Not only does Tokyo make a strong investment case for both investors and homeowners, but now is perhaps the greatest time in the city`s history to purchase property. We have seen the returns of capital gains in large parts of the metropolis and there remains strong rental return opportunities as well, with yields higher than other major global cities. There are a number of factors involved, ranging from growing international awareness, greater inbound tourism and the changing nature of the domestic Japanese market.
With big events such as the Tokyo Olympics 2020 and the Rugby Worldcup 2019 coming up, Tokyo profits from improvements on top of an already first-class infrastructure and is expecting an economic impact of 3 trillion Yen (29.7 USD) while having a budget of 383 billion Yen for the construction and renovation of the necessary facilities. The site of the games is to be converted into permanent residences after the event is over.
The events are also helping to boost tourism awareness, traveller numbers and alter Japanese institutions to encourage a more global outlook.
When the current Prime Minister of Japan, Shinzo Abe, was elected in December 2012, he introduced his now famous program of radical economic reforms dubbed “Abenomics”. Thanks to the aggressive monetary easing policies brought and the new trade-orientated foreign-policy, the Japanese economy has started to move forward in a more virtuous cycle. We have seen corporate profits return, strong investment from business and increased migration into Tokyo.
On top of this, the Tokyo Metropolitan Government has also launched the Special Zone for Asian Headquarters project as a new plan to attract foreign companies to Tokyo, with the aim to make Tokyo the preferred site in the Asian region for regional headquarters and R&D centers. This leads to tax incentives, low interest loans, a quicker immigration process and simplified documents, business and living support as well as multiple language support being provided.
What is underpinning this is the cheaper Japanese yen – something which has both made Japanese exports cheaper on the global market but also made property here considerably cheaper when compared to its Asian neighbours.
Furthermore, tourism in Japan has been steadily rising, with the numbers doubling in the last 2 years to an all-time high of 19 million in 2015, leading to high occupancy rates and forcing the current hotel laws into greater flexibility as well as leading to a number of new property developments.
With any financial benefits for ordinary citizens lagging, the greater flexibility in the market has also seen Japanese people once again looking to move, especially to Tokyo, and that has resulted in capital price rises for central Tokyo real estate.
With all of these current developments, the “Emerging Trends in Real Estate Asia Pacific 2016,” has once again ranked Tokyo as the number one city in Asia to invest in for its prospects, which marks the third year in a row it has occupied this position.
Although Japan infamously faces a demographic fall, Tokyo is poised to continue to grow for the next 20 years as more and more people concentrate on the metropolis.