Jun 2019

Japanese versus Chinese Property

A great article this week in ReThinkTokyo by Mareike Dornhege, well worth your time and I will post the link to the full article at the end of this post.

The article compares housing stock in Japan and China. I learnt there is an astonishing 65 million empty units across China, just phenomenal. By comparison Japan has an estimated 8.5 million as of October 1st 2018. A major difference is of course that the majority of Japan’s empty buildings are old houses in places were few people want to live. In some cases you can pick up a large 3 or 4 bedroom empty house for less than US$20,000. That is great if you are looking for a slower life away from the busy city. However not that many people are.

The continued urbanisation of Japan is exactly why JPI buys apartments where we do in the locations we do. More and more people moving to the city looking for good, clean, affordable accommodation close to the city centre.

It is well know that in the 80s and 90s Japanese economy was the envy of the World, that is until the unsustainable asset property bubble burst so dramatically. Looking at China and real estate investment, it would appear the same is happening there. Young people are buying more and more expensive first apartments. Investors have fueled the bubble by buying property above the actual value. Only time will tell how this ends up.

Back in Japan, land and house prices are rising, slowly, steadily, dare I even say sustainably. Young Japanese and foreigners have access to affordable loans to help them purchase their first home. The results of the Olympic effect will be known in a few years but the upturn is not being attributed to the Olympics as it has in past host cities.

In short, obviously I am biased, Japan is THE place to invest right now. But we investors should remain vigilant and always question opportunities, if they look too good, perhaps they are too good!

Here’s the article for further reading; https://www.rethinktokyo.com/china%E2%80%99s-housing-glut-japan%E2%80%99s-real-estate-market