For Japanese companies, once known (and sometimes hated) for foreign takeovers and buying up foreign real estate, things have changed. Today it’s foreign companies and individuals who are coming to Japan and purchasing Japanese real estate and businesses. The struggling Japanese economy has taken a toll on the real estate market, which has seen prices fall up to 30 percent. Japan is now considered a bargain for foreign investors. In addition, it has become more and more difficult for even major Japanese companies to get long term financing from banks, which means many have turned to foreign investors to help them both at home and abroad. All of these trends have made the Japanese market quite attractive to international buyers, especially those from China and other nations with money to spend. While many Japanese are resistant or apprehensive to selling companies and real estate to foreigners, they realize that they must sell in order to survive and gain access into foreign markets.
Having recently surpassed Japan as the world’s second largest economy, China and its citizens have the money to spend not only at home, but also abroad. The number of Chinese visitors to Japan has skyrocketed in recent years as many cash-rich Chinese come to Japan to shop for not only electronics and cosmetics, but also Japanese companies and property. As Japanese property prices have fallen, many Chinese have purchased homes and property in Japan, often paying cash. Properties are also often purchased for cheap prices at court-ordered auctions following foreclosures.
Real estate companies in Japan have noticed an increased interest in the Japanese market from Chinese buyers and some companies are holding seminars (attracting hundreds of participants) for wealthy Chinese. These seminars explain more about Japanese real estate and show Chinese buyers that Japanese property is much cheaper than Shanghai or Beijing (where prices have skyrocketed), is of high quality, and that owners can make money by renting. The low-interest rate and low financing costs in Japan, as well as increasingly overseas-buyer-friendly policies of Japanese banks, make the market extremely attractive. In addition, according to an article in the China Daily, Japan’s developed infrastructure and legal system, along with its unrestrictive policies on foreign national property purchases and its pro-landlord environment in the rental market draw investors from overseas.
Wealthy Chinese have been buying real estate for personal use and for investment purposes not only in cities, but also the countryside of Japan. Even in the northern island of Hokkaido, many Chinese have purchased vacation homes for prices around 30 million yen. Chinese buyers are also purchasing upscale accommodations such as resorts or hotels because domestic demand for them has fallen in recent years. Buyers are often interested in purchasing investment properties and then renting them out since Japanese rents have not fallen as much as property prices. Chinese are also interested in purchasing, renovating, and then selling properties to other Chinese businesses.
Investments from Singapore into the Japanese real estate market have increased in recent years as well. Many companies see the struggling Japanese market and low prices as a huge opportunity. Furthermore, they are attracted to the built-to-suit logistics properties around the nation that can generate stable rent. For foreign investors, Japanese logistics properties are attractive because of Japan’s advanced technology and manufacturing capabilities, as well as the growing demand for online services and shopping.
Some examples: In 2008, a Japanese real estate fund sold the Tokyo Westin hotel to Singapore’s Government Fund. The slowing Japanese economy means that consumers are spending less and the Japanese hospitality industry has suffered. Other companies from Singapore have invested in residential as well as hospitality properties, including business hotels around the capital city of Tokyo. Also, property developers from Singapore and Southeast Asia have expanded business in Japan over the past several years and now operate a variety of properties in Japan including shopping malls, rental apartments and other commercial investments. Recently, Mapletree Investments, a Singaporean real estate firm, announced plans to launch an 80 billion yen Japanese property fund to expand in business-related properties including data centers, research and development facilities, and office buildings outside central Tokyo and major cities.