http://www.globalpropertyguide.com/Asia/japanmailto:[email protected]:[email protected]://www.globalpropertyguide.com/Asia/japanhttp://www.imf.org/


14/16



fluctuations in neither Japan nor the US. Is it correct or reasonable result? The purpose of this

paper develops several housing population-based demand factors and focus on the relationship

between these demand factors and housing prices on Japan.

COMPETITION

AD Works Co Ltd

A.D. Works Co., Ltd. operates real estate business and provides due diligence services that

evaluate values of real estate properties. The company also provides support businesses for real

estate investment funds.

Aeon Mall Co Ltd (8905)

AEON Mall Co., Ltd. develops, manages, and maintains large-scale shopping malls throughout

Japan. The Company develops shopping malls, rent the space, manages and maintains the

shopping malls.

Apamanshop Holdings Co Ltd (8889)

Apamanshop Holdings Co., Ltd. maintains a real estate properties database and provides real

estate agency services and information services through its franchises. The Company also

publishes magazines for rental properties. In addition, Apamanshop Holdings leases and manages

real estate properties.

Ardepro Co Ltd (8925)

ARDEPRO CO.,Ltd. sells, leases, and manages real estate properties. The Company also provides

consulting services on real estate.

Area Quest Inc (8912)

Area Quest Inc. provides property management services on behalf of property owners. The

Company also attracts and negotiates with new tenants for the owners. Area Quest also provides a

total business solution, such as marketing activities and leasing contract by coordinating business

outsourced mainly by tenant companies.

Arealink Co Ltd (8914)

ArealinkCo., Ltd. provides real estate leasing services. The Company also operates real estate

businesses including storage and parking space rental. Arealink also develops and constructs

custom-made and rental buildings.

http://www.bloomberg.com/markets/companies/real-estate-mgmnt-servic/
http://www.bloomberg.com/markets/companies/real-estate-mgmnt-servic/http://www.bloomberg.com/markets/companies/real-estate-mgmnt-servic/


15/16



REFERENCES

https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

http://www.cnbc.com/id/100687192

http://www.globalpropertyguide.com/Asia/japan

http://www.bloomberg.com/markets/companies/real-estate-mgmnt-servic/
https://www.cia.gov/library/publications/the-world-factbook/geos/ja.htmlhttp://www.cnbc.com/id/100687192http://www.globalpropertyguide.com/Asia/japanhttp://www.bloomberg.com/markets/companies/real-estate-mgmnt-servic/http://www.bloomberg.com/markets/companies/real-estate-mgmnt-servic/http://www.globalpropertyguide.com/Asia/japanhttp://www.cnbc.com/id/100687192https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html


16/16



analysis of japan

Documents