HOUSING JAPAN Innovation in Japanese Real Estate Tokyo Real Estate - - PowerPoint PPT Presentation

HOUSING JAPAN

Innovation in Japanese Real Estate

Tokyo Real Estate Report

www.housingjapan.com

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TOKYO REAL ESTATE REPORT

Comparison on International Real-estate market

Country / City Buying price US$ per Sq. M. Price/Rent Ratio (x) Pent per Month ($) Gross Rental Yield

1

Monaco 60,114 n.a. na.a n.a.

2

UK / London 34,531 31x 11,089 3.21%

3

Hong Kong / Hong Kong Island 22,814 35x 6,431 2.82%

4

US / New York 18,499 26x 7,225 3.91%

5

France / Paris 18,415 35x 5,317 2.89%

6

Russia / Moscow 16,021 31x 5,158 3.22%

7

Singapore 15,251 35x 4,332 2.83%

8

Austria / Vienna 14,592 46x 3,174 2.18%

9

Switzerland / Geneva 13,529 26x 5,152 3.81%

10

India / Mumbai 11,455 45x 2,540 2.22%

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Japan / Tokyo 10,784 20x 5,413 5.02%

12

Israel / Tel Aviv 10,166 44x 2,318 2.28%

13

Sweden / Stockholm 9,439 n.a. n.a. n.a.

14

Finland / Helsinki 8,390 28x 3,043 3.63%

15

Canada / Toronto 8,288 27x 3.047 3.68%

16

Italy / Rome 8,007 26x 3,089 3.86%

17

Luxembourg 7.654 26x 2,943 3.85%

Source: Global Property Guide

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TOKYO REAL ESTATE REPORT

Tokyo rent in same as Hong Kong, but half in price

Country / City Buying price US$ per

• Sq. M.

Price/Rent Ratio (x) Pent per Month ($) Gross Rental Yield 3

Hong Kong / Hong Kong Island 22,814 35x 6,431 2.82%

4

US / New York 18,499 26x 7,225 3.91%

5

France / Paris 18,415 35x 5,317 2.89%

6

Russia / Moscow 16,021 31x 5,158 3.22%

7

Singapore 15,251 35x 4,332 2.83%

8

Austria / Vienna 14,592 46x 3,174 2.18%

9

Switzerland / Geneva 13,529 26x 5,152 3.81%

10

India / Mumbai 11,455 45x 2,540 2.22%

11

Japan / Tokyo 10,784 20x 5,413 5.02%

Source: Global Property Guide

www.housingjapan.com

6 12 18 24 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

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Capital Gain is possible. From the lowest point in 2000 until 2008, land prices in Ginza 3 Chome rose 100%.

Land price fluctuation for Ginza 3-chome (in millions JPY) 100% UP

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

TOKYO REAL ESTATE REPORT

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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

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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)

Tokyo Demographic Report

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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)

TOKYO DEMOGRAPHIC REPORT

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City GDP 2014 450 900 1350 1800

Tokyo New York Los Angeles Seoul London Paris Osaka-Kobe Shanghai Chicago Moscow

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2025 estimates were targeting 36.4 million people in the greater Tokyo area however in 2015, the population was measured at 37.8 million.

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

6

Osaka-Kobe 11.0 Delhi 15.9 Mexico City 21.0

7

Kolkata 10.9 Shanghai 15.0 New York 20.6 Tokyo and Suburban Area Historical and Growth Population Projections

Source: Various municipality web sites

TOKYO DEMOGRAPHIC REPORT

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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)

TOKYO DEMOGRAPHIC REPORT

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Tokyo Metropolitan Government Original Estimation made in 1995 for population levels in 2015

Source:Mitsubishi UFJ Trust Bank Real Estate Research

An interesting visualisation:

TOKYO DEMOGRAPHIC REPORT

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13 Source: Tokyo Metropolitan Government, “Industry and Employment in Tokyo – A Graphic Overview 2014”

Other 54% Tokyo 46% Other 24% Tokyo 76%

Number of Companies with Capital

• f Over 1 Billion Yen in Japan

Number of Headquarters for Foreign-Affiliated Companies in Japan

Source: Tokyo Metropolitan Government, “Industry and Employment in Tokyo – A Graphic Overview 2014”

2,749 companies 3,213 companies 2,371 companies 732 companies

TOKYO DEMOGRAPHIC REPORT

Japan Growth Potential

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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

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JAPAN GROWTH POTENTIAL

Nikkei 225 Rising

Source: Google Finance Source: XE currency

Since Mr. Abe was elected, the Nikkei 225 has risen to pre-2008 levels and the yen has fallen in value. This helps export driven multinational corporations increase make more money. So the remaining question: When will consumer spending increase?

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JAPAN GROWTH POTENTIAL

Source: Bloomberg; released on October 12th, 2015

Now…

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JAPAN GROWTH POTENTIAL

…Except

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… Source: Bloomberg; released on October 12th, 2015

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JAPAN GROWTH POTENTIAL

More than 13 million visitors came to Japan in 2014

Country # Tourist in 2014

Japan 13,413,467 France 83,700,000 United Kingdom 32,613,000 Hong Kong 27,770,000 Singapore 11,858,000 USA 74,757,000 Australia 6,868,000 1 Tokyo 2 New York 3 Barcelona 4 Istanbul 5 Prague 6 Vienna 7 Berlin 8 Rome 9 Paris 10 Dubrovnik Tokyo is first among key tourist cities around the World.

Source: Trip Advisor World City Survey

Best overall experience 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.

Source: UNWTO Tourism Highlights 2015 Edition

…Tourism!

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JAPAN GROWTH POTENTIAL

Source: Japan Tourism Marketing Co. Total Inbound Tourists for 2015 With Two Months Remaining: 16,316,663 (+18% YoY Compared to ALL of 2014)

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JAPAN GROWTH POTENTIAL

Historical Annual Tourism Stats for Japan Since 1964 Source: Japan Tourism Marketing Co.

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JAPAN GROWTH POTENTIAL

Source: Japan Tourism Marketing Co. Tourists from overseas are exceeding predictions so much that….

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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

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JAPAN GROWTH POTENTIAL

Source: Japan Tourism Marketing Co. Another way to visualise the change in tourism targets

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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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TOKYO REAL ESTATE REPORT

In conclusion…

• Tokyo is better than the rest of Japan demographics

wise

• Capital gains in central Tokyo is VERY possible
• Tourism is exceeding expectations and is injecting

enormous amounts of money into the economy

• Abenomics is giving Japan’s economy more reason

to raise household incomes

• The key indicator to watch is household spending

from now on

Thank you for your time