Tokyo too expensive? Yen is at 13 year low!

My first time to Tokyo was a business trip. My GM allowed me to go one day earlier and come back two days later. I loved the trip. My second trip was just a few years ago and I visited 8 cities in Japan including Tokyo. I love Japan. It’s my top country for vacation after comparing it to around 19 other countries that I have visited before. So, when I read an article about investing in Tokyo, I was attracted to share. Of course, I am not at the buying Tokyo property level but no harm in sharing. Maybe some of kopiandproperty.com readers are ready.
According to property investment firm IP Global, the interest in Tokyo from Southeast Asian property investors are growing because of the strong rental market and the depreciating Yen. In fact, Yen is now at a 13 year low level. (US$1 to Yen 124.92). Lowest since 2002. It has also fallen to its lowest level versus the Singapore Dollar, at S$1 to Yen 92, depreciated by more than 35 percent. No, the Japanese economy is not in a financial crisis if you intend to again make a comparison of depreciating currency versus some currencies as a sign of crisis.
The two reasons to buy? Due to the currency, properties have become cheaper and rental yields remain healthy in comparison to many modern cities which has seen huge property price increases. Another major reason is also the 2020 Summer Olympics. Note that this is really many years away but if you are trying to take advantage of this, then better not buy few months before. No one knows if the price can sustain itself after the Games. Japanese Prime Minister Shinzo Abe has also committed to spend more in the upgrades of public infrastructure.
For those who have been following Japan’s economy for the last decade, do note that the economy has never been very healthy. Growing slowly but lacking that oomph. According to the report, confidence is returning to the market and more developers are committing to building more apartment blocks in the capital. The government, through its policies continue to welcome investments and many foreign and local banks are also lending more to foreign investors into the Japanese property market.
Always note that investing in overseas require much more homework than listening to one report, even if the report is from quite a famous research firm. At the very least, pay a visit to the actual place that you are buying. Then, look at all the usual considerations such as convenience of location, nearby facilities, actual rental market for the area and the actual condition of the property. Remember, you may not be able to visit that said property often. If this is your first investment property, perhaps best to concentrate on places you know better first. Happy investing or at least enjoy a vacation there, taking advantage of the current weak Yen, even when it’s versus Ringgit versus the past few years.
written on 16 June 2015
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