You Asked Us – Can Foreigners Buy Shops in Japan?

Japan Investment Shops

Investment Shops Japan

18 Apr, 2018 –

Following our last piece in this series, which detailed statistics and strategies to profiting from shops and other retail properties in Japan, we received the following question from a reader –

Q: How easy or difficult is it for foreigners to enter the retail scene in Tokyo, in terms of buying units at shopping malls or other commercial lots? Is there a glut of retail space in Tokyo? If so, are there any bright spots eg. niche or high-end or themed malls? 

A: While there is nothing that limits non-resident foreigners from buying any property in Japan (aside from very specific, cultural heritage or agricultural properties) – there’s a big difference between commercial units in otherwise residential of mixed purpose apartment blocks (street shops) – as opposed to wholly commercial buildings or shopping centers (malls and department stores). While ground floor shops or offices in a mixed purpose building can be purchased by anyone, similar to a residential property, and then leased out to business owners – the situation is quite different with wholly commercial blocks, which are normally entirely owned by a single, licensed operator. That operator runs the entire complex, and provides utilities and services to its entire renter community.

Investing in Shopping Centers

In the latter case, business operators would be required to apply to the building or centre management if they wish to lease shop or office space – those spaces would normally only be available for renting, and not for purchase individually. The operator, on their part, would be required to provide certain services such as infrastructure, in-house advertising space, floor and building maps references to the business, daily or weekly rubbish disposal, etc. While it is definitely possible for foreign investors to purchase and run an entire commercial space structure, and while there are management companies who will be able to then operate the center on your behalf – this of course adds an entirely new layer of complexity to the investment, which becomes more than a simple real estate and rental management transaction. In effect, you will now be running a fully pledged business operation, which would often require hiring, providing for and training of staff, out-sourcing of advertising, stock management, etc. The closest equivalent is probably purchasing and running a hotel or other guest or short term stay accommodation business, as opposed to “straight out” real estate property investment.

Where to Buy?

As for attractive locations – there are plenty of those, in Tokyo and beyond. While traditionally, spots located within walking distance to the JR Yamanote line (Tokyo’s central “circle” train line, which runs in a loop around its main suburbs) were all considered its prime business locations, these days the profitability map has expanded far beyond it, as new and attractive suburbs are being developed and re-developed regularly. Additionally, areas around Tokyo, such as Chiba, Yokohama and Kawasaki are also highly desirable – as are various areas in Japan’s other big cities, such as Osaka, Nagoya, Sapporo, Kyoto, Fukuoka, to name only a few. In fact, when considering the reduced purchase prices in other cities, percentage yields tend to be higher out of Tokyo, as they are in all Japanese real-estate property investment market sectors.

(Source – Ziv Nakajima-Magen, Nippon Tradings International”, Pic – Investment Shops in Japan / “Ziv Nakajima-Magen“)

 

Municipalities and Condo Associations Call the Shots on Japanese Short-Term Rentals

Japan Real Estate

Japan Short Term Rental Property

10 Apr, 2018 –

A new law will go into effect in June to regulate minpaku, private residences rented out by their owners as short-term lodgings. To most, the new law will address changes that have occurred in recent years due to the rise of Airbnb, the worldwide online service that allows travelers to book rooms in private homes directly from the owners of those residences.

Japan has long had a similar type of system called minshuku, which usually involves rooms in private homes that are offered as lodging. But people who want to let rooms as minshuku must apply for a license, which requires that the room be a certain size. Also, a management-type person must always be on the premises. These rules, however, have never been strictly enforced, which is why Airbnb was able to gain a foothold in Japan, even though, technically, such rentals are illegal.

The new minpaku law will lower the legal hurdles for renting out properties as short-term lodgings. Currently, only certain specially designated districts allow minpaku rentals, but after June 15, in principle, minpaku rentals will be permitted throughout Japan. There will no longer be limitations on room size. Nor will representatives of owners be required to be present on the premises. Local governments, however, can also implement their own restrictions and conditions. Kyoto, for instance, will mostly prohibit minpaku from being operated in residential areas.

One of the new conditions of the law is that people who wish to rent out properties as minpaku must register with the land ministry. In fact, the ministry is already accepting registrations, so presumably owners can start renting out rooms when the law goes into effect. Probably the most contentious aspect of the new law is that it contains no restrictions with regard to the type of property that can be used.

One of the main sources of complaints about Airbnb rentals has been condominium owners and tenants who object to neighboring units being used as de facto hotel rooms without their approval. The new law will not expressly address this problem, but the land ministry has drawn up guidelines for owners associations that wish to ban minpaku from their buildings. The problem is that the law was only written four months ago, meaning few owners associations may know about the guidelines.

Associations can ban minpaku, but after June 15 they must include any prohibitions in their own sets of rules and regulations, otherwise they will not be legally binding. And according to the law, since associations must gain three-fourths approval of their voting members to amend their rules, adding such prohibitions could be difficult. Presently, under the special district rule, minpaku can still be banned by condo associations without any kind of formal declaration in writing.

Consequently, the new minpaku law could exacerbate well-publicized existing problems associated with Airbnb properties, such as garbage being thrown out on non-designated days, visitors staying up all night and making lots of noise and, most significantly, loss of security. Many modern condos have auto-lock systems that require residents to first use a key or key code to enter the building and then another key or key code to enter units, the point being to keep non-residents out of the building unless a resident is there to give allow entry.

This situation will become more of an issue because many minpaku owners don’t live in the buildings where they have rooms. In Osaka, for example, two-thirds of Airbnb owners are non-Japanese who don’t live in the country. There are, for example, Chinese real estate companies that sell Japanese condos to Chinese investors and then manage the units as minpaku. The owners may never even physically see the unit they bought. The new law will also do away with a current minimum-stay rule, which states that a person must stay at least two nights in the rented property. (Previously, it was six nights.) However, if owners don’t live in the building where they rent rooms, they will be required to hire a management company to take care of the property.

This condition will make it more difficult for owners to make money, since some management companies take as much as 70 percent of the rental fees for themselves. If owners simply want to rent out rooms to pay for property taxes and mortgages, what remains may be enough, but another new rule says that they cannot rent out a room for more than 180 days in a given year, which will further limit potential profits.

Despite this, landlords having trouble keeping long-term tenants could find the minpaku business more financially rewarding, since they can charge more on a per-night basis. The government is thus hoping that minpaku can alleviate some of the problems associated with the growing number of vacant houses and apartments in Japan, many of which are available for renting but stay empty for long periods of time due to the dwindling number of renters.

More and more housing portal sites on the internet will likely offer minpaku. On March 15, the real estate site Apaman, which represents 200,000 property owners and landlords, registered itself as a management agency for minpaku. The proliferation of such portal sites, however, could cause regulatory problems. If a property is offered on more than one site, it may be difficult for the portals to keep track of how many days the property has been rented out, meaning the owner could end up going over the yearly 180-day quota. The new law will slap a ¥1 million fine on violators — if they are found out, that is.

The main merits of minpaku are to the customer. Minpaku are usually cheaper than hotel rooms and there is no limit as to how many people can stay in a unit. Hotels, of course, are not happy with the new laxer law, and will be even less happy after the present tourism boom deflates following the 2020 Tokyo Olympics.

Right now, the hospitality industry is busy creating more hotel rooms for the Olympics, which means there could be a glut in the future. Minpaku may aggravate the problem, but we really won’t know until the new law goes into effect.

(Source – The Japan Times, Pic – Apartment/House / “Michael Coghlan“)

How to Profit from Japan’s Retail Market?

03 Apr, 2018 –

Retail Heaven

Japan Investment Property

Japan Retail

According to JETRO (Japan’s governmental external trade agency), Japan boasts the world’s second largest retail market, with a sales value exceeding US $1,3 billion (150 trillion yen).

Being a mature, quality and luxury oriented consumer market, the country has been a natural destination for any and all global brands seeking to establish their presence in Asia for many years, with spectacular results. 35% of Asian tourists from countries such as China, Taiwan, Hong-Kong and South Korea, who are traveling to Japan, cite their main reason for visiting as “shopping”. Local Japanese shoppers are also a force to be reckoned with – often labelled as “obsessed with consumerism culture”, for better and worse.

Key sectors in the country’s retail market are high-end specialty stores, apparel specialty stores, and lifestyle/environmental products – all of which are readily available not only in shopping hot spots such as Tokyo’s Ginza, Omotesando, Shibuya and Shinjuku, but all over the country, in other large metropolitan centres such as Osaka, Nagoya, Fukuoka and Sapporo, to mention only a few.Shopping malls, supermarkets and street shops are bustling with activity during all hours, fashion is a major driving force for men and women alike, and even the two “lost decades” of deflation, which the country has only recently broken out of, did not seem to diminish the Japanese passion for shopping – as a walk down the street down any of these major shopping districts would have demonstrated at any point in time during those years.

 

Current Retail Status

As the graph above, taken from Mitsui Fudosan’s 2016 statistics publication shows, total retail in Japan is generally on the rise, aside from a small slump, due mainly to a sharp drop in Chinese tourist numbers between 2008-2015 (as a result of increased import duties in the mainland).

Two interesting main trends evident from that same graph, are the following –

1.      Supermarket shopping has long surpassed department stores as far as total retail sales numbers are concerned, and is likely to remain so. This trend has further intensified in 2017, as clothing, goods and apparel are sold more and more online – while Supermarkets, selling consumable goods such as foods and beverages, aren’t as susceptible to online competition.

2.      The by far large majority of retail sales in the country, however, aren’t in either department stores (or “Depaato” as they’re known here), nor in Supermarkets – but in “other retail” – namely, street shops, train and subway station shops, outlet malls, and small businesses– and of course, ever increasingly – online.

The Property Investment Perspective

As explained in depth in our annual summary, rents and prices for retail commercial properties have barely budged throughout 2017, in line with general Japanese property market trends – and prime location retail rents have actually decreased in Tokyo, previously the heart of the nation’s shopping culture.

Furthermore, multiple new shopping mall projects announced in Tokyo and beyond have created an expectation for more stock to soon hit the markets, which will naturally further taper the potential for price hikes in rents and purchase prices.

The same report, however, also points to two main macro-economic indicators which are expected to continue and buoy investment in coming years –

a)      an increase in Japanese consumer confidence – now at its highest since the 2014 consumer tax hike (further boosted by the postponement of the next scheduled tax hike to late 2019)

– and –

b)     an increase in retail sales since July 2016 – with increasing tourist numbers – this trend is expected to continue until the 2020 Olympics at the least.

How to Profit from These Trends?

  • While ownership of a shopping center or mall can be an attractive investment, buying and managing such a property is an expensive exercise, and requires a Japanese presence for the purpose of running such a business, with all related aspects. Furthermore, with decreasing rents in prime shopping areas, as more and more customers turn to internet shopping – it may be far more feasible for foreign, remote investors to put their funds into smaller, “street level” commercial retail properties, which can be easily managed via standard rental leases (straight-out rental yield investment, as opposed to business management). These shops are also far cheaper, which provides investors with far better diversity and an option to hedge their investments, as opposed to investing in a single, high priced shopping centre.
  • The huge boom in internet shopping, and its expansion to the inclusion of same or next day service, has led to huge growth in the logistics real estate market (factories, packing houses, warehouses & shipping/delivery hubs) in the suburbs of most of the country’s large metropolitan centers – another sector well worth looking into. And, since this particular market is currently red-hot, with demand far outstripping supply, creative approaches such as acquisition of existing older properties erected on medium to large land-plots, with a view to demolishing and re-construction, is a highly profitable strategy.

(Source – Ziv Nakajima-Magen, Nippon Tradings International”, Pic – Shopping in Japan / “Ivan Walsh“)

 

Factors to Consider when Renting Out in Japan

Japanese Cash Flow Properties

Japanese Rental Properties

17 Mar, 2018 –

In the March – April issue of, “Asian Property Review” magazine, NTI’s Marketing Manager, Priti Donnelly shares tips to keep in mind when renting out your Japanese property.

Unlike other parts of the world where real estate investments focus on value, Japanese properties are a non-speculative investment mainly for monthly cash flow. That’s not to say there is no capital growth potential. After two decades of inflation, signs of economic progress have been quite promising, trickling down to the real estate market.

We have seen property values rise between 2012 and 2016. Since Prime Minister Shinzo Abe’s second term in 2012, the “Abenomics” plan produced significant progress in consumer confidence. Japan’s stock market almost doubled in value, increasing wealth of consumers. The yen fell by nearly one third against the U.S. dollar invigorating Japan’s export industries. Unemployment dropped. Entering 2015, Japan was positioned on an upward cycle on the back of the depreciation of the yen, partly due to a surge of tourists, and partly due to corporations relocating their production from overseas, back to Japan.  Although signs of economic progress continue to appear promising, stability is uncertain. Therefore, investors turn to Japanese properties not for speculative long-term value, but for month-to-month cash flow from rental income.

Maximize Yield

 Prior to purchasing a property, as part of your due diligence, you will have a chance to find out about the tenant’s history. If your tenant leaves earlier than expected, depending on the profile and location, it could take one to three months to repair, clean, renovate, if necessary, and re-populate. In some cases, where the location isn’t very attractive, and market conditions aren’t favorable, it could take as long as six months.

To protect yourself against the risk of extended vacancies, aim to purchase properties with the highest yield possible in a high occupancy area. If you own one or two units you would be at higher risk than holding a larger portfolio in which you can offset your losses in case of a vacancy. Therefore, for a low-risk income average, consider building your portfolio to be able to diversify your real estate assets to include properties with lower yields (6% to 7% net pre-tax) in metropolitan cities as well as higher yield, single units (upwards of 8% net pre-tax), in industrial areas or less central suburbs of the bigger cities.

Raising the Rent

 Once you own a property, you might be inclined to raise the rent for additional profit. Raising or lowering rents would not be common practice as long as the same tenant is occupying the unit. If you do raise the rent before renewing the lease, your tenant will probably not take the time to negotiate with you. Instead, he will likely move out to avoid any confrontation, leaving you with a vacant unit.

Since rent rates were higher prior to the economic downturn, some investors prefer to find properties occupied by the same tenant for several years because their rent will be higher than the current average. Until that unit is occupied by a new tenant, the rent is likely to remain the same. Keep in mind however, that when the tenant leaves, the rent would drop to the current rate, having an impact on the yield.

Term

Japanese leases are normally two years and automatically renewed unless the landlord notifies the tenant in advance. But, you will find that laws are tenant-oriented. The landlord would be required to give six months’ notice to terminate a lease, and tenants would need to provide one month. A security deposit of one or two month’s rent would be your best protection in case a tenant decided to move out mid-lease.

Small vs Large Units

Is it easier to rent out a large or small unit? The ideal location for a larger unit of 30 to 60 sqm would be in a metropolitan area where families have access to schools, hospitals, and shopping.  Larger units are harder to rent than smaller units, but once occupied, families stay for the longer term. Small units of 15 to 30 sqm are much easier to rent because of Japan’s large singles demographic. But, singles are more likely to move. Large or small…it really depends on the area, and, of course, on your budget and any other assets in your portfolio.

Age and Condition of Buildings

Some investors shy away from an older building on the assumption that if it’s old it must not be in great condition. The truth is, the condition of a building does not necessarily reflect its age. Older properties can be safe investments if they are well-maintained. While 1981 is the turning point for some investors as the year the Building Standards Act was revised for earthquake resistant construction methods, some older buildings built prior to 1981 can be retrofitted by regularly renovating, repairing and re-strengthening exterior walls to bring them up to code. The condition of a building does often dictate the type of tenants in the area — lower, middle or high income earners. Therefore, with careful due diligence on building repairs and the building’s accumulated funds, you can find a less expensive, well-maintained, older property occupied by tenants with stable income.

Short-Term Rentals

Short-term rentals, known as, “minpaku,” are becoming more regulated in Japan, especially popular in Osaka, Kyoto and Tokyo. Minpaku refers to rentals less than one month. Anything longer than that is treated as a standard rental lease. New legislative framework scheduled to come into effect mid-2018 allows owners to rent out their unit for up to 180 days a year. While short-term rentals could generate higher income than long-term leases, the caveat is, if you’re going to own an individual unit in a co-owned building, building management authorities can vote to disallow short-term rental agreements at any time. Therefore, if you are determined to rent out units on a short-term basis, a better investment would be to consider owning an entire building or a house in a popular minpaku area.

 

(Source – “First Published in ‘Asian Property Review,” Pic – Apartment Japan / “digital_studio_japan“)

You Asked Us – What Licenses, Permits, Business Visas and Taxes are Required for Non-Resident Landlords?

Japan Investment Property

Japan Real Estate

25 Feb, 2018 –

As long as a tenancy lease is made out for a period of one month or longer, there is no legislation, visas or any other complications you need to be concerned about as an owner.  There is no certification or agreement for either foreign or local landlords. Complications and hassles only arise if the lease is what’s called “minpaku”, which is defined by law as short-term leases of less than one month. For that matter, even if the tenant decides to move out mid-lease, and has stayed in the property for a shorter period of time, you would be well within your legal rights, since you made out a lease for a minimum term of one month.

Regarding taxes, you would need to legally declare your income for tax purposes, of course. Income tax is first billed in Japan, then the difference is billed in your country of residence. You might be tax free in Japan due to the low income stream in Japan, but still need to report your income in your country of residence. Your total Japanese income stream is taken into account as well as your tax situation in your country of origin. You can find the income tax thresholds on our website, here – http://nippontradings.com/taxation-information/.

As a non-resident, you would be exempt from municipal and regional taxes. However, the fixed asset tax is applicable to all property owners. For properties less than 200 sqm in size, the tax would be around 0.75% to 1.5% of the property purchase price per annum.

For specific and accurate advice, it’s best to speak to an accountant in both countries regarding tax matters.

 

(Source – Priti Donnelly, Nippon Tradings International”, Pic – Documents / “Nippon Tradings International” )

Q & A: Investing in Multi-Purpose Real-Estate Property in Japan

SOHO

Home Business

20 Feb, 2018 –

Q: Are there SOHO (Small Office Home Office) or its variants, SOFO and SOVO available in Japan? If I want to rent out my apartment investment, would it better to buy a serviced apartment or even better, one that is managed by a reputable hotel management company? Are these properties subject to commercial rates in terms of utilities, taxes, etc?

A: As shown in our recently published deal analysis, there are plenty of apartments in Japan that are designated multi-purpose – meaning, they can be leased as a residential property, business, or any variation of the two. However, the distinction lies in local municipality area ordinances and building management restrictions – from the landlord’s perspective, there is no difference in taxation or rates (although certain building management companies may charge slightly higher monthly fees for management for units functioning as businesses) . Corporate tax rates are applicable only in cases of corporate ownership of the property, regardless of whether it is used as a private residence, a business, or both. 

As far as serviced apartments go, these are normally only used for short term leases in Japan, and are known here as a “weekly mansion” or “monthly mansion”. These can be attractive investments if they are located in well maintained buildings, close to city centers or other convenient locations, and are well equipped with functioning kitchens, internet access and electrical appliances. In these cases, the management companies would normally charge approximately 30% of the gross rental income, and would in turn take care of all advertising, placements (check-in/check-out), cleaning and monthly reporting on behalf of the owner. However, the unit profiles required to make these apartments popular with short term tenants, which tend to be traveling business-folk or visiting tourists, would make the initial capital outlay a lot higher than most profitable “standard” apartments (more central, newer buildings, larger units etc).

Generally speaking, the best way to approach these potential investments is to first contact a local serviced apartment management company and ask them for the designated profile fitting their current stock – then look for appropriate units available on the market and see if the price and projected returns make sense.

(Source – Ziv Nakajima-Magen, Nippon Tradings International”, Pic – SOHO / “Froschmann)”

Condominium Residents Challenge Short-Term Accommodation

15 Feb, 2018 –

Japan Properties

Japan Real Estate

With more foreign travelers keen on renting Japanese private homes amid an inbound tourist boom, residents in high-rise condominiums are doing the opposite of what one might expect: forbidding vacation rental website services due to concerns about security and living conditions. Daisuke Shimada, 54, leads a tenants’ association group that campaigns against residents or owners of condos using their homes as “minpaku,” or paid temporary accommodation. He has been president of the building’s homeowners’ association for eight years. Its members, all of whom are condo owners, have given vacation rental services the thumbs down.

“Having tight security is one of the benefits of living here. We’re not prepared to deal with any trouble caused by unfamiliar visitors” from inside or outside the country, said Shimada, referring to the 44-story Apple Tower building whose amenities include onsen hot spring baths in each apartment and stunning views of Tokyo Bay. Residents of the condo located in the Shinonome area, which is one of several luxury buildings adjacent to the area that will host the 2020 Tokyo Olympics and Paralympics, say they worry about noise and other trouble, such as visitors not complying with garbage disposal rules.

APA Community, a condo management firm, oversees about 30 housing complexes in the capital. “Almost all of those under our management service in Tokyo have drawn up new regulations forbidding home-sharing and paid accommodations,” said Yuichiro Fujimoto, 36, who is in charge of management services at the Apple Tower. The firm checks vacation rental websites almost monthly to ensure Apple Tower apartments are not listed.

Some homeowners’ associations in the neighboring Ariake district, where high-income individuals have purchased apartments as investment property, have taken similar measures to prohibit owners from renting out their properties for profit. They say they are wary of unfamiliar people staying in the properties. The district is known for its iconic night-time harbor view, featuring the Rainbow Bridge that connects Tokyo with the artificial island of Odaiba across Tokyo Bay.

Japan has seen an increase in demand for lodging amid a surge in foreign visitors combined with a shortage of hotels and inns. The number of overseas visitors has grown by an average of 34 percent annually from 2011 to 2016. From January to October this year, it surpassed last year’s record of over 24 million and the figure is expected to exceed the government target of 40 million in 2020. Vacation rental website providers, such as Airbnb Inc. and similar local businesses, have played a key role in catering to this increasing demand to shelter inbound tourists.

But having visitors stay in private housing without the permission of local authorities is illegal under Japan’s existing lodging business law, except in areas designated for minpaku accommodation with approval by the central government. However, the current legal framework has not prevented headaches for neighbors of housing units used to accommodate travelers. According to a 2016 survey by the Health, Labor and Welfare Ministry, 83.5 percent of private lodgings are run without authorization, or under the radar of local authorities. In more than half of the cases local authorities are unable to contact housing owners or operators, another survey by the ministry showed.

Amid suspicion over unlawful business operations, complaints by residents and public authorities, such as police and fire departments, to municipal governments nationwide ballooned to 10,849 in the year to March, up 1,413 from a year earlier, as familiarity with the new business practices became widespread. Rumi Yamazaki, sales promotion manager at a property investment consulting firm in Tokyo, said at a seminar for investors that gross revenue per square meter from private lodging businesses is 4.8 times higher than rooms rented normally.

In June this year, the Diet enacted a law that allows property owners across the country to rent out vacant homes or rooms to tourists for up to 180 days per year after notifying municipalities. The law will come into force next June. Prior to this move, Sumitomo Realty & Development Co., the country’s largest supplier of condos and apartments, started including a ban on paid accommodation in a regulation draft for some properties it has sold since April 2015.

Some homeowners’ associations at existing condos have also revised regulations on vacation rentals, following proposals by Sumitomo’s housing management firm affiliate. Security appears to be a major source of concern. “Security is supposed to be ensured by multiple measures at a condo. The homeowners’ association assumes to know who lives there,” said Toshiya Suzuki, spokesman for Sumitomo. “Security systems will collapse internally if many unspecified persons are allowed to enter the property.” Tokyo’s Koto Ward, which encompasses about 3,700 private housing buildings, including a number of high-rise condos in the Tokyo Bay area, opened a reception counter for revisions to condo regulations in late September.

Similar moves have been seen across the majority of Tokyo’s 23 wards after the government proposed in late August a revised prototype for the regulations of homeowners’ associations that aims to encourage measures preventing issues in the private accommodation business ahead of the new law’s enforcement next June. Hideaki Umemura, head of the housing division at Koto Ward office, said, “Some locals tell us they have recently seen unfamiliar foreigners frequenting private housing,” he said, adding that some have made requests to strictly ban minpaku in their buildings.

The Mizuho Research Institute said in its latest report that a hotel shortage in Japan would continue toward 2020, adding that Tokyo may face a serious shortfall around the Olympics and Paralympics. But for Shimada, back at Apple Tower, peace of mind outweighs meeting the increasing accommodation demand — especially if vacation rental businesses are flouting regulations and buying properties only to reap profits.

“There is no guarantee that every single resident and owner will follow our regulations,” said Shimada. “Our owners association will issue an advisory to stop such practices first, and prepare for lawsuits as a next step. With the central and local governments boosting minpaku business, we are concerned that professionals or entities in the private lodging business might launch their services by buying rooms here.”

(Source – The Japan Times, Pic – Shibuya Crossing / “inefekt69“)

Japanese Real Estate 2017-2018 Summary, Predictions

31 Jan, 2018 –

It’s that time of year again – as 2018 kicks into gear, all major real-estate industry players have published their annual 2017 statistics, summaries and, perhaps most importantly, predictions for the coming year. As always, we will attempt to collate this vast amount of data into major takeaway points and actionable items for investors in Japan’s property arena, who are wondering where to place their bets this coming year.

Tokyo Real Estate

Unprecedented competition for assets

A recurring trend in all major Asian investment destinations, which has featured majorly in Japan as well, is the constantly increasing inflow of capital into the region. As the vast majority of investors have reported an overwhelming tendency to buy and hold existing assets, as opposed to selling – due mainly to the high demand and severe lack of attractive new deal potentials – transactions have been slow and far between, with attractive deals being snatched in a heartbeat, either by asset-starved private investors and funds, or by the continuous influx of institutional investors, for whom even the ultra-low yields generated by prime core properties beats existing returns from other asset classes, mainly sovereign bonds, which have been trading at close to zero yield in Japan (PWC/ULI). This has resulted, for instance, in a huge drop in commercial sales volumes in Tokyo, traditionally one of Asia’s top two core markets, which have been down 33% for the first half of 2017 (RCA). This competition has also resulted in more creative investing and a focus on alternative asset classes such as logistics/warehousing (more below), assisted senior living, student housing and data centres – the latter, in particular, is gaining traction, as data consumption is set to more than double in Japan by 2020. And while almost all of the above asset classes require specialized operators who can profitably manage them, locating and partnering with such operators is an attractive strategy for those seeking higher yields in an ever-compressing environment.

Flight to provinces continues

As noted in last year’s predictions, this intense competition, coupled with an expectation for decreasing rents in Tokyo, have seen capital flight to other areas of the country, such as Osaka and Yokohama – both of which have now seen yield compression almost identical to Tokyo itself – as well as to other regional centres such as Fukuoka and Nagoya. This trend has been pronounced to such a degree that, even as Tokyo commercial transactions have dropped by a third, the national average has actually increased by 14% – purely by virtue of the afore-mentioned provincial transaction volumes. In fact, when taking all sectors of the property investment market into consideration, Japan’s other major outlying destinations now account for more overall transaction volume than Tokyo (CBRE).

This trend is due not only to the intense competition for viable assets in the nation’s capital, but also due to higher yields and highest potential for rent increases, however slight, as opposed to expected rent decreases in Tokyo throughout the course of 2018.

Co-working spaces take the forefront

Increasingly popular throughout Asia, co-working and shared office spaces have been the major demand driver for office spaces in many major markets – this trend, which leads to forecast increased vacancies in the office space, further boosted by a slight over-supply of new office developments, is one of the reasons commercial rents are stagnant or forecast to drop in major cities, mainly Tokyo (CBRE) – where office capital values overall have been second only to Hong-Kong, the world’s most expensive property market, in the second quarter of 2017 (PWC/ULI). And while, in the eyes of many traditional investors, that particular investment class is still considered unreliable and dubious, market reality seems to dictate otherwise.

Retail is losing its Mojo – Logistics flourish but are too hot to handle

Another break from the mould is the rude awakening that retail operators and owners have been going through – with the exponential increase in e-commerce as opposed to traditional brick and mortar shops and shopping centres. CBRE predicts that retail rents in prime areas will continue to trend downwards in 2018, as they have been doing throughout all of 2017. Another result of the e-commerce boom, which has been noticed and intensified, as predicted, throughout 2017, is the increased popularity of logistics and warehouse facilities in and around Tokyo and other major cities – while developers have been trying to keep up with demand, particularly in Tokyo, these assets are still red-hot and their prices continue to rise, which has led many investors to accept higher risk levels and adopt “built to let” strategies, which enable them to gain slightly higher yields overall – particularly since construction costs in Japan are now more reasonable and development more affordable as a rule, due to the depreciation of the Japanese Yen. However, the lack of available land for development in Tokyo itself hampers this strategy, and serve to further heat up the logistics sector, as demand far outstrips supply for this asset class. Some institutional investors have even taken to buying contaminated land, cleaning it up, which is a lengthy and complicated process, but leaves them with attractive land parcels in prime locations (PWC/ULI).

Another way in which retail operators and investors attempt to keep their retail assets profitable is by leasing out to food and beverage shops, or other retailers whose wares are less likely to be available or popular online – these types of tenants generally pay lower rents, but are more likely to stay in business over the long term, for lack of online shopping alternatives. Some shopping centre operators have even converted some of their retail space into warehouse facilities for e-commerce operators, adopting a less profitable but more practical “if you can’t beat them, join them” mentality.

Commercial is “out” – residential is “in”

As the buzz of “Abenomics” (prime minister Shinzo Abe’s economic re-invigoration policies, first rolled out in 2012) dies out, property price hikes taper off, and rents become stagnant again (and, in Tokyo, are forecast to decline, as mentioned), the global mindset towards Japan has come to terms with the country once again shifting back into a low inflation, low interest rates and low growth environment, as predicted – as evident by the almost completely stagnant land price graph for 2017 (Mitsui Fudosan). While Japan’s Real Estate Institute (JREI) forecasts slight price hikes on condominiums until 2020, as industry expert JPC (Japan Property Central) correctly states –

“Forecasting future property prices is an impossible task and data can be unreliable due to the unpredictable nature of the market and the factors influencing it.  Back in 2014, the Institute forecasted that the average price of a new apartment would be 816,000 Yen/sqm in 2020, while the latest forecast puts it at 959,000 Yen/sqm (a 17.5% difference).”

The fact that Tokyo condominium prices are now approaching their last pre-bubble peak in 1991 (Real-Estate Japan), also constitutes a Psychological barrier for many potential buyers, and further adds credibility to the concern that further price hikes may be un-likely. Japan’s GDP growth forecast, although recently slightly updated by the OECD to 1.2%, is also grinding down to a halt, and while it hasn’t slipped back into deflation, also hasn’t seemed to recover significantly since its last peak at 2010 of 4.2%.

With all this in mind, many investors are now shifting their focus from commercial properties to residential real-estate, which is considered far less volatile as far as vacancies and rents are concerned – since businesses open, close, upgrade and downgrade with the economy – while everyone still needs a place to live. This further boosts an already competitive arena of residential property investors who either buy or develop residential properties to rent. And while there is a large question mark over the prospect of rent increases in this sector as well, due to wage inflation stagnation, the move from commercial to residential, which has further increased competition on the residential front, has also contributed to the migration from Tokyo to other investment destinations in Japan, as yields have become too compressed for comfort in Tokyo and Yokohama (PWC/ULI).

J-REITs lose popularity

The compressed yields trend has, of course, not skipped the REIT market in Japan, which has lost approximately 8% of its value as of October 2017, with an average return of 4.2% overall. The fact that J-REITs are among the world’s most expensive per share, has led many investors to reduce their portfolio allocations for this asset class or, alternatively, switch over from a variety of hedged mid-level funds to either top, large asset oriented ones, or smaller, more specific alternative asset focused selection of those.

Hotels star ratings do not dictate popularity with investors

In the lead-up to the Olympics, which has seen a huge boost in AirBnb short term type operations and led to forecast 100% occupancy rates in Tokyo’s hotels, investors have also expressed great interest in low budget accommodation, as opposed to the traditional focus on 4 and 5-star resorts. The increased interest in Japan as a tourism destination has led to an ever-growing tourist influx, which includes not only luxury and corporate guests, but, first and foremost, low budget travellers – including mainland Chinese, who seem to have re-emerged as one of the Japan’s top tourist spenders (up 17.3% year-on-year as of May 2017 – PWC/ULI). These types of travellers prefer to invest their limited budgets in their trip rather than their accommodation. As a result, there has been a large spike in interest in 2 and 3-star hotels, who cater to this type of guest.

(Source – Originally published on “Plaza Homes, Pic – “Nippon Tradings International“)

 

Senior Residents in Hokkaido Welcome Ride-Sharing

Japan Investment Properties

Japan Real Estate

15 Jan, 2018 –

Business practices collectively known as the “sharing economy” are finding their way to Japanese regional governments addressing such problems as aging populations and scarce job opportunities. The sharing economy involves activities in which individuals can pay to borrow or rent underused assets owned by others, including not only vehicles and other physical items but also intangible assets such as time and skills. It offers solutions for demand that is difficult to meet by conventional administrative policy measures or existing private-sector services.

The town office of Teshio in Hokkaido launched a ride-sharing program in March last year in cooperation with an intermediary service company in Tokyo. Residents in Teshio regularly visit Wakkanai, a city located some 70 km away, by car for shopping or to see doctors, but Teshio has many elderly people who are unable to drive. The town office introduced a matching program to make ride-shares available to residents. The number of such trips stood at 55 as of the end of last October, covering a total of 80 people. Many senior residents use the program to visit hospitals. One of them welcomed it as “extremely helpful.”

Costs for the local government to introduce the program were limited to expenses for travel to the town by representatives of the ride-sharing arrangement company, the preparation of documents to inform residents of the program and a few other tasks. The ride-sharing program is “much more cost-effective” than on-demand bus or taxi services, said a town official involved in the program. But with more drivers needed for the program, the town office is considering measures to reduce related burdens, such as a dedicated auto insurance policy for ride-sharing work.

In 2014, the Nichinan Municipal Government in Miyazaki Prefecture started a project in cooperation with a crowdsourcing service company in Tokyo to outsource the writing of local news articles and creation of websites to residents. Crowdsourcing is the process of farming out work online to a crowd of people.The city office picked three child-rearing women for the project and provided lessons, including on how to get work, with the aim of enabling them to earn ¥200,000 per month each. Although none of the three has earned as much as ¥200,000 to date, due in part to the difficulty of setting aside enough work hours, monthly incomes occasionally exceed ¥150,000, according to city officials. In addition, one of them has landed a job at an information technology venture company, attracted to Nichinan by the city government, and continued both child-rearing and work, utilizing a teleworking system introduced by the employer.

Job opportunities for child-raising women are limited in Nichinan in the absence of big local companies. The project has proved that new work systems “worth challenging are possible outside urban areas,” a city official said. The central government is set to promote the use of “shared” activities to address local problems. Starting in fiscal 2018, which starts in April, the Ministry of Internal Affairs and Communications plans to carry out model projects solicited from local governments. A number of local governments are supporting the ministry’s plan, on the basis of projects they already have underway. They include the prefectural government of Yamagata, which promotes the use of volunteers to clear snow from roofs and support elderly citizens’ shopping.

The city of Inuyama, Aichi Prefecture, prioritizes child care support, while the Takeo city office in Saga Prefecture is working to establish a new transportation system for residents in sparsely populated areas.

(Source – “The Japan Times”, Pic – Aging Japan / “Hiro Kokoro Photo“)

JPMorgan Recommends Investing in Japanese Real Estate

Japan Cash Flow Properties

14 December, 2017 –

In order to take advantage of Japan’s prevailing easing monetary policy, JPMorgan Chase & Co.’s alternative asset management unit wants to invest in the country’s real estate and infrastructure. The news was reported by Bloomberg.

Although the European Central Bank and the Federal Reserve have started tightening monetary policies, Bank of Japan’s Governor, Haruhiko Kuroda, plans to continue with “powerful monetary easing” in order to encourage positive inflation in the country. According to the BoJ’s guidance for short-term interest rates and 10-year government bond yields, borrowing costs are expected to remain low in Japan.

The managing partner of JPMorgan Global Alternatives, Anton Pil, said, “Leverage is still very inexpensive in Japan, so you can use a degree of leverage to enhance returns. Many foreigners want to get exposure to Japanese real estate because the Bank of Japan is on a different schedule.” In fact, Pil believes that as the Federal Reserve sells bonds with an aim to reduce its balance sheet, alternative asset classes are likely to attract more attention and become lucrative for investors.

According to Pil, since investors nowadays look for non-traditional forms of fixed income, which can generate cash as well as serve as an inflation hedge, the Japanese real estate and infrastructure is becoming more attractive. However, Pil does not aim to use “significant” leverage. According to him, nearly 35% to 50% of leverage is sufficient. He stated, “If you go north of that, real estate doesn’t become the driver, but the leverage becomes the driver of your return.”

JPMorgan’s shares have gained 24.6% in a year’s time, outperforming 17.4% growth for the industry it belongs to.

(Source – Zacks, Pic – Real Estate / “Shinichi Sugiyama“)

Visitors to the 2020 Tokyo Olympics can Summon Self-Driving Taxis

05 December, 2017 –

Japanese Real Estate

Japan Business News

Carmaker Nissan plans to test self-driving taxis on Japanese roads from March next year. The company is partnering with Japanese software company DeNA, which operates online services for the gaming, healthcare and automotive industries. It will adapt a Nissan Leaf electric car, which passengers will summon using an app.

Nissan joins a growing band of carmakers trialling self-drive cars, including General Motors and Volvo. The free trials will be held over a two-week period in March in Yokohama. The Easy Ride system could be launched in Japan in the early 2020s.

“With ‘more freedom of mobility’ as its concept, Easy Ride is envisioned as a service for anyone who wants to travel freely to their destination of choice in a robo-vehicle,” Nissan said in a statement. “The goal is to allow customers to use a dedicated mobile app to complete the whole process, from setting destinations and summoning vehicles to paying the fare.”

Tokyo Olympics

During tests, there will be a staff member in the driver’s seat to comply with Japanese law. Customers, who can apply from now until 15 January, can select local destinations and sightseeing routes. Meanwhile, Japanese robotics maker ZMP is working with a Tokyo taxi operator to develop self-driving taxis for the 2020 Tokyo Olympics.

Elsewhere, Uber is working on its own self-drive service and in November struck a deal with Volvo to buy up to 24,000 cars. And Waymo, owned by Google parent company Alphabet, is planning to test autonomous cars with no human safety driver.

(Source – “BBC News“, Pic – Taxis / “Bit Boy“)

The Future of Minamisoma City, Fukushima

Japan Property Alert

Japan Investor Real Estate Watch

07 Nov, 2017 –

Fried chicken took to the skies over Fukushima Prefecture in northern Japan this week as Rakuten began drone deliveries of products from Lawson convenience stores. Forget meals on wheels, this is meals on rotors. The new free service from Rakuten’s drone business is aimed at delivering items from convenience stores to customers who find it challenging to travel long distances in order to shop. The service launched on October 31 in Fukushima’s Minamisoma City, an area that was devastated by the March 2011 Great East Japan Earthquake and tsunami as well as the disaster at the Fukushima Dai-ichi nuclear power plant that followed.

Since 2013, Lawson has been operating mobile sales points in the form of trucks that make regular visits to locations around its stores in some regional areas, thereby making it easier for customers to shop. The trucks are stocked with some 300 kinds of products, including everything from ice cream and bento lunch boxes to garbage bags and magazines, but they are unable to carry hot food. In this new service launched at a convenience store in Odaka, Minamisoma, Rakuten’s drone business addresses that problem by allowing hot food to be delivered to the mobile sale point from the store as soon as an order is received. At a ceremony to mark the service’s first flight, a local resident placed an order for fried chicken while the truck was parked at the Oya Community Center, located in a rural part of the city. Soon after, a buzzing sound was heard as the drone appeared overhead. In moments, its payload of hot chicken was delivered to the customer’s waiting hands.

Re-building with high tech

“This community has been in a weakened state, but starting with Odaka, we believe the drone and other technology can play a role in helping people who face challenges going shopping or receiving medical care,” Minamisoma Mayor Katsunobu Sakurai said in remarks at the ceremony. “My hope is that experiments with drones, autonomous driving and other technologies can lend a big push toward reconstruction following the nuclear accident.”

Sakurai became famous for his YouTube plea for help during the 2011 disaster. He has been outspoken in his efforts to rebuild Minamisoma, whose population has fallen from 71,000 before the disaster to around 57,000 today. As part of the revitalization efforts, the city in 2016 created a Robot Testing Field, in which robotics and other technologies can be developed for the monumental task of decommissioning the crippled Dai-ichi plant as well as other purposes. Other attendees also hailed the drone flight.

“It is said that this is an industrial revolution of the sky,” said Hiroshi Oikawa of Japan’s Ministry of Economy, Trade and Industry. “I am so happy that it is starting from Minamisoma in Fukushima.” “Since our founding, Rakuten aimed to empower communities and empower Japan,” said Koji Ando, Rakuten Managing Executive Officer and president of the New Service Development Company. “We would like people to get a sense of a bright and convenient future through this service.”

Groundbreaking flights

In a world first, Rakuten launched its drone delivery service in 2016, beginning with trials in which its Tenku drone brought equipment, drinks and snacks to players on a golf course in Chiba. In early 2017, Rakuten Drone partner Autonomous Control Systems Laboratory Ltd. (ACSL) delivered hot soup to surfers on a beach in Fukushima after a record-breaking flight of about 12 km. The latest version of the Tenku drone features quieter propellers and greater range compared to previous versions. It flew about 2.7 km for the fried chicken delivery, mostly following a river as it flew inland. While the service currently offers deliveries of hot products, it is planned that others will be added later, provided the drones can accommodate them. There is no extra charge for the drone deliveries.

“People here have been totally amazed by getting products from the sky,” commented Rakuten Airmap CEO Hideaki Mukai. “We would like to expand the service, while keeping in mind drone safety, as well as public acceptance. Because of the situation facing Minamisoma, people here have been quite accepting of drone flights.”

 

(Source – Rakuten.Today,” Pic – Bento Lunchbox / “Security4all“)

You Asked Us – “Can I Re-Sell my Investment Property?”

Japan Real Estate

Japan Properties

03 Nov, 2017 –

Because the Japanese property market is very active, globally second only to the USA, selling your property is a viable exit strategy. Since pricing for investment properties is generally dictated by rental yield than market trends, you can expect to sell your property for the same price or slightly higher. That is, assuming the rental rate hasn’t changed in the area. Land has depreciated over the last two decades, but the last five years have been kinder with central properties in hotspots like Tokyo and Fukuoka practically doubling. Although it’s anyone’s guess, values are expected to stay this way at least until the 2020 Olympics. From our experience, if your property is priced right, you should be able to sell it within two months.

Keep in mind though, that there are tax implications should you decide to sell your property. Foreign and local property owners who sell Japanese properties within five years can expect to pay 40% capital gains tax. After five years it drops to 20%. Therefore, as you can see, short-gains are not generally the goal. Property tax on units under 200 sqm, (which is usually the norm for most of our clients due to the higher yields involved), are 25% to 50% lower than larger properties.

(Source – Priti Donnelly, Nippon Tradings International”, Pic – Nippon Tradings International )

Japan’s Short Term Accommodations Market Expected to Heat Up

Japanese Investment Properties

Japan Real Estate

11 Oct, 2017 –

Needing a place to stay before moving to a new home, James Degan recently went on Airbnb and found an apartment in Tokyo’s upscale Minato Ward. At ¥8,000 per night with a double bed and fully equipped kitchen, it came cheaper than staying in a hotel and was conveniently located near a station close to his workplace. Degan, a Franco-British financial trader, said he looked at other short-term minpaku (private lodging) sites but couldn’t find any operating in Japan with the variety offered by Airbnb.

He attributed that advantage to the service’s early entry into the nation. “I think Airbnb benefits from the innovator’s edge,” he said. An impending law change, however, could shake up Airbnb’s dominance in a market experiencing an unprecedented tourism boom. Airbnb’s success here took a similar trajectory the American firm has followed elsewhere: fighting often difficult regulatory environments and sometimes operating in legal gray zones. While Japan has no laws specifically outlawing short-term lodging services, the hotel law lays out conditions few private homes can meet.

Facing a surging number of visitors and an accommodation shortage, however, the government of Prime Minister Shinzo Abe in June passed a new law giving the green light to such services. The change brought on a roster of new players looking to play catch-up in one of the hottest areas of the sharing economy. E-commerce giant Rakuten Inc. recently announced the launch of a joint venture with real estate listing operator Lifull Co. Rakuten Lifull Stay Inc. aims to begin offering services after the law takes effect sometime in the first half of next year.

Rakuten is a household name in Japan, with 90 million members, its own professional baseball team and a platform that offers myriad services from banking and credit cards to travel and e-books. Lifull, on the other hand, operates a real estate and housing information site with around 8 million listings, and the firm has a network of more than 22,000 affiliated real estate stores. “I think it’s an ideal joint venture — Lifull can reach corporate clients while Rakuten can reach out to individual customers,” Munekatsu Ota, representative director and chief operating officer of the new company, told The Japan Times in an interview.

The venture has so far announced a series of partnerships with major players, including American powerhouse HomeAway and China’s largest vacation rental site, Tujia. Rakuten said it will supply the firms with property listings from its tentatively titled Vacation Stay minpaku service. In return, the overseas operators will drive demand for Japanese properties by promoting travel to Japan through their platforms.

Ota said his company also plans to offer property management services for hosts and said it has its eyes set on eventually working to convert the growing number of vacant homes — a product of the nation’s aging population — into lodgings. With an estimated 8 million empty houses in the country, even having a small portion renovated would lead to a boom in listings, he said. “I think we are looking at property listings in the league of hundreds of thousands,” Ota said. Hitoshi Sato, a senior analyst at InfoCom Research, said despite its global popularity, many in Japan are still unfamiliar with Airbnb and its services. “In that sense, Rakuten’s strong presence here is an asset which it can use to lure domestic property owners who may feel more comfortable working with a well-known Japanese company,” he said.

The bill passed in June will let people rent out property for a maximum 180 nights a year if lodging providers register with local governments. It also calls on absentee landlords to outsource property management to firms that can guarantee hygiene and safety. Meanwhile, service platforms like Airbnb and HomeAway will be required to register with the tourism agency, which plans to create an online system to grasp the accommodation situation at all minpaku businesses.

The push to loosen related restrictions comes as the number of inbound visitors continues to rise thanks to a weaker yen and the easing of visa requirements. Japan saw 13.4 million visitors in 2014, 19.7 million in 2015 and 24 million last year. The government wants to increase that number to 40 million by 2020, when Tokyo will host the Olympic Games. The surge in visitors has also seen travel spending swell to a record high ¥3.7 trillion in 2016. The government projects that figure to double to ¥8 trillion in 2020.

But the rosy tourism numbers are dogged by a shortage of accommodations, particularly in popular destinations such as Tokyo, Kyoto and Osaka, where room occupancy rates at city hotels exceed 80 percent. The introduction of the minpaku law could help ease that crunch by prompting players who had been on the sidelines to enter the market.

Japan’s largest travel booking site JTB Corp. last week said it is throwing its hat in the ring via a partnership with Japanese startup Hyakusenrenma Inc. The collaboration will allow visitors to JTB’s multilanguage travel booking site Japanican to access the roughly 800 minpaku properties listed on Haykusenrenma’s vacation rental site, Stay Japan. Yuki Okuno, business development manager for Squeeze Inc., a company that runs a management system for minpaku properties, hotels and ryokan inns, said businesses like monthly apartments are looking at using the law change to increase occupancy rates by filling vacancies in between reservations with short-term guests. At the same time, he said the 180-day cap and legal penalties could see some hosts opt out of the minpaku model due to risk and profitability issues.

Hosts making extra cash from listing rented apartments may not be able to turn a profit under the new law because of the 180-day cap. A revision to the existing hotel law is also up for deliberation in the Diet, possibly raising the maximum fine for unlicensed hosts to ¥1 million from the current ¥30,000. “Still, I think the overall size of the market will get bigger,” Okuno said. Spike Data, which tracks the minpaku market in Japan, estimates the sector will swell to ¥200 billion by 2020 compared with ¥13 billion in 2015 as the number of minpaku businesses and users grow.

Foreign players are also eying a piece of the pie. In announcing its partnership with Rakuten in Tokyo last month, Tujia Chief Operating Officer Yang Changle said the company is confident it can boost its presence in Japan by focusing on serving Chinese visitors through its experience and strong name recognition back home. Chinese tourists accounted for one-fourth of all visitors to Japan last year, and could reach 10 million by 2020 and 13.5 million by 2025, said Tomoko Suzuki, Tujia’s Japan head.

HomeAway, a subsidiary of Expedia Inc. that operates one of the world’s largest vacation rental sites, is also increasing its presence since opening a Japan office last year with a focus on luxury properties. Airbnb, meanwhile, has been expanding the breadth of its services beyond private rentals, embracing broader categories of accommodation, including boutique ryokan and hotels through partnerships with travel startups.

It also has the first-mover advantage, which it can capitalize on. The San Francisco-based company lists over 3 million properties in 65,000 cities in 191 countries. In Japan alone, Airbnb lists over 55,000 properties, by far the largest such provider in the nation. It began selling travel experiences like bonsai art and sake and food pairing this year, and in June launched its first television commercial in Japan. Yasuyuki Tanabe, Airbnb’s Japan chief, said he welcomed the new legislation for its clarity and simplicity, adding that Japan is the company’s most popular destination in Asia and saw 5 million guest arrivals in the past 12 months. “Hospitality is a large, growing market and we strongly believe that helping more people to travel is good news for everyone,” he said.

(Source – “The Japan Times“, Pic – Apartment Share House / “JAPANKURU“)

MasterCard Reveals Japan’s Fastest Growing Tourist City

Japan Real Estate

Japan Investment Properties

27 Sept, 2017 –

On Tuesday, MasterCard revealed the results of its annual Destination Cities Index. The survey not only provides insight into the spending of international travelers but also predicts where they’ll visit next year. According to MasterCard, Osaka is the fastest-growing destination in the world — and has been since 2009. Over the past seven years, overnight stays from international visitors have grown 24 percent.

MasterCard interprets that Osaka’s rapid tourism growth is indicative of the growing importance of Asia and the Middle East. The index’s fastest growing cities for tourism include Chengdu, Colombo, Abu Dhabi, Jakarta, Tokyo, Hanoi, Riyadh, Lima and Taipei. Overall, Asia dominated the list of where people are traveling. Of the top 10 destinations for overnight international visitors, seven were in Asia (including Istanbul). The only exceptions were London, Paris and New York City. Of the world’s largest cities, Bangkok had the most international visitors stay overnight last year, but MasterCard predicts that Tokyo will see the most growth this year.

“Cities that apply technology to simplify services and connect people with their passion points can become true destination cities and realize the benefits of increased visitors and greater spending,” Carlos Menendez, MasterCard’s president of enterprise partnerships, said in a statement.

Japan’s rapid rise through the tourism ranks is likely due, in no small part, to the country’s preparations for the 2020 Olympic Games. In addition to improving mass transit options throughout the country, Japan is also making its famously-complicated toilets easier for tourists to understand. Tokyo is also reportedly developing a manmade meteor shower for the occasion, too.

(Source – “Travel+Leisure“, Pic – Osaka / “Pedro Szekely“)