Q&A – Sell Before the Olympics

International Real Estate

Japan Real Estate

06 Jun, 2016 –

This week in his Q&A column on “Asian Property Review” magazine, NTI’s Asia-Pacific Executive Manager, Ziv Nakajima-Magen discusses two issues: the effect of the 2020 Olympics on the value of Tokyo properties; and the effect of the recent earthquake in Southern Japan on property value. –

Q : Some Japanese experts are advising that you should sell your Tokyo properties just before the Olympics if you had bought them within the last few years. What is your take on this?

ZNM : The short term view:

Capital gains tax in Japan is doubled if properties are sold within five years after purchase, so from a pure financial perspective, and taking into account projected sales costs (normally 3-6%, unless you’re lucky enough to have a direct buyer lined up), you need to make sure it’s worth your while. Of course, this would entirely depend on the price at the point of purchase and sale.

The medium term view:

Once the above has been factored in, it has generally been noticed that property prices in Olympic cities tend to build up in the few years leading to the event, and slump away slightly afterwards. So if the numbers are in your favour, and you’re in it for the long haul, then yes, the assumption that selling just before the Olympics would be a prudent course of action and is most likely correct statistically.

The long term view:

The multi-trillion dollar question, as always, (not just for our own personal holdings, but for the entire region and its’ local economies) is what the future will bring. Not holding a crystal ball, but noticing the volatility in the area and the (as of yet) reluctance of the current government to address some of the deep-seated social and demographic issues underlying Japan’s economics – I would advise a less speculative and more monthly yield-oriented approach. Buy and hold basics – if it’s not generating enough to justify holding it, compared to what your money could be doing for you elsewhere – simply don’t.

NEGLIGIBLE IMPACT FROM EARTHQUAKE

Q: How would the recent deadly earthquake in Southern Japan affect the property market in Japan?

ZNM : Japan’s property market is, sadly, well versed in natural disaster, as are its’ insurers and property holders. From that particular aspect, and for individual property owners, it’s business as usual, and no effect overall.

From a more local perspective, a singular earthquake or even a series of closely occurring earthquakes and aftershocks would not cause any serious dent in market fundamentals. Kumamoto was, and will most likely remain, a very attractive market with a growing population. It also boasts socially aware local governance which supports its ageing population in a much better fashion than many of Japan’s municipalities, and some interesting industries to watch out for – not the least of which is one of the world’s largest mega-solar farms, built in rural Kumamoto prefecture and drawing many employees and businesses to the area.

However, if this were to become a repeated occurrence of some concern, with the area officially declared more earthquake-prone than others, it would most likely have a deeper localised effect on its property market as well.

On this note, we would like to take the opportunity to announce that NTI has been assisting our clients in donating directly to the Kumamoto earthquake relief efforts, by donating directly to local municipalities, with little to no overhead involved. Please feel free to contact us if you wish to participate – all donations are welcome.

(Source – “First Published in ‘Asian Property Review’ Pic – Tokyo Night / “Alessandro Baffa“)

This entry was posted in Japan Real Estate and tagged , , , , , , , , , , , , , . Bookmark the permalink.