Earthquakes! Tsunamis! Japanese people are going to go extinct with those low birth rates! The list goes on and these are just some of the common concerns we hear often from home owners. Buying a house is a huge investment for just about 99% of us, and we understand those fears are rational to have. However, we want to address those concerns and hopefully this article will help to allay some fears.
1. Natural Disasters
In our experience, this is the most common concern our customers have. Japan, being situated on the Pacific Ring of Fire, means that it experiences earthquakes often. While most earthquakes are not strong enough to cause any substantial damages to infrastructure, destructive earthquakes do occur every few decades.
Why you don’t have to worry too much: Building collapse due to earthquakes are extremely low, since all buildings after 1981, known as the shin-taishin or new anti-earthquake standards, in Japan are required to have an earthquake resistant structure, and new construction must comply rigorous building codes. Another thing is your property can be insured against natural disasters and fire, and premiums are not expensive. To read more about coverage and premiums, click here.
Case in point: 3652 buildings in Tokyo were reported to have “very little” to “slight damage”, 8 buildings reported “half damage”, and zero “serious damage” from data published by the Condominium Association.
Source: Nikkei Business Publication, January 10, 2012
2. Japan’s Falling Birth Rates makes it a bad country to invest in
Yes, Japan’s overall population is shrinking, but this fall is uneven, and demographics in Tokyo tell a different story compared to the rest of Japan. Young people from the age of 21-29 are moving to Tokyo and other major cities such as Osaka and Nagoya.
Why you don’t have to worry too much: This increase of population inflow into Tokyo has exceed the year before and is due to the strong economic trends. All 23 wards have seen an increase in the population, and wards like Chuo Ward has broke through 150,000 people for the first time in 55 years. The population is still forecasted to increase by 17% to about 110,000 from the current 70,000 in 10 years.
3. Japan doesn’t seem to be very welcoming of foreigners
Japan is closed, sometimes literally. Last year, a Japanese cosmetic store Pola made headlines by banning Chinese visitors, which seems to be going against Abe’s push for inbound tourism growth and “omotenashi” – the ever famous Japanese style of hospitality.
While we don’t want to offer simple, sweeping statements about these actions that tread dangerously on the side of racism, Japan has seen huge, year on year and often double digit growth in terms of visitors go to Japan to visit. This has put on an enormous strain on business owners, who can find it overwhelming and unable to cope with the lack of buffer time to react to these changes and growth.
Why you don’t have to worry too much: People are always surprised to hear that foreigners can buy land and property in Japan, and they enjoy the same rights and the same rules apply to them as well as a Japanese owner. The most common and preferred land ownership is freehold, which is the absolute ownership in Japan and thus a draw for investors.
And as mentioned above, most Japanese people and organisations are not being intentionally racist, but perhaps rather under the pressure from growth and are also lacking in resources to cater to English speaking customers. While there are many initiatives to bridge language issues, change is still happening slowly, and so the best way to get around this barrier is to find a company that provides English support. One thing I can assure you is that Japanese companies are painfully aware of this gap and many are pushing to accommodate foreign customers.
4. A lot of Chinese investors are buying into Japanese property. Aren’t they spoiling the market this way?
The Chinese have gained worldwide infamy with their “bakugai” or explosive shopping sprees, from everything to luxury products to Real Estate. They come with cold hard cash, and buy truckloads of stuff to bring back home. This is the same for Real Estate, and you don’t really hear sales agencies talking it, because why should they? Good business is a good thing, isn’t it?
Why you don’t have to worry too much: Even though Chinese customers make up a significant portion of our overseas customers. This tantalising image of a rich businessman swaggering in, carrying wads of cold hard cash snapping up buildings and apartments wanting to circumvent capital control back home is not really the reality. There are many somewhat incoherent sources such as this report from Bloomberg, and this from Business Insider as to China’s influence on the Japanese market, but from our own experience, transactions made by foreign customers still make a very small space on the pie, and Japan has not yet experienced the impact the wealthy Chinese has made on cities like London, Melbourne or San Francisco.
5. Houses in Japan are more like cars because they depreciate
This is a major one out of all the factors listed. In many countries, properties are treated as assets, but this is not the case in Japan. Houses depreciate once you move in, and houses are commonly demolished and rebuilt in Japan. This goes against the common idea that assets appreciate and grow after time. I sometimes have to tell potential buyers that if they are looking to get rich by flipping houses, it might be better that they find opportunities elsewhere.
Here’s the upside: Japan is a mature market, and even if you hear about capital gains from the upcoming Olympics, be skeptical and inquire more about how they have arrived at this conclusion. What Tokyo can offer investors is a better rental yield, strong domestic rental market, a healthy tourism industry, as well as openness to foreign buyers.
If you’re looking to invest in somewhere that offers you a stable income and also intend to invest long term, drop us any inquiries at
https://www.dualtap-international.co.jp/contact/contact.html and we will get back to you within one working day!