May 2018

Japanese Property – not that difficult to understand

Weekly research

An interesting article this week from Reid Kirchenbauer who owns and runs  Reid has an interesting story, from child actor to property and stock investor, you should take a look.

This week Reid wrote about Japanese property, which always peeks our interest.  The article on his website is entitled “Why You Shouldn’t Buy Japanese Property” which doubled out interest!  Reid outlines 3 reasons why he believes Japanese Property is not a good buy.  The article shows the importance of local knowledge when investing in any marketplace.

Dispelling the myths

Reid’s first point is that property in Japan is not an asset.  The basic argument here is that Japanese property only lasts for 20 years.  While it is true that Japanese property is not build to last 100 years, as in England, Japanese property lasts well beyond 20 years.  During the bubble period, it was common for Japanese owners to pull their houses down after 10-15 years and rebuild.  This was when the Japanese had limitless money and thought the good times would never end.  They did end and now Japanese property owners are far more cautious and frugal.  DIY and home improvement books, magazines and TV shows are commonplace, people stay in their houses and apartments longer.  And of course, the land that the property sits on will always hold some residual value.  JPI’s counter-argument is of course that Japanese property is an asset and offers great returns.

The second point Reid makes concerns the Japanese demographics.  It is no secret that the Japanese population is declining.  Government statistics tell us the population reduced by 1 million people last year, which would cause serious problems for the economy.  But what Reid doesn’t know, as the Japanese government keeps this news quiet, is that there have never been more foreign workers in Japan as there has today.  Politically it is not done to allow foreign workers flow into Japan but pragmatically it has to happen.  And it is happening.  This trend will only increase as Japanese manufacturing, retail and service sector companies need to fill the labor shortage all over the country.  So while the Japanese population is in decline,  steps are well underway to tackle this situation.

Reid’s third point had (has) some merit.  The Japan, Korea, China geographic location has the highest concentration of military personnel of anywhere in the world.  North Korean has been a constant concern in recent years.  The new American administration raised tensions but in the past week, a historic meeting between North and South Korea seems to have defused tensions.  The region has its ups and downs but the future looks promising and we are certainly not going anywhere.

Local knowledge always key

When investing in any market, local knowledge is key.  It is easy to read a few articles and jump to the wrong conclusions.  Taking the time to understand a market from the inside is vital.  Here in Japan with JPI you can invest safe in the knowledge that you have access to years of sourcing, buying, and investing experience.

Access to download our free e-guide “Real Estate Investing in Japan”

Access the full article from Reid Kirchenbauer, here.