Foreign buyers pushing up land prices in Japan? ? Real Estate ...

Foreign buyers are reportedly joining the apartment buying frenzy in Japan.

The recent weakening of the Yen by up to 20% means an offshore buyer can now save as much as 20 million Yen when buying a 100 million Yen apartment (assuming they were initially planning to buy last year but put it off until now).

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) announced the results of their assessed land values (koji-chika) in March.

The most surprising observation from the report was that the highest increase in land values in Tokyo?s 23 ward was an area in Tokyo?s manmade islands that is at risk of liquefaction in a major earthquake ? Toyosu 4 Chome. This area saw residential land prices increase by 2.8% over the past year. The continued development of the area into a high-rise residential and commercial hub is creating an unexpected bubble.

Seminars targeting foreign buyers

In February, Jones Lang LaSalle held a Japanese real estate seminar in Singapore targeting wealthy buyers. It was said to have been a great success. Some of the condominiums marketed at the seminars include 24-hour room service, linen change and housekeeping, dinner cruises and night helicopter flights.

Over 200 prospective buyers were invited to the two day event, which resulted in offers made on five apartments and a number of apartments being reserved. Of the 65 apartments offered for sale to this group, almost 30 were sold.

Another high-rise condominium in Roppongi was also marketed to Singaporeans, with positive sales on apartments priced over 100 million Yen. One visitor said that she did not feel there was a huge price difference between apartments in Singapore and Japan, and found the Roppongi area appealing as it was famous for being a celeb-hangout.

The weakening Yen is supporting the buying activity from foreigners in Japan.

If a foreigner had purchased a 100 million Yen apartment last year when 1 USD was 80 Yen, they would have paid 1.25 million USD. The Yen has now dropped to about 1 USD / 98 Yen which means the same apartment could be purchased for 1.02 million USD ? a saving of almost 20%.

At the event in Singapore, apartment prices were listed in Yen along with their Singapore-dollar equivalent.

(Foreign buyers need to be aware of the exchange rate risks when buying real estate overseas. At the time of the event in February, 1 SGD was around 75.5 Yen, so a 100 million Yen apartment would have cost the buyer about 1.33 million SGD. The Yen has since weakened further, so that 100 million Yen purchase would now be about 1.25 million SGD in May, losing the buyer about 6% in 3 months.)

[Currency rates used here are different to the retail rates available to consumers]

Chinese real estate tours

Foreign buyers are increasingly noticeable at apartment showrooms in Tokyo. A salesman from a European securities company near Roppongi said ?the reason that the staff of foreign companies are being aggressive buyers is due to the exchange rate.?

Chinese and Taiwanese buyers are also being lured to Japan on real estate tours. Areas convenient to Narita and Haneda Airports are popular with such buyers. These buyers were not active in 2012, and many suggested it was because of the renewed dispute over the Senkaku/Diaoyu Islands. However, the real reason was said to be the high Yen at the time.

Popular areas with foreign buyers include Toyosu, Roppongi, Azabu, Aoyama and Akasaka.

A salesman from a major developer explained that ?after the Lehman Shock, many foreign corporations pulled out of Japan and the luxury rental market suffered considerably. However, the sales market did not suffer as much.?

President Oki of Attractors Lab said there is a pattern where the value of apartments drops by an average of 12,000 Yen/sqm per year. However, in the popular expat areas of Azabu, Aoyama and Akasaka, the prices drop much slower, if at all. Because there is a very small supply of new developments, demand remains strong.

An employee of a foreign financial company said his foreign boss once remarked that he didn?t consider any executive rental apartment outside of those three expat areas to be ?Tokyo?. However, this belief has changed in recent years as surrounding areas see a rise in the development of luxury residences. Toyosu is on area is seeing growth in foreign residents. It?s elementary school now has students from China, Korea and Russia,

Editor?s Note:?Zoe Ward is the publisher of?Japan Property Central?and has extensive experience in the Tokyo real estate market, working for some of the advertising agents on Real Estate Japan.

Tokyo Apartments For Sale | Tokyo Apartments For Rent | Real Estate Japan

Source: http://www.realestate.co.jp/2013/05/20/foreign-buyers-pushing-up-land-prices-in-japan/

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