Cross-border investors should take another look at the Japanese market which has been largely overlooked since the 1989 crash Asking a Japanese person whether the country manufactures cars may seem rather naïve but that is exactly what US national Lawrence Longua, now director of the New York REIT Centre, did as a 17-year-old undergraduate in New England. These days most people could probably name a handful of Japanese car brands and some may be aware the country is the second-largest car producer in the world.
Cross-border investors should take another look at the Japanese market which has been largely overlooked since the 1989 crash
Asking a Japanese person whether the country manufactures cars may seem rather naïve but that is exactly what US national Lawrence Longua, now director of the New York REIT Centre, did as a 17-year-old undergraduate in New England. These days most people could probably name a handful of Japanese car brands and some may be aware the country is the second-largest car producer in the world.
Yet, as Longua explained to PropertyEU’s Japan Investment Briefing in November, the world at large remains somewhat ignorant about the Japanese economy in general, and its real estate sector in particular. The widely held view is that Japan went into terminal decline after an economic crash at the end of the 1980s. ‘It was unsettling to watch the bursting of the bubble in 1989 and to a certain extent Japan disappeared from a lot of people’s mindsets and became somewhat invisible or irrelevant. I think that is not an accurate view and we should look at the market again,’ Longua told the investment briefing which was hosted in London by international law firm SJ Berwin. The point was driven home by Katsuhiko Kita, first secretary of the Japanese embassy in London. ‘Due to the geographical distance I think it has been very difficult for British and European investors to recognise the logic of investing in Japanese real estate. However, money is being allocated globally these days for diversification purposes to generate a stable global portfolio performance and I believe Japan can help achieve these desired returns.’ Kita and Longua were keen to dispel other misconceptions about the country. The major earthquake and tsunami last year, Kita noted, affected an area which accounts for only 2.5% of Japan’s economy, and the business climate had recovered gradually to the level prior to the natural disaster. This means that despite its slow economic growth, Japan remains the third-largest economy in the world. Until the third quarter of this year, the country had been reporting positive GDP figures - something few European countries can boost. The latest forecasts are that Japan will be joining them in recession before reviving in the second half of 2013, Longua said. Japan’s demographics resemble the trend in the West. The population is ageing fast, and is expected to shrink by a third by 2060. But as Longua showed in his market presentation, there are 12 cities in Japan with a population of 1 million or more, and Tokyo’s metropolitan area is expected to continue to attract young professionals
which will keep its population above 35 million in 2025. This puts the Tokyo market in a league of its own.
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