Mar 2020

Property v shares v property v COVID-19

I get it, not the greatest title, but stick with me and I’ll explain.

So by now, you know Sim and I and JPI are all about PROPERTY and in particular Japanese Property. The past 3 months have been unbelievable. The lives of people all over the planet have been turned upside down by COVID-19 and uncertainty is everywhere.

Property v shares at times of crisis. What happened to your stock portfolio over the past 3 months, mine is down 50% and it’s depressing. I woke up one-morning last week to discover everything I thought was valuable disappeared down a red arrow on a graph in a matter of hours. Just like that value has been wiped out. Okay so what about JPI’s property portfolio, what has been the change in value over the past 3 months… yes… wait… a little… nope, absolutely no change. Property is slow, steady and boring. Our tenants still need somewhere to live, there’s no fire sale in property. It could go up or down but over the last 3 months and in general its… stable.

So property v property, what’s that about? I deal with a lot of property people. The average person will by their own home, perhaps a second investment property and that is it. In my circle, I have friends that have HMOs, mini MOs, lease options, multi-unit buildings, single lets, SA and holiday lets, etc, etc. A big thing right now with AirBNB is SA or serviced accommodation. I am constantly questioned by people why I prefer ‘vanilla’ buy to lets or single-family units. “The returns are so much greater in SA, what are you doing with your portfolio” etc. etc. I get it the returns can be huge, imagine buying a small, old run-down house in beautiful rural Japan and then cashing in on the tourist boom. But it is a lot of work, cleaning or employing cleaners. Writing the welcome pack and all the instructions for the accommodation. Buying beds, bedding, fridge, washing machine, cutlery, curtains and on and on and on. It’s a big investment and a lot of start-up capital. And now? With no-one travelling, how is the SA market going? In the meantime what has JPI’s portfolio been doing over the past 3 months …

So then Property v COVID-19, what that about. Single let property investing is for those people who love slow, steady, stable and reliable income. Everything the current world situation is not. We are in an irrational, scary and panicked time.

I know the stock market will bounce back and my portfolio should survive. Meanwhile, property in Japan just keeps plodding along slow, steady and safe. JPI feels the pain of so many people around the world struggling to deal with this situation, we hope for a speedy end and a return to a slow, stable and reliable World once more. Let’s keep watching.