These can be considered interesting times for real estate investors. While markets in Southeast Asia offer the lure of high yields, countries like Vietnam, the Philippines and Thailand are all prone to some amount of risk. Meanwhile, with the impact of Brexit and the presidency of Donald Trump still unknown, so-called safe haven markets like the US and UK aren’t as much of a sure bet as they have been in the past.
This is why some Malaysian investors have begun turning their attentions to Japan, a market with no political volatility and a proven ability to bounce back after turbulent events. The Japanese real estate market has managed to recover after the 90s bubble collapse, the global financial crisis and the massive 2011 earthquake.
The country also offers something emerging markets don’t have, a large, developed economy. Additionally, tourism is rapidly expanding in Japan with Tokyo among the most visited cities in the world. And with the Japanese government looking to allow more foreign workers into the country, real estate investment in cities like Tokyo could be a shrewd play.
In fact, the only thing stopping more property investors from entering the country has nothing to do with the performance of the market itself.
“The biggest thing deterring people from buying Japanese real estate is the language barrier,” Sato Tsutomu, Managing Director of HJ Real Estate, explained. “It can cause some complications in the process, but it is easy to overcome with the help of an expert. There are also considerations you will need to be aware of when it comes to financing and capital gains tax, but the process of buying real estate in Japan is straightforward and transparent.”
Unlike some markets where ownership rules regarding international buyers can be complex, there are no regulations or restrictions when it comes to non-resident ownership of property in Japan.
“Japan offers freehold ownership for international clientele and your name will be shown on the title deed,” Sato said. “And unlike Hong Kong, Singapore and Australia, where buyers from abroad are hit with a stamp duty tax, international owners are not obliged to pay any additional taxes when buying Japanese real estate.”
Japanese real estate affordable for Malaysian investors
Another advantage Japan has on those markets is price. While property in the country is not cheap when compared to developing markets like Vietnam, Thailand and Indonesia, it does cost significantly less than in Hong Kong or Singapore.
“Housing in central Tokyo can cost the third of a similar unit in Singapore and this is something interesting to buyers,” Sato noted. “International investors are also attracted to Japan because of the weaker yen which helps make property prices reasonable.”
Another factor working in Japan’s favour is domestic demand. Whereas London is now overly dependent on foreign demand, there is still strong domestic demand in Tokyo. This is something that is important for a healthy residential market.
“Nearly 50 percent of the population in Japan are renters and renting is not necessarily something that is seen as being negative,” Sato pointed out. “Many people in the country work for larger corporations and move every three-to-five years. This means it isn’t always practical to own a home and ensures the rental market is solid.”
Find a partner who knows the Japanese market
Regardless of if you are looking to purchase a single unit or are a large-scale investor, Sato stressed that it is important to work with a firm that not only knows the market, but can also help with all aspects of a potential deal. HJ Real Estate is an associate company of Housing Japan K.K. an international real estate broker in Tokyo, and HJ Asset Management K.K, an independent asset management firm.
The officially licensed Singaporean agency serves as a one-stop shop for international clientele and can help buyers from Malaysia and Singapore find the best luxury homes and investment properties in Japan as well as translate and close contracts in English. HJ Real Estate also offers complete property management, asset management services and can assist with structuring deals that contain efficient tax and financing.
This story appears in the May/June issue of Dot Property Magazine.