Tokyo is 'stable but forgotten' real estate market

Tokyo property is not going to offer 'explosive' growth any time soon but the time is right for international investors to become reacquainted with a strong, stable market that has been largely forgotten, PropertyEU's recent Japan Investment Briefing heard.

Professor Lawrence Longua, director of New York REIT Centre, said during his presentation that Tokyo, relative to US, European and other East Asian markets, has gone relatively unnoticed as a source of real estate investment opportunities since the 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 by international law firm SJ Berwin.

Tokyo is in a much stronger economic and demographic position than other parts of Japan, and the city is home to the headquarters of 48 of the top 500 global companies, Longua pointed out. By contrast, London has 17 headquarters, Paris 19 and New York only 18. Beijing, after Tokyo, is the second largest corporate centre with 44 corporate headquarters.

An important attraction is that Japan's economy has experienced impressive growth this year. The GDP forecast in the third quarter of 2012 was revised upward to 3.1%; an increase from the 2.8% forecast by Deutsche Bank economists in the previous quarter.

The most recent data, Longua conceded, point to a downturn, though the consensus among economists is for a revival in the second half of 2013. Europe, on the other hand, has seen its forecast downgraded from 1% growth for 2012 to 0.1%.

'The Japanese capital is not going to offer explosive growth to risk-averse investors but it is going to be steady. I would not go so far as to say buying Tokyo property is equivalent to buying a bond, but it isn't that far off.'

Read more about the Japan Investment Briefing in the December edition of PropertyEU Magazine.