HOUSING JAPAN Innovation in Japanese Real Estate
Tokyo Real Estate Report
3 TOKYO REAL ESTATE REPORT Comparison on International Real-estate market Buying price US$ Price/Rent Ratio Country / City Pent per Month ($) Gross Rental Yield per Sq. M. (x) Monaco 60,114 n.a. na.a n.a. 1 UK / London 34,531 31x 11,089 3.21% 2 3 Hong Kong / Hong Kong Island 22,814 35x 6,431 2.82% US / New York 18,499 26x 7,225 3.91% 4 5 France / Paris 18,415 35x 5,317 2.89% Russia / Moscow 16,021 31x 5,158 3.22% 6 Singapore 15,251 35x 4,332 2.83% 7 8 Austria / Vienna 14,592 46x 3,174 2.18% Switzerland / Geneva 13,529 26x 5,152 3.81% 9 India / Mumbai 11,455 45x 2,540 2.22% 10 Japan / Tokyo 10,784 20x 5,413 5.02% 11 Israel / Tel Aviv 10,166 44x 2,318 2.28% 12 Sweden / Stockholm 9,439 n.a. n.a. n.a. 13 Finland / Helsinki 8,390 28x 3,043 3.63% 14 Canada / Toronto 8,288 27x 3.047 3.68% 15 16 Italy / Rome 8,007 26x 3,089 3.86% Luxembourg 7.654 26x 2,943 3.85% 17 Source: Global Property Guide www.housingjapan.com
4 TOKYO REAL ESTATE REPORT Tokyo rent in same as Hong Kong, but half in price Buying price US$ per Country / City Price/Rent Ratio (x) Pent per Month ($) Gross Rental Yield Sq. M. Hong Kong / Hong Kong Island 22,814 35x 6,431 2.82% 3 US / New York 18,499 26x 7,225 3.91% 4 France / Paris 18,415 35x 5,317 2.89% 5 6 Russia / Moscow 16,021 31x 5,158 3.22% 7 Singapore 15,251 35x 4,332 2.83% Austria / Vienna 14,592 46x 3,174 2.18% 8 Switzerland / Geneva 13,529 26x 5,152 3.81% 9 India / Mumbai 11,455 45x 2,540 2.22% 10 Japan / Tokyo 10,784 20x 5,413 5.02% 11 Source: Global Property Guide www.housingjapan.com
5 TOKYO REAL ESTATE REPORT Capital Gain is possible. From the lowest point in 2000 until 2008, land prices in Ginza 3 Chome rose 100%. 24 18 12 100% UP 6 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Land price fluctuation for Ginza 3-chome (in millions JPY) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 10 14.5 21 21.6 22 22.7 22.7 20 14.5 9.8 6.82 5.3 5.3 5,3 5.14 4.95 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 5.05 5.1 5.13 5.26 5.8 7.25 9.75 11.5 9.2 7.55 7.22 7.04 7.1 7.8 8.75 Source: tochidai.org www.housingjapan.com
6 TOKYO REAL ESTATE REPORT Capital Gain Case Studies: Minami Aoyama 4 Chome House Japan tax laws allow ¥30,000,000 of capital gain tax exemption if the property was used as a primary residence Sold Price – (Original Purchase Fee + Total Entry & Exit Transaction Costs) = Amount Subject to Tax Purpose: Primary Residence ¥238,000,000 – (¥195,000,000 + ¥11,126,000) = ¥31,874,000 *Costs of Sale includes 3% agent fees and 60,000JPY stamp duty fees. Capital Gains Tax Holding for less than 5 years = 30% of NET capital gains AFTER ¥30,000,000 therefore (¥31,874,000-¥30,000,000) * 30% = ¥562,200 Total Estimated Profit After 2 years of ownership = ¥31,311,800 www.housingjapan.com
7 TOKYO REAL ESTATE REPORT Capital Gain Case Studies: Jingumae Residence Total Revenue – (Total Purchase Fee + Total Cost of Sale) = Amount Subject to Tax Length of Ownership - 2 years (Rental Property) 139,800,000 – (120,742,075 + 4,254,000) = 14,803,925 *Costs of Sale includes 3% agent fees and 60,000JPY stamp duty fees. Holding for less than 5 years = 30% 14,803,925 * 30% = 4,441,177 Total Estimated Profit after 2 years of ownership: ¥10,362,748 Capital Gain ¥11,040,000 rent earned during ownership (¥460,000 / month) www.housingjapan.com
Tokyo Demographic Report
9 TOKYO DEMOGRAPHIC REPORT Tokyo has the LARGEST GDP of all major cities in the world. Tokyo has the highest GDP of City as of 2014 at USD 1.62 trillion or JPY 194 trillion. (Figures in billions of USD, taken from 2014 GDP figures from Brookings) City GDP 2014 1800 1350 900 450 0 Tokyo New York Los Angeles Seoul London Paris Osaka-Kobe Shanghai Chicago Moscow www.housingjapan.com
10 TOKYO DEMOGRAPHIC REPORT 2025 estimates were targeting 36.4 million people in the greater Tokyo area however in 2015, the population was measured at 37.8 million. Tokyo and Suburban Area Historical and Growth Population Projections Rank 1991 2007 2025 1 Tokyo 32.5 Tokyo 35.7 Tokyo 36.4 2 New York 16.1 New York 19.0 Mumbai 26.4 3 Mexico City 15.3 Mexico City 19.9 Delhi 22.5 4 Sao Paulo 14.8 Mumbai 19.0 Dhaka 22.0 5 Mumbai 12.3 Sao Paulo 18.8 Sao Paula 21.4 Osaka-Kobe 11.0 Delhi 15.9 Mexico City 21.0 6 Kolkata 10.9 Shanghai 15.0 New York 20.6 7 Source: Various municipality web sites www.housingjapan.com
11 TOKYO DEMOGRAPHIC REPORT Population trends in Tokyo have been increasing steadily for over the past 60 years. Tokyo Prefecture Population as of September 2015 was 13,482,000 Population of Greater Tokyo (Kanto) was 37,883,000 (2014) (Figures from Ministry of Internal Affairs and Communications and Tokyo Metropolitan Government) www.housingjapan.com
12 TOKYO DEMOGRAPHIC REPORT An interesting visualisation: Tokyo Metropolitan Government Original Estimation made in 1995 for population levels in 2015 Source:Mitsubishi UFJ Trust Bank Real Estate Research www.housingjapan.com
13 TOKYO DEMOGRAPHIC REPORT Number of Companies with Capital Number of Headquarters for Foreign-Affiliated of Over 1 Billion Yen in Japan Companies in Japan Tokyo Tokyo 76% 46% 2,749 companies 2,371 companies Other Other 54% 24% 3,213 companies 732 companies Source: Tokyo Metropolitan Government, Source: Tokyo Metropolitan Government, “Industry and Employment in Tokyo “Industry and Employment in Tokyo – A Graphic Overview 2014” – A Graphic Overview 2014” www.housingjapan.com
Japan Growth Potential
15 JAPAN GROWTH POTENTIAL Abenomics has 3 arrows of implementation: 1) A massive financial stimulus 2) Aggressive monetary easing from the BOJ 3) Structural reforms to boost Japan’s competitiveness. So, how’s it going so far? Sources: Housing Japan Flipboard Feed www.housingjapan.com
16 JAPAN GROWTH POTENTIAL Nikkei 225 Rising Since Mr. Abe was elected, the Nikkei 225 has risen to pre-2008 levels and the yen has fallen in value. Source: Google Finance This helps export driven multinational corporations increase make more money. So the remaining question: When will consumer spending increase? Source: XE currency www.housingjapan.com
17 JAPAN GROWTH POTENTIAL Now… Source: Bloomberg; released on October 12th, 2015 www.housingjapan.com
18 JAPAN GROWTH POTENTIAL …Except Source: Bloomberg; released on October 12th, 2015 The average Japanese person needs to feel confident enough about the economy to start spending more of their savings. Mr. Abe believes this confidence will rise with increased… www.housingjapan.com
19 JAPAN GROWTH POTENTIAL …Tourism! Best overall experience More than 13 million visitors came to Japan Tokyo is first among key tourist cities in 2014 around the World. Country # Tourist in 2014 1 Tokyo 2 New York Japan 13,413,467 3 Barcelona France 83,700,000 4 Istanbul United Kingdom 32,613,000 5 Prague Hong Kong 27,770,000 6 Vienna Singapore 11,858,000 7 Berlin 8 Rome USA 74,757,000 9 Paris Australia 6,868,000 10 Dubrovnik Source: UNWTO Tourism Highlights 2015 Edition Source: Trip Advisor World City Survey Tourism is important for increased consumer spending but in Tokyo’s case, combined with easier visa applications for skilled labor brought about by the Special Economic Zones, will contribute to more people wanting to live and invest in Tokyo. This contributes to higher demand with limited supply thus increasing property prices overall. www.housingjapan.com
20 JAPAN GROWTH POTENTIAL Total Inbound Tourists for 2015 With Two Months Remaining: 16,316,663 ( +18% YoY Compared to ALL of 2014 ) Source: Japan Tourism Marketing Co. www.housingjapan.com
21 JAPAN GROWTH POTENTIAL Historical Annual Tourism Stats for Japan Since 1964 Source: Japan Tourism Marketing Co. www.housingjapan.com
22 JAPAN GROWTH POTENTIAL Tourists from overseas are exceeding predictions so much that…. Source: Japan Tourism Marketing Co. www.housingjapan.com
23 JAPAN GROWTH POTENTIAL …the government raised the original tourism targets from 20 million visitors by 2020 to… 30 million by 2020! Source: Japan Times Article; Friday, November 6th, 2015 www.housingjapan.com
24 JAPAN GROWTH POTENTIAL Another way to visualise the change in tourism targets Source: Japan Tourism Marketing Co. www.housingjapan.com
25 JAPAN GROWTH POTENTIAL The Summer Olympics will be held in 2020 with the Rugby World Cup being held in 2019 Both Events will take place within a compact 8km radius . Tokyo taking advantage of improvements on already top class infrastructure. Potential economic impact of 3 trillion Yen (29.7 billion USD) Creation of over 150,000 jobs Construction budget of over 383 billion yen for 11 new facilities and renovation on existing facilities www.housingjapan.com
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