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Gavin

I Bite The Bullet And Invest In Property

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We probably STR'd to early, beginning of 2004.

We have been convinced that prices are overvalued in the UK. Yet still we keep rumbling on.

We have to decided to invest again in property, but there, as always, is a twist.

We believe that its important to invest in a heavily populated island with some of the best infrastructure in the 1st world.

They are not building anymore land you know!

Clearly its in the land of the rising sun. And a 2 bed serviced apartment with in house gym and swimming pool, within 80 minutes of Tokyo central station by direct shinkensen bullet train service.

On sale for USD25k and returning a yield of 17.5%.

This shows that a UK property bear does not necessarily hate property, but will only be interested at the right price.

I am not trying to boast, or show off, this is available, although it is not 'easy' to invest in Japan for foreigners and maybe thats the point. I have a friend who is resident and arranging this.

I can not give any further detail because I promised I would not, but these kind of purchases are available.

If anything it just shows how ridiculous prices have become here.

We might lose most of our money, but we are willing and able to accept this risk, and its a long term punt. It also allows a crude hedge against sterling devaluation in the eventual reversal of the carry trade.

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Guest wrongmove
Clearly its in the land of the rising sun. And a 2 bed serviced apartment with in house gym and swimming pool, within 80 minutes of Tokyo central station by direct shinkensen bullet train service.

On sale for USD25k and returning a yield of 17.5%.

If it wasn't you posting this Gavin, I would be tempted to shout "BULLSH!T"

£12k for a two bed flat in Japan! And it rents for less than £200 pcm!

I have to say I am shocked, and even more fed up with prices here!

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All I can say is its an 'unfashionable' area, that benefited a lot during the bubble era from infrastructure spending.

Neither would I say its up and coming (because I hate that cliche) but it would certainly benefit from any even mild return of growth in Japan.

I think in certain areas that have seen circa 90% falls people do not see property as an investment.

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Go for it. It seems a bargain.

Meanwhile look at what you can get for £18k on the sunny south coast :)

:lol: Cash buyers only!

I can just imagine the locals turning up to the auction with 'their' cash in 300 seperate wallets and purses of all shapes and sizes.

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We probably STR'd to early, beginning of 2004.

We have been convinced that prices are overvalued in the UK. Yet still we keep rumbling on.

We have to decided to invest again in property, but there, as always, is a twist.

We believe that its important to invest in a heavily populated island with some of the best infrastructure in the 1st world.

They are not building anymore land you know!

Clearly its in the land of the rising sun. And a 2 bed serviced apartment with in house gym and swimming pool, within 80 minutes of Tokyo central station by direct shinkensen bullet train service.

On sale for USD25k and returning a yield of 17.5%.

This shows that a UK property bear does not necessarily hate property, but will only be interested at the right price.

I am not trying to boast, or show off, this is available, although it is not 'easy' to invest in Japan for foreigners and maybe thats the point. I have a friend who is resident and arranging this.

I can not give any further detail because I promised I would not, but these kind of purchases are available.

If anything it just shows how ridiculous prices have become here.

We might lose most of our money, but we are willing and able to accept this risk, and its a long term punt. It also allows a crude hedge against sterling devaluation in the eventual reversal of the carry trade.

You will not loose money buying a property yielding 17% in the land of 0% yields. good luck wish I could live in such a place.

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Guest wrongmove
You will not loose money buying a property yielding 17% in the land of 0% yields. good luck wish I could live in such a place.

Indeed - any trouble letting it, just slash the rent in half (i.e. £90 pcm for a 2 bed) and still get a return of >8%!

Why is UK so staggeringly expensive by comparison? It's frankly sickening!

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Yeah, go for it Gavin. I wish I had the balls to do something like that, not that I know how.

I just want UK property to become reasonably priced - that's about a 50% drop then! :lol::lol::lol:

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Indeed - any trouble letting it, just slash the rent in half (i.e. £90 pcm for a 2 bed) and still get a return of >8%!

Why is UK so staggeringly expensive by comparison? It's frankly sickening!

Haven't you heard, that's because it's a little island and they're not making any more land.

Or to put it another way, the small island/housing shortage is a load of bull$hit.

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17% yield sounds a lot doesn't it?

But GBP200 rent pcm doesn't sound a lot does it!

It just illustrates how out of kilter the UK or Japan (or both) are. My guess is that certain parts of Japan are seriously undervalued and the UK, overvalued.

When I first bought my home in 1995 it cost me 300 pcm mortgage. Probably rents in that region of Japan were 300 pcm then as well.

Markets move, opportunities change and we are all trying to find when to time our investment and divestment.

Pricing and timing are where the bulls don't seem to want to tread, its what is lost during irrational exurberence and becomes crystal clear with hindsight.

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Really? When I lived in Japan even renting a place was a flipping nightmare unless you found a gaijin friendly agent. We were quite lucky as we got a nice though oldish place in Iriya in the Shitamachi district of Tokyo. Our landlady even spoke English, didnt want any key money (a big cash present you give to landlords when you move in) and charged us the Japanese going rate. She'd bring us present occasionally too. :)

Anyway I digress. I doubt that there are any restrictions on foreigners owning property so as long as you can pay in cash the estate agent should handle everything for you. However I think its the owning rather than the buying that will present the problems. All your contracts, service and ground rent obligations would be in Japanese so I hope your friend is translating it all for you, and translating and mailing you any letters and bills from the ward office and managing company. Its a long way to go back if you have any problems.

I dont want to sound like I'm pouring cold water on your parade either but have you checked that rental yield? 80 minutes by Shinkansen is a very long way from Tokyo, its a very expensive journey too, no ones going to be commuting from there. I did have a student who commuted an hour each way to Tokyo on the Shinkansen, it cost his company about £50 a day, and they only paid it because he was a director. Rental yield outside of cities

Its also very easy for Japanese tenants to stop paying rent and theres not alot that the landlord can do about it. It can take up to 2 years to eject a tenant through the courts after theyve defaulted.

Property tends not to go up in value either. The land may do but Japanese built houses have notoriously short life spans and low build quality. As low as 25 years in some cases. House owners generally factor in the cost of rebuilding their home into their savings. Apartments are worse. Anything more than 5-10 years old is considered "old" and even renting it can be problematic, let alone selling. Typically apartment owners have been forming their own companies. They then sell the block to developers who rebuild it with extra luxury apartments, these are then sold or rented to new people which hopefully covers the cost of the rebuild. In cases where they cant do this because theres not room or the area is undersirable theyve basically just had to sell for next to nothing and walk away.

I suppose its pretty cheap so if it doesnt work out its not the end of the world. Really though I can foresee so many problems with this plan, if you have £12500 to invest it would be a lot less hassle to put it in the bank. However I guess if youve done your homework and youve got good people helping you out there it could work out.

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be careful though:

http://investing.reuters.co.uk/news/articl...FUNDS-JAPAN.xml

Optimistic funds scoff at Japan crash talk

Thu Sep 6, 2007 1:31 PM BST146

Email This Article | Print This Article | RSS

[-] Text [+]

By Dominic Whiting and Eriko Amaha

HONG KONG/TOKYO (Reuters) - Property fund managers are still keen to pour billions of dollars into Japan, saying fears of a 1980s-style price bubble and crash are way off the mark.

Japanese property shares have tracked a wider stock market slide since mid-July as the U.S. subprime mortgage crisis caused a global liquidity squeeze.

The jitters were compounded by comments on Wednesday from the chairman of the country's second biggest house builder, Daiwa House Industry Co Ltd (1925.T: Quote, NEWS , Research). Takeo Higuchi was quoted by Bloomberg News as saying he "wouldn't be surprised if the real estate bubble goes bust".

But property fund managers at a conference in Hong Kong on Thursday disagreed.

"I think it's an inflammatory remark with no foundation whatsoever," Nicholas Loup, Asia managing director for British property firm Grosvenor, said of Higuchi's comments.

"Land prices are just rising, and there's a positive yield spread -- a sign of a market in the early stages of recovery."

Tokyo's real estate sub-index (.IRLTY.T: Quote, NEWS , Research) has fallen nearly 10 percent this week, underperforming a 2.5 percent decline in the broader TOPIX

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The warning I was trying to give in my post as well was that rental yields and property value drop steadily after whatever it is has been built and quite dramatically after the 5 year mark. Unless inflation decides to happen any time soon then you're rental yield will be dropping. 2.5 million yen is pretty cheap as well, I wonder about the location. Is this definitely new built?

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Really? When I lived in Japan even renting a place was a flipping nightmare unless you found a gaijin friendly agent. We were quite lucky as we got a nice though oldish place in Iriya in the Shitamachi district of Tokyo. Our landlady even spoke English, didnt want any key money (a big cash present you give to landlords when you move in) and charged us the Japanese going rate. She'd bring us present occasionally too. :)

Anyway I digress. I doubt that there are any restrictions on foreigners owning property so as long as you can pay in cash the estate agent should handle everything for you. However I think its the owning rather than the buying that will present the problems. All your contracts, service and ground rent obligations would be in Japanese so I hope your friend is translating it all for you, and translating and mailing you any letters and bills from the ward office and managing company. Its a long way to go back if you have any problems.

I dont want to sound like I'm pouring cold water on your parade either but have you checked that rental yield? 80 minutes by Shinkansen is a very long way from Tokyo, its a very expensive journey too, no ones going to be commuting from there. I did have a student who commuted an hour each way to Tokyo on the Shinkansen, it cost his company about £50 a day, and they only paid it because he was a director. Rental yield outside of cities

Its also very easy for Japanese tenants to stop paying rent and theres not alot that the landlord can do about it. It can take up to 2 years to eject a tenant through the courts after theyve defaulted.

Property tends not to go up in value either. The land may do but Japanese built houses have notoriously short life spans and low build quality. As low as 25 years in some cases. House owners generally factor in the cost of rebuilding their home into their savings. Apartments are worse. Anything more than 5-10 years old is considered "old" and even renting it can be problematic, let alone selling. Typically apartment owners have been forming their own companies. They then sell the block to developers who rebuild it with extra luxury apartments, these are then sold or rented to new people which hopefully covers the cost of the rebuild. In cases where they cant do this because theres not room or the area is undersirable theyve basically just had to sell for next to nothing and walk away.

I suppose its pretty cheap so if it doesnt work out its not the end of the world. Really though I can foresee so many problems with this plan, if you have £12500 to invest it would be a lot less hassle to put it in the bank. However I guess if youve done your homework and youve got good people helping you out there it could work out.

Yes, the first time I visited Japan, I was being shown round this technological wizard home when the owner said that the house had been there for 150 years. I didn't believe that but soon realised they meant the land, and that the house had been rebuilt only the year before on the 'family plot'.

I have a friend who is running this deal and I will not see any paper work and fees will be deducted. I am aware of the pitfalls but I still think it has latent potential.

We are not expecting any commuters to Tokyo, but it is more of a vacational area where accessibilty is required.

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We probably STR'd to early, beginning of 2004.

We have been convinced that prices are overvalued in the UK. Yet still we keep rumbling on.

We have to decided to invest again in property, but there, as always, is a twist.

We believe that its important to invest in a heavily populated island with some of the best infrastructure in the 1st world.

They are not building anymore land you know!

Clearly its in the land of the rising sun. And a 2 bed serviced apartment with in house gym and swimming pool, within 80 minutes of Tokyo central station by direct shinkensen bullet train service.

On sale for USD25k and returning a yield of 17.5%.

This shows that a UK property bear does not necessarily hate property, but will only be interested at the right price.

I am not trying to boast, or show off, this is available, although it is not 'easy' to invest in Japan for foreigners and maybe thats the point. I have a friend who is resident and arranging this.

I can not give any further detail because I promised I would not, but these kind of purchases are available.

If anything it just shows how ridiculous prices have become here.

We might lose most of our money, but we are willing and able to accept this risk, and its a long term punt. It also allows a crude hedge against sterling devaluation in the eventual reversal of the carry trade.

Any idea what the apartment would have been worth say 10-15 years ago?

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:lol: Cash buyers only!

I can just imagine the locals turning up to the auction with 'their' cash in 300 seperate wallets and purses of all shapes and sizes.

Sold for £30,000 http://www.propwld.co.uk/auction/foxssouth.htm

hey I'm moving to Gosport and resent that remark :)

£500pm for 3bdrm Detached House with Garage. Good enough for me.

Although Violence against a person is 1000% above average according to http://www.findaproperty.com/crimefacts.as...amp;areaid=0658

Edited by maxwell

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Did I read USD25K right?

The average price of a serviced apartment in Tokyo itself is over USD600k.

(http://www.japantoday.com/jp/news/415030)

I don't doubt it. But USD600k is not a lot compared with central London, and this is not in Tokyo anyway. I am not making it up.

Compare Kensington to an apartment in Devon and you are comparing like with like with Tokyo and this area. Except imagine its Devon 15 years ago when people might go on holiday there but its hardly the height of fashion. Well fashions change.

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I don't doubt it. But USD600k is not a lot compared with central London, and this is not in Tokyo anyway. I am not making it up.

Compare Kensington to an apartment in Devon and you are comparing like with like with Tokyo and this area. Except imagine its Devon 15 years ago when people might go on holiday there but its hardly the height of fashion. Well fashions change.

Where is it?

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Sold for £30,000 http://www.propwld.co.uk/auction/foxssouth.htm

hey I'm moving to Gosport and resent that remark :)

£500pm for 3bdrm Detached House with Garage. Good enough for me.

Although Violence against a person is 1000% above average according to http://www.findaproperty.com/crimefacts.as...amp;areaid=0658

I got it ! , £550pm etc. Being developed in 6 months time so after that month by month until they get can get enough credit I imagine, as they own another 2 houses on the street.

(big firm renting it, sold for £225,000 end of 2006 on houseprices.co.uk so mortgage would be @6% 25 years; interest only = £1125pm or repayment = £1466.75pm)

Good enough for me and whomever I can convince to share it then reducing the rent to below what most will consider pocket money. Gas Hob (hate electric myself; for cooking, no control over heat) was the tipping point.

Long live the HPC and the rent involved for fully detached houses with a garage for less than my current 1bd flat.

Edited by maxwell

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I don't doubt it. But USD600k is not a lot compared with central London, and this is not in Tokyo anyway. I am not making it up.

Do you have any information on Japanese property valuations?

Rental yields specifically, but any other info would be good.

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Guest wrongmove
We just agreed to buy property number three, here in Hong Kong.

Very interesting Bubb. Are you basically calling the top in gold?

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Just found the documents on the council website, the house I rent and know is being converted, is being turned into five 1 bedroom flats with 2 car parking spaces and 6 bicycle spaces.

Which outweighs the 12 objections in writing from other people on the street who took the hassle of doing that. Of course everything is green nowadays and bicycles are good and no body drives anymore so they needn't worry about it. Aso they only get 2 wheelie bins for 5 flats and the bungalow next door will be happy to have the sunshine literally removed from their lives.

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Really? When I lived in Japan even renting a place was a flipping nightmare unless you found a gaijin friendly agent. We were quite lucky as we got a nice though oldish place in Iriya in the Shitamachi district of Tokyo. Our landlady even spoke English, didnt want any key money (a big cash present you give to landlords when you move in) and charged us the Japanese going rate. She'd bring us present occasionally too. :)

Anyway I digress. I doubt that there are any restrictions on foreigners owning property so as long as you can pay in cash the estate agent should handle everything for you. However I think its the owning rather than the buying that will present the problems. All your contracts, service and ground rent obligations would be in Japanese so I hope your friend is translating it all for you, and translating and mailing you any letters and bills from the ward office and managing company. Its a long way to go back if you have any problems.

I dont want to sound like I'm pouring cold water on your parade either but have you checked that rental yield? 80 minutes by Shinkansen is a very long way from Tokyo, its a very expensive journey too, no ones going to be commuting from there. I did have a student who commuted an hour each way to Tokyo on the Shinkansen, it cost his company about £50 a day, and they only paid it because he was a director. Rental yield outside of cities

Its also very easy for Japanese tenants to stop paying rent and theres not alot that the landlord can do about it. It can take up to 2 years to eject a tenant through the courts after theyve defaulted.

Property tends not to go up in value either. The land may do but Japanese built houses have notoriously short life spans and low build quality. As low as 25 years in some cases. House owners generally factor in the cost of rebuilding their home into their savings. Apartments are worse. Anything more than 5-10 years old is considered "old" and even renting it can be problematic, let alone selling. Typically apartment owners have been forming their own companies. They then sell the block to developers who rebuild it with extra luxury apartments, these are then sold or rented to new people which hopefully covers the cost of the rebuild. In cases where they cant do this because theres not room or the area is undersirable theyve basically just had to sell for next to nothing and walk away.

I suppose its pretty cheap so if it doesnt work out its not the end of the world. Really though I can foresee so many problems with this plan, if you have £12500 to invest it would be a lot less hassle to put it in the bank. However I guess if youve done your homework and youve got good people helping you out there it could work out.

This is all very true.

I would suggest that anyone interested in Japan should take a look at the demographics.

The population peaked a couple of years ago and is likely to fall rapidly in a few year time

as the baby boomers of 1946 to 1949 start to peg it. Also, Japan's legions of concrete

pourers build around 1 million houses and flats per year, I doubt if the same number are

demolished.

It is likely that Mrs Dweller and I will retire to Japan but I wouldn't consider buying

as an investment.

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