Property investment firm IP Global has released its view on where overseas property investors should be setting their sights for the next few months, based on its own research and investment activities.
In its Global Real Estate Outlook report, it noted how Tokyo has been attracting growing interest from Southeast Asian property investors looking to benefit from the strong rental market and depreciating yen.
Last week the Japanese yen reached a 13 year low against the US dollar, sliding to 124.92 per US$, its weakest level since May 2002. The Japanese yen also continues to fall to its lowest level against the Singapore dollar. One Singapore dollar equalled about 68 yen two years ago. It now equates to about 92 yen, an increase of more than 35 percent, but Singaporeans are not the only ones benefitting.
Buyers from throughout the region are also benefiting from cheaper property assets and soaring rental yields, the company said. Average apartment prices in Tokyo have seen seven months of consecutive growth up to March, particularly in the city centre. The rental average in Tokyo’s five wards in the centre rose 2.9 percent year-on-year since 2008.
The expected impact of the 2020 Summer Olympics is also pushing up prices as President Abe invests in major improvements in public infrastructure. UBS has recently projected a direct effect of YEN 3 trillion from the Olympics, and an additional benefit of YEN 10 trillion to YEN 23 trillio from infrastructure upgrades.
Alex Bellingham, Director and Head of Singapore at IP Global, said: “Tokyo has never been a more compelling case for property investors with the yen at a 13-year historic low, and some real pockets of value available in the city’s wards.”
Property demand is on the rise as more Japanese come to settle in Tokyo from rural areas outside the city. The population is expected to increase significantly up to 2030, with occupancy levels in Tokyo’s 23 wards already between 94 percent and 96% percent.
Bellingham added: “With confidence returning to the market, we are now seeing developers committing to building more apartment blocks in the capital. Among all the apartments that are scheduled to be completed from 2015 and onwards, over half are within Tokyo’s central 23 wards.
“Abenomics has clearly been positive for real estate investment, leading to better liquidity, deregulation in urban development and lower property taxes for investors looking to enter the market. The message from the government is that Japan is very much open for business. Many foreign and local banks are also easing lending to foreign investors and opening more doors into Japanese property.”
IP Global’s latest look at the world’s property markets analyses and rates the cities it is currently focusing its research and investment resources.
Source: www.ipglobal-ltd.com
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
