Why invest in Japan?
1. Supportive economic policies
Japanese government is determined to end a two decade period of lacklustre growth. Its new prime minister, Shinzo Abe, has pushed through aggressive economic reforms called “Abenomics” in a bid to kick-start growth and end stagnation. It involves a massive increase in fiscal stimulus through government spending, a massive increase in monetary stimulus through unconventional central bank policy and a reform program aimed at making structural improvements to the Japanese economy. In some ways, this is effectively the same strategy that has been used in both the United States and the United Kingdom and is known as quantitative easing. Quantitative easing has been the stimulus for housing prices in both the US and UK.
2. Political stability
With the Liberal Democratic Party (LDP) winning both the Lower House and Upper House Elections in 2012 and 2013 respectively, the Abe government will not see another election until summer 2016. This would give the Abe government sufficient time and power to implement “Abenomics” effectively. This is favourable to foreign investors as the political stability of the Japanese government would imply lower overall risks for foreign investors in general.
3. Rising land prices
Developed land prices in Japan have started to rise in general, with data showing that 81% of intensively used land in Japan showed increases in prices in 4Q2013. Rising land prices bodes well for the Japanese real estate market, and would provide considerable upward pressure for property prices to increase.
4. Strong rental market
Like Singapore, major cities in Japan enjoy high occupancy rates. Based on fund and REIT data, the residential occupancy rates for Tokyo is around 95%. Furthermore, rents in Tokyo seem to be non-cyclical in nature, remaining resilient even during downturns. High occupancy rates and stable rental yields would drive demand for investment in Japan.
5. Olympic boost
Winning the rights to host the world’s biggest sporting event is positive for Japan’s revival efforts. The 2020 Olympics would be the best opportunity to showcase Japan’s developed infrastructure, high standard of living and unique culture. This would drive tourism growth and create increased demand for Japanese real estate.
Source: OrangeTee.com retrieved 22 Aug 2014
