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20-12-2010, 10:28 AM
Good infrastructure, low interest rates exert pull
By Dhevarajan Devadas
source: Straits times 20 Dec 2010
Japan has become the new darling of asian property investors as prices in markets such as singapore and hong kong hit historically high levels.
According to a report released last week by credit suisse, japan's resudential property sector is expected to see "strong growth with accelerating momentum".
Mr Masahiro Mochizuki, a real estate analyst with credit suisse in tokyo said developers have begun to buy land for new construction projects and that cash inflows into condominium market are a positive factor for land prices.
Commercial real estate investors are beginning to earn capital gains from rising asset prices and as office vacancy rates in tokyo decline, cash flows from real estate will improve he said.
This comes as Japanese property market sees interest from Asian investors. The wall street Journal asia reported that according to deal tracking firm dealogic, asian investors have made 18 real estate deals worth US$372 million (S$488 million) in japan this year. This is 10 more than last year.
Real estate investment trust Maple tree logistics trust bought three distribution centers for 13 billion yen(S$203 million) in july. In october it signed a sale and leaseback agreement with a leading Japanese logistic firm, Hamakyorex to acquire a warehouse facility for 1.05 billion yen.
The firm which opened it's japan office in 2007 plans to extend it's japanese portfolio further, Chief Executive Richard Lai said the logistic market in Japan remains attractive due to it's "unmatched" breadth and depth.
Malaysian industrial conglomerate YTL corporation has also placed big bets on Japan. The company announced last week that it intends to develop the scenic Niseko Village in Hokkaido into a mountain resort with hotels, luxury homes, ski resorts and shopping and dining outlets. The property was acquired for 6 billion yen in April.
YTL first residential development in the 460ha village in Hinode Hill a luxury project of 125 units with views of nearby Mount Yotei. Mr Kemmy Tan a director at YTL singapore said the firm has always had confidence in Japan owning seven prime properties in Tokyo through a subsidiary.
Regarding YTL latest venture, he said "We have also noticed a growing trend among affluent asian property investors to invest in holiday homes around the region. He notes that foreign home ownership in Niseko jumped 20 fold between 2004 and 2006. "Skiing is a rising sport of the affluent and as Asian wealth grows we are seeing more interest in Asian ski regions like Japan and south korea" he added.
Another singapore-based firm investing in Japan is Saizen Reit. The firm concentrates on properties in 12 regional cities excluding tokyo and osaka, and manages about 180 properties across Japan.
Mr Chang Sean Pey, Chief Executive of Japan Residential Assets Management which manages Saizen, said Japan's property sector offers good rental yields compared to other developed markets.
"Centrally located properties in Tokyo provide yields(net rental after property-related expenses) 4.5 to 5.5 percent". he said.
Mr Chang added that the figure was less than 3 percent for similar properties in Hong Kong and Singapore.
Mr Nicholas Mak head of research and consultancy at property consultancy SLP international said Japan does have some good points.
"They have very well developed infrastructure and an esaily convertible currency. Interest rates are also near zero making borrowing costs very low. he said.
However long term investors should be careful where they park their money Mr Mak cautioned.
"There is still a risk of asset deflation with prices stagnant or even falling" he said "Japan population is declining. Since real estate values depend on demand can long-term demand be sustained?"
Still for companies such as small and medium-sized enterprises(SMES), Mr Mak advises to that to minimise risks they can invest in securities linked to Japanese properties. Since Japan is still a major tourism destination he recommends that these SMEs invest in hotels and other related development.
"Logistics" is also a sector with a positive future" Mr Mak said.
He also advises that investors should visit the location and speak to local real estate experts before making a decision.
"Ultimately, whatever sector you invest in, you should never buy before seeing it for yourself"
By Dhevarajan Devadas
source: Straits times 20 Dec 2010
Japan has become the new darling of asian property investors as prices in markets such as singapore and hong kong hit historically high levels.
According to a report released last week by credit suisse, japan's resudential property sector is expected to see "strong growth with accelerating momentum".
Mr Masahiro Mochizuki, a real estate analyst with credit suisse in tokyo said developers have begun to buy land for new construction projects and that cash inflows into condominium market are a positive factor for land prices.
Commercial real estate investors are beginning to earn capital gains from rising asset prices and as office vacancy rates in tokyo decline, cash flows from real estate will improve he said.
This comes as Japanese property market sees interest from Asian investors. The wall street Journal asia reported that according to deal tracking firm dealogic, asian investors have made 18 real estate deals worth US$372 million (S$488 million) in japan this year. This is 10 more than last year.
Real estate investment trust Maple tree logistics trust bought three distribution centers for 13 billion yen(S$203 million) in july. In october it signed a sale and leaseback agreement with a leading Japanese logistic firm, Hamakyorex to acquire a warehouse facility for 1.05 billion yen.
The firm which opened it's japan office in 2007 plans to extend it's japanese portfolio further, Chief Executive Richard Lai said the logistic market in Japan remains attractive due to it's "unmatched" breadth and depth.
Malaysian industrial conglomerate YTL corporation has also placed big bets on Japan. The company announced last week that it intends to develop the scenic Niseko Village in Hokkaido into a mountain resort with hotels, luxury homes, ski resorts and shopping and dining outlets. The property was acquired for 6 billion yen in April.
YTL first residential development in the 460ha village in Hinode Hill a luxury project of 125 units with views of nearby Mount Yotei. Mr Kemmy Tan a director at YTL singapore said the firm has always had confidence in Japan owning seven prime properties in Tokyo through a subsidiary.
Regarding YTL latest venture, he said "We have also noticed a growing trend among affluent asian property investors to invest in holiday homes around the region. He notes that foreign home ownership in Niseko jumped 20 fold between 2004 and 2006. "Skiing is a rising sport of the affluent and as Asian wealth grows we are seeing more interest in Asian ski regions like Japan and south korea" he added.
Another singapore-based firm investing in Japan is Saizen Reit. The firm concentrates on properties in 12 regional cities excluding tokyo and osaka, and manages about 180 properties across Japan.
Mr Chang Sean Pey, Chief Executive of Japan Residential Assets Management which manages Saizen, said Japan's property sector offers good rental yields compared to other developed markets.
"Centrally located properties in Tokyo provide yields(net rental after property-related expenses) 4.5 to 5.5 percent". he said.
Mr Chang added that the figure was less than 3 percent for similar properties in Hong Kong and Singapore.
Mr Nicholas Mak head of research and consultancy at property consultancy SLP international said Japan does have some good points.
"They have very well developed infrastructure and an esaily convertible currency. Interest rates are also near zero making borrowing costs very low. he said.
However long term investors should be careful where they park their money Mr Mak cautioned.
"There is still a risk of asset deflation with prices stagnant or even falling" he said "Japan population is declining. Since real estate values depend on demand can long-term demand be sustained?"
Still for companies such as small and medium-sized enterprises(SMES), Mr Mak advises to that to minimise risks they can invest in securities linked to Japanese properties. Since Japan is still a major tourism destination he recommends that these SMEs invest in hotels and other related development.
"Logistics" is also a sector with a positive future" Mr Mak said.
He also advises that investors should visit the location and speak to local real estate experts before making a decision.
"Ultimately, whatever sector you invest in, you should never buy before seeing it for yourself"