Money Week, in it's 16 July 2004 issue had a cover story:
"Global House Prices: are they about to plummet?"

SUMMARY and excerpts:

"The last decade has been an extraordinary on for thw world's property markets. For once- probably for the first timer ever - a house price bubble has gone global. How did this happen, and can it last?" (John Ferguson takes a look)

Key points:
+ The Economist reported: that prices are now at 'record levels in relation to average wages and rents' in America, Australia, Britain, Ireland, the Netherlands, New zealand, and Spain", and frothy in China, South Africa and Dubai,

+ Other markets like France and Italy have also shown double digit gains in recent years.

+ The reason is simple: Low interest rates: 'average short term rates in the G& economies are at the lowest levels in recorded history.' Simply put, 'if rates halve, house prices double'

+ Rates are now on the rise, and will keep rising

+ Housing bulls are complacent because they think (rightly or wrongly) that: recent trends matter more than future surprises, the economy will stay strong, rates won't rise muc h, debtors can cope with mild rate rises, there is 'pent-up demand' from FTBers, BTL investment will stay healthy, there's chronic housing shortage

+ MoneyWeek believes that few of the reasons cited by bulls are convincing, and that housing is very pricey by historic measures, so there is little or no romm for unhappy surprises

- - -
THEIR SUGGESTION is: Skip America and Spain: buy a house in Japan
Why?

"Alone of the developed nations, Germany and Japan have remained immune to the seductive charms of easy money. The most exciting from the point of view of buying at very long-term lows is Japan. Japanese prices fell another 6% over the lasty year, making it 12 years straight that property values have fallen, eve though rates have been effectively zero for more than three years now.



At last Japan's domestic economy finally seems to be improving, but constraints imposed by a decade-long credit crunch banking crisis may still take years to unwind. this has resulted in the strange situation where rental yields can be multiples higherr than mortgage financing costs. That's a situation that could bring tears of envy to the eyes of suffering BTL investors from Sidney to Siddenham."

= = = = =
LINKS:
Money Week..........: MoneyWeek Offer
Advfn thread on Japan: JAPan Property
Charts, etc.............: JAPNprop

I have been considering this as an investment for some time, however I have one major reservation:

What happens to Jap property when the rest of the global property markets collapse??

It can't be good

But maybe the first out in 10 years time?

Paul Verlaine, Poèmes Saturniens, Mon rêve familier.

I am seriously thinking of buying property in Japan. I need an English online source for land and real estate properties. Anyone know of a good source?

I would also consider Germany too.

Thanks

Here is a link to buying in Japan:

http://www.jref.com/practical/property.shtml

http://www.realestate-tokyo.com/sale/hot/index.aspx

If you are not resident there, I would get it financed outside. I think I have seen yen-based mortgages available in the UK for those who take advantage of the cheaper interest rates. I believe that now is a good time to buy in Japan and have heard that the declines are levelling out. However, I think it would be nigh on impossible for someone outside to get into BTL etc. The few English-speaking agencies tend to bet targeted at the high-flying ex-pat market.

The properties in the link start at the equivalent of about GBP 160k, which is not too bad for central Tokyo.

Friend of mine has just bought flat in Shibuya for 570k USD, last sold for 5m USD in 1989!

But he lives & works there.

Best way in is REITS.

What is REITS?

Real Estate Income Trust.

Common in US and Japan. Basically a property company that gets tax breaks as long as they give 95% of net income out as dividends.

Do you have any good information about Japanese REITs? (links to english pages would be nice - but not essential, I'll struggle through Japanese).

I thought the prices were still pretty bad so REITs wouldn't be giving any return, unless its a long term speculation - that Japan property ever appreciates again and that there isnt a big earthquake that destroys your portfolio.

Anyway I have a lazy 10 million yen to invest in Japan for a term of >10 years and was thinking of RE. A REIT would be a pretty good option and I'm willing to bet that property will appreciate.

Maybe it is worth considering renting property in Japan instead of buying so you wont get zapped if house prices sink in another crash.

Have you got a link anywhere explaining how you can get permanent residence in Japan without a job ?

Have you tried www.destinajapan.co.uk?

I do not think that there is another way. If you are prepared to work, you can easily get a visa, although you might need to go first to look.

Why would you want permanent residence without a job? Just being nosey.

To retire there and escape british house price madness !

japanese property will only appreciate in areas with favourable demographics (and there are very few of those!)

basically investing in anything outside the major cities is throwing good money after bad, the areas in tokyo that have good demographics are very central and are frighteningly expensive. as expensive if not more so than london.

i wrote about this in another thread, which you can look up if you like.

unless you have bucket-loads of cash to invest in very central areas, japan is a bad option.

Although J-demographics are working to reduce the population, I do not think this is relevant. The old are living very long, and when the baby boomers retire they will still want to live somewhere, so we may get an exodus from the city to the country, pushing up prices.

The cities may even siffer some depopulation, lowering land values.

Also, demographics are not what has been behind the housing booms in the west, but rather cheap cash and a lack of profitable alternative investments. Rental yields are quite high, as they need to account for falling land values. If the falls start, BTL investments could be seen as more attractive.

penbat1 is looking to retire to Japan to escape high property prices (?) and his money will go a long way in Kyoto, for example.

What we are currently seeing is the flight from suburbs to cities. The population is ultimately declining without immigration to bolster it.

Im sorry, but you are off your trolley if you think that the countryside is going to see an increase in land value, at the expense of cities. I have been to the Japanese countryside, as I am sure you have, and what were once flourishing, vibrant areas, are now ghost towns in many cases. That trend, according to every serious study undertaken, is set to continue.

Are you seriously trying to tell Penbat that Japan is a legitimate retirement option? I sincerely hope you are being tongue in cheek Ah-So, as you clearly have knowledge of Japan, but to recommend this smacks of complacency.

How can ANY habitable land in Japan be abandoned, considering it's scarcity and their insane population densities?

i can promise you there are many parts of japan which had higher populations 15 years ago.

I couldn't agree more - so many towns have emptied and the shopping districts are virtually boarded up. The impact of the recession has been in rural areas rather than rural cities.

My thinking, perhaps misguided, is that while the young (few that there are) will continue to head for the bright lights, the baby boomers, now in their 50's, are approaching retirement and many dream of moving to the country when they retire. If they did, then the cities could begin to thin and some rural areas repopulate (with old people).

I would not recommend anyone retire to Japan, not even the Japanese!

good comments!

here's a list of japanese reits:
http://www.tse.or.jp/english/cash/reit/list.html

and a thread on advfn:
http://www.advfn.com/cmn/fbb/thread.php3?id=6107612

Here's one I like:
Mitsubishi Estate (JP:8802) ... update

WATCH JAPAN: The Outlier

The Economist, not ordinarily an alarmist magazine, thinks this could
be the world's biggest housing bubble. Not only have US house prices
been soaring, but they've been soaring almost everywhere else, it
appears. From Los Angeles to Vancouver to Toronto to Boston to New
York to Cork to London to Paris to Madrid to Delhi to Singapore to
Hong Kong to Hawaii.

Except Japan.
Japan is the only industrial nation where house prices have actually
declined in recent years. Once the speculation died out, demography
took over.

An article in yesterday's Wall Street Journal gives some useful statistics.
"The average price of a 750-square-foot condominium in Tokyo rose
to more than 70 million yen, or about $625,000 at current exchange
rates in 1991 from about 25 million yen in the early 1980s. After
crashing in the early 1990s, the average house price has hovered
around 40 million yen, or about $360,000 for the past ten years."
In the US, one contributor to the "froth" is, as one might expect, the
Waterfall effect: house prices have been particularly bubbly in cities
such as San Francisco, New York and Boston where thousands of
residents got rich from what could be termed ovine options (first pull
the wool over the stockholders' eyes, then shear them).

Realtors report that tech and Wall Street execs have been
"diversifying" their investments by moving cash into real estate.
Feeding this worldwide housing boom is the "global savings glut"
identified by Ben Bernanke (as discussed in last month's issue).
According to IMF data, Japan is the greatest supplier to the global
savings pool that supports, inter alia, the bourgeoning US mortgagebacked
securities market, where a discouraging word is seldom heard
by a homebuyer with no money for a down payment.
Japan's housing bubble burst 15 years ago, at about the same time as
its stock bubble. Since Nasdaq's runup was unassociated with real
estate holdings of technology companies and wasn't a major feature
of the American banking system's lending, the real estate experiences
of the two countries could remain divergent, even as other aspects
converge

...MORE: http://corporate.bmo.com/publications/basi...ult.asp?id=5345

Japan producer prices may herald end of deflation
By David Turner in Tokyo
Published: August 10 2005 05:38 | Last updated: August 10 2005 05:38

Japan’s domestic producer prices rose for the 17th month in July, a further sign that the country may be approaching the end of deflation.

The Bank of Japan said on Wednesday that its domestic corporate goods price index, which measures the prices companies pay for goods and materials produced locally, was up 1.5 per cent year-on-year and up 0.6 per cent on the month. The index had shown a monthly decline in May and June.

Domestic prices for makers of intermediate goods, such as chemicals, rose 1 per cent from June. The same measure for makers of consumer goods rose 0.3 per cent, an indication that the costs of raw materials were being passed on further down the production chain.

Up until now, Japanese companies have generally responded to rising prices for fuel and materials by absorbing the costs themselves. The cost of raw materials rose 24 per cent in the year to July, but the huge increase has not been passed on to consumers.

Commenting on the latest figures, Lehman Brothers said in a report: “The data tentatively suggest that firms are gradually starting to pass on rising costs onto prices of their final products.”

With thinner margins, however, companies are more likely to start raising prices and ending Japan’s long period of consumer price deflation. Core consumer price deflation fell to only 0.2 per cent in June, and many economists expect an end to deflation before the end of the fiscal year.

“We believe it is just a matter of time before domestic private demand, on the back of an employment and income recovery, is able to recover the strength needed for the rise in prices upstream to pass through to consumer prices,” according to Barclays Capital in a report.

@: http://news.ft.com/cms/s/060809d4-094d-11d...000e2511c8.html

Interesting list Bubb! How would a UK investor go about investing in these? I've been trying to look at ways of investing directly in the Japanese (stock)market but haven't found a single broker yet..

Beyond Japan unit trusts and funds (I have a couple of these), how do others invest directly in Japan?

Japan's Property Prices Rise in Three Largest Cities

March 23 (Bloomberg) -- Japan's three largest cities had their first gain in commercial land prices in 15 years, adding to evidence the property market is rebounding in the world's second-biggest economy.

The average price of commercial land in Tokyo, Osaka and Nagoya urban areas gained 1 percent in 2005, the Ministry of Land, Infrastructure and Transport said today in a statement. Land prices nationwide fell by the smallest amount since 1991.

Demand for property rose in larger cities as Japan's economy is set to enter its longest postwar expansion, with imports last month gaining the most in almost a decade. Property purchases by investment banks such as Goldman Sachs Group Inc. and a near doubling of real estate investment trusts to 26 from 14 last year drove up prices.

``The market is very strong,'' said Sonny Kalsi, global head of real estate at Morgan Stanley, which bought $8 billion of Japanese real estate last year. ``Institutional investors now have a stronger appetite for investing in the real estate market along with retail investors.''

New York-based Goldman and Dallas-based Lone Star Funds have invested in Japan properties since the 1990s and are now reaping profits. Lone Star sold 35 percent of Japan's largest golf course operator for 39 billion yen in a December IPO. Goldman sold 45 billion yen of shares in Japan's first hotel REIT in February.

Property Bubble

Japan's overall land prices haven't risen since peaking in 1990. The bursting of the asset bubble has erased about two- thirds of the value of commercial property purchased in that year and about half of that for residential real estate.

Japan's economy grew at an annualized 5.4 percent in the fourth quarter, faster than both the U.S. and Europe, driven by both consumer spending and exports. A separate report today showed imports jumped 30 percent in February from a year earlier, as exports surged 21 percent.

Nationwide, commercial and residential land prices declined for a 15th year, though at a slower pace than the previous year, the report showed. Prices for commercial and residential land both fell 2.7 percent in 2005, compared with 5.6 percent and 4.6 percent a year earlier.

For commercial land, the decline was the least since 1991, while the drop in residential land was the smallest since 1997.

`Healthier'

``The data show asset deflation is not completely over yet, but the land market overall has become healthier,'' said Hiromichi Iwasa, chief executive of Mitsui Fudosan Co. and president of the Real Estate Companies Association of Japan.

The Tokyo region's residential land prices in 2005 were at the same level as in 1985, while commercial land prices for the region were at a similar level to 1975, the report showed.

``The government's land index is bit of a lagging indicator,'' said Dan Klebes, chief investment officer at Aetos Japan LLC., which has invested $4 billion in Japan's property market since 2002.

``We have seen gains pretty much across the board in the major cities, and in the sub-major cities pretty significant increases in value in both residential and commercial land,'' Klebes said.

Tokyo's Marunouchi Building, a high-rise office and shopping complex, is the most expensive commercial space in Japan at 24.4 million yen ($208,000) per square meter (10.7 square feet), up 11 percent from 2004. The building is owned by Mitsubishi Estate Co., Japan's second-largest developer.

Fastest Gains

Land plots in front of Nagoya station, in Aichi prefecture, had the fastest gains at 38 percent. The land is across the street from Toyota Motor Corp.'s Midland Square Building, a joint development by Toyota and Mainichi Newspapers.

Toyota, the world's second-largest automaker, will move some operations to the 47-story building when it's completed in October. The development probably helped drive land prices higher in Nagoya city, the land ministry said.

The top four residential land price increases in 2005 were in the Aoyama area of central Tokyo, which posted gains ranging from 26 percent to 29 percent.

The biggest project in the area was Omotesando Hills, a 34,061-square-meter complex of shops, apartments and parking space. Omotesando Hills, with six stories above ground and six below, was developed by Mori Building Co., Japan's largest private real-estate developer by assets.

`Strong Demand'

``Demand for residential land from developers and funds is very strong,'' said Keiji Kimura, Chief Executive of Mitsubishi Estate Co. ``It seems likely that we may see prices in other major cities gaining.''

As land prices started to pick up, more companies sold shares in real estate investment trusts, or REITs. There were 12 REITs newly listed in the Tokyo Stock Exchange last year, compared with 4 REITs the previous year.

Nippon Building Fund Inc., Japan's largest real estate investment trust, sold 86.9 billon yen of shares in March to raise funds for purchasing more properties.

@: http://www.bloomberg.com/apps/news?pid=100..._U0&refer=japan

= = =

I SUGGESTED THIS


What happened??

I saw that article too, Dr B. It chimes in with post-Fukui comments regarding interest rates on the TV 'wide shows' urging us all to pile in now and buy our apartments quickly whilst rates are still low, and property unlikely to fall further. All very 'now is the time'.
However now is just the time to put air in the balloon. Deflation defeated is still only 'perceived'. Rates may rise 'in summer'. Rises in property prices quoted in that article have extra-ordinary causes(like Nagoya and Toyota). Japan would love to shake off all the past 15 years. And maybe she has. It's just a pity the rest ot the world ins't in step, too. How long will Japan belong to export herself out of trouble? We are at the mercy of the US and China. They have a symbiotic relationship at the moment. But 'till when?
Now where's that air pump.....

Can anyone help with this?

I too would like to throw a punt on japanese property without actually buying a place.

BTL at 0% interest ? is it possible in Japan? in the uk 0% rates woud mean house prices rises to infinity probably!

Nikkei stockmarket might list some property/construction firms, although not every UK broker will deal in.

Here is quite a good article on Japanese property investment:

http://www.timesonline.co.uk/article/0,,587-2009701,00.html

If anyone is looking into buying in Japan, this is a great little guide to buying and has lots of links to various sites, as well as some rather quirky photos.


http://www.dannychoo.com/blog_entry/eng/51...perty+Purchase/

It seems my prediction from last year is on the verge of coming true! It's nice to be right about something once in a while.
http://www.japantoday.com/jp/news/386523

Anyone know of a Japan property fund?

Any luck on that? We could go to Google Answers:

http://answers.google.com/answers/

See page 1 of this thread for information on REITS.

Sorry, I should have been clearer. I was talking about UK registered funds.

Dogbox - A J-Reit listed on AIM this morning by a company called Prospect Epicure which has raised £101m in the issue to invest in Japanese real estate. I think its worth a look. Im particulary interested in Japan for 2 reasons:

1) The underperformance for the last 15 years of Japanese real estate could mean that it has a lot of price inflation potential, obviously this will be dictated by the economic recovery, which looks to be underway.

2) It attracts me as a safer play than other areas I have looked into. Should there be a housing mkt downtuirn then I cant see Japan as being hit hard, and could almost act as a hedge against possible falls in other investments.

I was looking to invest in Japanese equities a couple of years back and have missed the initial move, I wonder if the property market is about to follow suit... views from everyone appreciated.

Hey guys, forgive me if I'm missing something, but . . . .
- I read somewhere tha rental yields in Japan are about 8%,
- base rate in 0.4%.

So if I could get a morgage for a BTL . . .ain't it a total NO BRAINER?

Any ideas how I could proceed?

REITS ain't geared enough for me.

[Message for Dreamweaver.

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Feebib
www.travelarchitect.com

Yields are probably higher. Issues are slightly different. The building has a limited lifespan - 20 years or so and will require rebuilding. Over the time, the price people will pay to rent it will drop.

Japan has suffered from falling property values. This has also been reflected in the high yields.

However, as property falls seem to have stopped, this could be a very good time to get into BTL in Japan. How you would proceed rather depends on your starting point - it would help enormously to actually live there and be married to a Japanese for starters.

I think I must be missing something as I find myself asking "What building?" Presumably interest rates are the same no matter which property you invest in. (Assuming property doesn't have any problems that would make it tricky to get a mortgage.) All things being equal you would invest in a building that didn't have structural problems.

What I mean is, a Japanese residential building will not remain standing for more than about 20 years. It will usually be knocked down and replaced.

Apartments (mansions) thus lose value quite quickly, and also the rent that they attract will be lower as the building gets older. Here is a link:

http://www.japaninc.com/print.php?articleID=1480

This English guide to buying a house in Japan will be some help, but also highlight the difficulties of investing there. If you are not based there, I am not sure how you would start.