Real Estate: Japan and Trends in Foreigners

Feb 21, 2019


Japan professional baseball team, Orix Buffaloes announced that they will sell tickets by “dynamic pricing (Price variation system)” from the game with Rakuten on July 16, 2019. This is a method of selling tickets that incorporate AI (Artificial Intelligence) which is the first attempt of the professional baseball industry.

 

This means that popular games are an attempt to raise the ticket price and vice versa. Some people may feel that they are not familiar in Japan, but in fact, this kind of system is common in the aviation industry and the travel industry from long ago. And the fact that such systems are spreading in various industries means that the movement to emphasize “equity” rather than “equality” is advancing in Japan. It also suggests that the way in which prices fluctuate due to “demand” and “supply” will further expand.

 

The real estate industry is no exception. Rather, the real estate industry is greatly affected by “demand” and “supply”. Prices of real estate with demand soared, prices of real estate oversupplied will fall. However, at present, the Japanese real estate industry is totally contrary to its basic way of thinking. Please see the figure below.

 

※Created by the author from real estate registrations in the metropolitan area data from Zentakuren and Real Estate Institute

 

This figure was created from registered real estate information from 2014 to 2018. And it shows the trend of the registered number of single apartment real estate in the Tokyo metropolitan area and the trend of real estate in stock.

 

Looking at this, you can see that the number of registrations and stocks has increased dramatically since 2014. However, as stated in another article (link of column ①), real estate prices in Japan are showing a sharp rise recently.

 

In other words, although the price of real estate now rises and the number of properties is increasing, it is suggesting that real estate sales are becoming difficult. In the real estate industry, there are not a few people who believe that the disparity in the movements of real estate trading is expanding with properties that can sell and properties that do not sell, as properties are soaring up too much.

 

 

There are many people who anticipate that this price is too expensive and enormous inventory becomes a problem, and from the viewpoint of “demand” and “supply”, the collapse of real estate prices which is considered to occur naturally is close. For this reason, it is true that there are many people who request sales.

 

In fact, it is also true that many people are asking us to assess the property. However, even if it is put out for sale, it will be meaningless unless it finally sells. What is important here is who will purchase it when it is sold and who will benefit from purchasing. Please see the figure below.

 

 

※Created by an author from the survey of Urban Future Research Institute

 

The above is the contents described in the Nihon Keizai Shimbun on January 6, 2018. It shows the amount and proportion of foreigners buying Japanese real estate. Looking at this, the percentage of Japanese real estate purchased by foreigners is on an increasing trend year by year, and in 2017 about 24% of Japanese real estate is purchased by foreigners. So why do foreigners buy Japanese real estate that is soaring?

 

※Created by an author from calculated by subtracting 10-year government bond yield from investment yield of high-class office by Jones Lang LaSalle survey

 

The above graph shows the difference between the investment yield of Tokyo real estate and the borrowing rate from Japanese banks. If you look at this, you can see that the numerical values in Tokyo are very high compared to other countries. As a result, foreigners who feel the merit of purchasing real estate in Japan are purchasing Japanese real estate.

 

Japanese real estate has soared so high that it has become quite difficult for Japanese to purchase, but it can be said that it is still more attractive from a global perspective. When selling something, it is a theory to sell to people who feel the merit. So, when selling real estate, I think that it is important to consider selling real estate to foreigners.

 

My company LINC specializes in activities utilizing the sales route to foreigners as a real estate agent specialized for foreigners. When you want to assess your precious property, please ask our agent.

For a personal consultation or to join the ” How to Sell Buy and Sell Property in Japan” Seminars please sign up at the form below:

 

https://docs.google.com/forms/d/e/1FAIpQLSe95Jhp-WantePXtbwVNsnRJTSfwMgffvO1TkjeeBjbrbmDtA/viewform

 

For more information about the seminar check out this article:

Free Seminar: Introduction to the Way to Buy Your Dream Home and Sell Property in Japan!

Real Estate: Selling Price and the Impact of Interest Rates

 

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