Japanese Real-estate Investment Update IMPORTANT NOTICE: The - - PowerPoint PPT Presentation

Japanese Real-estate Investment Update

IMPORTANT NOTICE: The information in this slides is strictly confidential. Please do not disclose any information either directly or indirectly to a third party without prior approval from HJRE. All information are given in good faith and are believed to be correct at time of dissemination but HJRE cannot and does not guarantee any rate of return or investment timeline based on the information presented herein. By reading and reviewing the information contained in this document, investors acknowledge and agree that HJRE, and/or its agents are not liable to any party for any loss or damage caused by the use of the information contained herein. This includes any errors or omissions contained in this document for any investment decision. Investors are required to conduct their own investigations, analysis, due diligence, draw their own conclusions, before making any decisions. Investors are to seek professional advice from accountants, lawyers, consultants, brokers or other professionals that are licensed, qualified or authorized for any issues concerning taxes or legalities or technical specifications related to the property.

HJ Real Estate is the gateway to Japanese and Singapore
 real-estate for International Clients.

HJ Real Estate is the gateway to Japanese real-estate for international clients– whether you are a first-time investor; an institutional investor, or simply looking to purchase a luxury home in Japan. As a licensed agency in Singapore, we ensure complete legal compliance with local authorities while providing you direct access to additional financing options and tax advice. We are also an associated company of Housing Japan K.K, an international real estate broker in Tokyo, and HJ Asset Management K.K, an independent asset management firm. This relationship ensures we are uniquely placed to benefit from both our international position and a strong presence within Japan. We have an established history of providing a broad range of real estate services to clients in Japan and around the world. Our strength in various languages allows us to specialize in serving you in the way that suits you best. We are able to source the right property; arrange deal financing and structure, close contracts and if necessary, provide in- house property management services.

350 Orchard Road #21-07 Shaw House Singapore, 238868 +6562356866 www.hjrealestate.com.sg marketing@hjrealestate.com.sg

What’s happening in Japan?

Massive Growth in Japan Tourism

Source: JTB Tourism Research & Consulting Co. (http://www.tourism.jp/en/tourism-database/stats/inbound/)

6,250,000 12,500,000 18,750,000 25,000,000 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Shinzo Abe returns, Abenomics begins

250% INCREASE in 3 years

Massive Growth in Japan Tourism

No. Country # Tourist in 2015 1 France 83,000,000 2 United States 75,000,000 4 China 55,000,000 8 United Kingdom 32,000,000 11 Hong Kong 27,000,000 22 Japan 19,000,000 25 Singapore 11,800,000 No. Country 1 Tokyo 2 New York 3 Barcelona 4 Istanbul 5 Prague

Source: Trip Advisor World City Survey

Best overall experience

Source: UNWTO Tourism Highlights 2015 Edition

Japan targets 40 million tourist by 2020 Tourist destination rank in 2015

International Sports Events

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

The Summer Olympics in 2020 The Rugby World Cup in 2019

Legalized Casino and Integrated Resorts

• Japan’s parliament passed a bill legalizing casinos in Dec 2016.
• Profits will be heavily taxed, which will be used to lower

government debt, and increase public spending

• Major Casinos such as Wynn and MGM, Sands are among the
• perators that have expressed interest.
• Opening 2 Integrated Resorts could bring in US$10 bn. in revenue,

wish potential for $30 billion if spread across the country.

• Bloomberg Industries Analyst indicated that Japan has the potential
• f becoming the next big thing beyond Macao.
• According to Bloomberg, the revenue of Macao’s Casino is $28.9

billion, Singapore $4.8 billion. The revenue of Pachinko in 2015 is $196 billion.

Special Economic Zones

Proposed Special Economic Zones: Asian Headquarter District

The Tokyo Metropolitan Government is advancing efforts to attract FOREIGN COMPANIES and further improve the INTERNATIONAL BUSINESS ENVIRONMENT within the special economic zones designated by the national government. Tokyo One-Stop Business Establishment Center Free business consulting services Subsidy program for expenses including recruitment costs Introduction of office space at reduced rates Tax incentives Immigration Act Low Interest Loans Quicker immigration process and simplified documents

Tokyo plans to raise its contribution to the national’s nominal GDP by roughly 30% from 2014 to $1 trillion by 2020.

Tokyo Gov. Yuriko Koike

Major Redevelopments in Central Tokyo

• 3. Otemachi

By Mitsubishi

• 2. Nihonbashi

By Mitsui

• 5. Toranomon

By Mori Blg.

• 6. Akasaka

By NSKRE

• 8. Hamamatsucho

By Nomura

• 10. Olympic Village

By Tokyo Gov.

• 7. Shibuya

By Tokyu

• 1. Olympic stadium

By Tokyo Gov.

• 4. Yotsuya

By Mitsubishi

• 9. Shinagawa

By Keikyu

Linear Train install by 2027

1 2 3 4 5 6 7 8 9 10

Attractions of Tokyo, Japan

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

World most populated city Source: various municipal web sites

Attractions of Tokyo, Japan

1st Place in National image ranking Source: US Times No. Score City 1 77 Japan 2 72 Germany 3 71 Singapore 4 64 America

Attractions of Tokyo, Japan

A safe and secure city Source: Tokyo Gov.

Attractions of Tokyo, Japan

450 900 1350 1800

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

Largest City GDP in the world

Attractions of Tokyo, Japan

World’s Top Gourmet capital Source: Michelin Guide No. Total Stars City 1 304 Tokyo 2 135 Kyoto 3 134 Paris 4 117 Osaka

The answer is Tokyo.

Attractions of Tokyo, Japan

Clean water and air Source: Tokyo Gov.

4th Place in Global Power City Index

Global Power City Index 2015

The Global Power City Index (GPCI) evaluates and ranks the major cities of the world according to their “magnetism,” i.e. their comprehensive power which allows them to attract creative individuals and business enterprises from every continent and to mobilize their assets in securing economic, social, and environmental

• Development. GPCI evaluates the comprehensive power of forty of the world’s leading cities according to six main functions 1. Economy, 2. Research and

Development, 3. Cultural Interaction, 4. Livability, 5. Environment and 6. Accessibility, representing city strength.

JPN Real Estate Market Updates

World’s Cross Border in Real-Estate Trade

London NY Tokyo Paris HK Shanghai Sydney Domestic 39% 68% 88% 60% 79% 69% 57% Cross border 61% 32% 12% 40% 21% 31% 43%

250 500 750 1000 London NY Tokyo Paris HK Shanghai Sydney Domestic Cross border

Trade volume between 2011 2ndQ and 2014 2ndQ Source: Japan Real-estate Research Authority, based on Jones Lang Lasalle

List of Countries by Immigrant Population

Country Immigrants Total Of World (%) Of National (%) United Arab Emirates 7,826,981 3.4% 83.7% Monaco 21,042 0.1% 64.2% Singapore 2,323,252 1.0% 42.9% Hong Kong 2,804,753 1.2% 38.9% Australia 6,763,663 2.8% 27.7% Canada 7,284,069 3.1% 20.7% United States 46,627,102 19.8% 14.3% United Kingdom 8,543,120 3% 11.3% Japan 2,437,169 1.1% 1.9%

Source: UN Report Trends in International Migrant Stock: The 2015 Revision

World’s Most Expensive Cities in 2016

Rank City Buying price US$ per Sq. M. Price/Rent Ratio (x) Rent per Month ($) Gross Rental Yield 2

London 34,531 31x 11,089 3.21%

3

Hong Kong 25,551 (22,814 in 2013) 36x (35x in 2013) 7,024 (6,431 in 2013) 2.75% (2.81% in 2013)

4

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

8

Tokyo 13,825 (10,784 in 2013) 29x (20x in 2013) 4,744 (5,413 in 2013) 3.43% (5.02% in 2013)

9

Singapore 13,748 (15,251 in 2013) 39x (35x in 2013) 3,498 (4,332 in 2013) 2.54% (2.83% in 2013)

Shows the buying price, price/rent ratio, rent per month (US$), and gross rental yield (%) for a 120 sqm apartment. Source: Global Property Guide

World Comparison: Prices against average income and rents

JPN Economic Improvement

JPN Economic Improvement

Rental History per Square Meter in Tokyo (in ¥)

Source: Housing Japan Historical Property Database

Global Financial Crisis Eastern Japan Earthquake Abe returns, Abenomics

Tips for JPN Real Estate

Tax for foreigner in Japan and Singapore

In Japan, NO restrictions on direct foreign ownership of any properties NO additional tax on foreign ownership. Most real estate is freehold, NOT leasehold In Singapore, Foreigners pay additional 15% Buyer’s Stamp Duty. Seller Stamp Duty of 16% (within 1 year of sale) is payable regardless of whether there is Capital Gain. 16% Stamp Duty reduces by 4% each and every year till zero.

Tax in Real Estate: Ownership Comparison

Type of Tax Individual SG / BVI Company Japanese Company

Acquisition

Real Estate Acquisition Tax Same Treatment Registration & License Tax Same Treatment Consumption Tax Same Treatment Stamp Tax Same Treatment

Rental

Fixed asset Tax Same Treatment City Planning Tax Same Treatment Individual Income Tax

• r

Corporate tax

Progressive rates 5.105% ~ 45.945% But Actually expected 5.105% ~ 10.21% for 1 unit owner Corporation tax 24.4296% Corporation tax & Local Tax 29.97% Disposition

Individual Income Tax

• r

Corporate tax

The holding period is more than 5 years (*1) 15.315% SG company sell the property 24.4296% (*2*3) Japanese company sell the property 29.97% (*2*3) The holding period is Within 5 years (*1) 30.63% Inheritance

Inheritance tax

Progressive rates 10% ~ 55% But Actually expected 0% ~ 10 % for 1 unit owner N/A Progressive rates 10% ~ 55% But Actually expected 0% ~ 10 % for 1 unit owner

(*1) 15.315% would apply from the first January after 5 years of ownership. 30.63% would apply before the first January after 5 years of ownership. (*2) An individual Singapore resident sell the share of the Singapore or Japanese company whose most of assets are consists of real properties 15.315% (*3) A Singapore company sell the share of the Singapore or Japanese company whose most of assets are consists of real properties 24.4296%

Acquisition Cost of Japanese properties

• Approx. 5 to 6% of Purchasing Price

Property Price

Transaction Cost

Registration Fee Insurance Cost Loan Fee Tax Fee pays to the Solicitor for the registration of the property. Fire Insurance etc.

• Stamp Duty … on the Sale Contract and the

Loan contract

• Registration and License Fee

1. Property Registration 2. Mortgage Registration

• Property Acquisition Tax
• Fixed Asset Tax Clearance
• City Planning Tax Clearance
• Insurance Application Fee
• Insurance Expense

Transaction Value (exclude. Tax) Agent Fee

Over 4 millions yen Transaction Value x 3% + 60000 + Ctax 2 millions – 4 millions yen Under 2 millions yen Transaction Value x 4% + 20000 + Ctax Transaction Value x 5% + CTax

Other Relocation Cost, PM Cost etc. Agent Fee LOAN

Transaction Cost Deposit

CASH

10-20% 50-70%

Global Media Coverage of Japan

Global Media Coverage of Japan

Global Media Coverage of Japan

Global Media Coverage of Japan

Global Media Coverage of Japan

Global Media Coverage of Japan

Tokyo Property Management Hands Free & Stress Free Ownership

Hands Free, Stress Free Property Management

Investment Property Tracker

Exclusive Service to Offshore Owners Access your property management statements anytime, anywhere with Housing Japan’s exclusive Investment Property Tracker.

• Mobile Friendly
• Browser based, no app

needed

• Three language interface
• English, Japanese, Chinese
• Cost of use included in

property management fee

https://housingjapan.com/property-management/tracker/

1. Tokyo is the world’s most populated city with a GDP higher than that of New York and London. 2. Japan has the world’s 2nd largest commercial real estate market with extremely high utilization. 3. Cross-border real estate trade is just 12%, with plenty of opportunities for outsider participation. 4. Recent government trade and immigration policies have created new opportunities in the market. 5. Tokyo property prices remain relatively cheap when compared to other major world cities. 6. There are no restrictions on foreign ownership in Japan, and no additional tax. This includes all freehold and landed properties. 7. Tourism to Japan is currently booming, with 28 mil people visiting in 2017 and 40 mil expected in 2020. 8. The 2020 Olympics and Rugby World Cup 2019 continue to attract outsiders and open the economy. 9. Proposed Casino and Integrated Resort developments will transform local economies.

• 10. New international business zones are creating a low-tax, foreign-friendly business environment designed to

attract international investment to Japan.

10 Reasons to invest in Japanese real estate

IMPORTANT NOTICE: The information in this slides is strictly confidential. Please do not disclose any information either directly or indirectly to a third party without prior approval from HJRE. All information are given in good faith and are believed to be correct at time of dissemination but HJRE cannot and does not guarantee any rate of return or investment timeline based on the information presented herein. By reading and reviewing the information contained in this document, investors acknowledge and agree that HJRE, and/or its agents are not liable to any party for any loss or damage caused by the use of the information contained

• herein. This includes any errors or omissions contained in this document for any investment decision.

Investors are required to conduct their own investigations, analysis, due diligence, draw their own conclusions, before making any decisions. Investors are to seek professional advice from accountants, lawyers, consultants, brokers or

• ther professionals that are licensed, qualified or authorized for any issues concerning taxes or legalities or technical

specifications related to the property.

Mitsuo Hashimoto Housing Japan Co. Ltd. President Joseph Rigby HJ Group Director Tsutomu Sato HJ Real Estate Pte. Ltd. Managing Director Peter Koh HJ Real Estate Pte. Ltd. Director、KEO

Management team of HJ Group

Kyoko Yokoyama Housing Japan Co. Ltd. Head of Property Management Shirley Yan Housing Japan Co. Ltd. Head of Sales Division Taro Squires HJ Asset Management Co. Ltd. CEO Adam German Housing Japan Co. Ltd. Head of Marketing Division

Sales, Leasing, Property Management, Luxury Home Development Real Estate Sales, Brokerage, Investment Real Estate Planning, Design, Construction & Supervision Investigation and Advisory for effective use of Land and Building Asset Management, Financial instruments dealer Investment management business, Investment advisory and agency business, Type 2 financial instruments business, Comprehensive real estate investment advisory business Gateway to Japanese and Singapore real-estate Real Estate Activities, Business and Management Consultancy Service

HJ Real Estate is the gateway to Japanese and Singapore
 real-estate for International Clients.

HJ Real Estate is the gateway to Japanese real-estate for international clients– whether you are a first-time investor; an institutional investor, or simply looking to purchase a luxury home in Japan. As a licensed agency in Singapore, we ensure complete legal compliance with local authorities while providing you direct access to additional financing options and tax advice. We are also an associated company of Housing Japan K.K, an international real estate broker in Tokyo, and HJ Asset Management K.K, an independent asset management firm. This relationship ensures we are uniquely placed to benefit from both our international position and a strong presence within Japan. We have an established history of providing a broad range of real estate services to clients in Japan and around the world. Our strength in various languages allows us to specialize in serving you in the way that suits you best. We are able to source the right property; arrange deal financing and structure, close contracts and if necessary, provide in-house property management services.

350 Orchard Road #21-07 Shaw House Singapore, 238868 +6562356866 www.hjrealestate.com.sg marketing@hjrealestate.com.sg