Real Estate Japan | Tokyo, Osaka, Nagoya Properties For Rent & Sale

Tokyo is still a strong market no matter what anyone says. Anyone who has imported a product such as wine or cheese, opened a restaurant chain offering exotic dishes, or even anyone opening a serious, student improvement focused English school all have one thing in common. They offer the Japanese public a product or service that either never existed before or if it did, then the product or service is offered with greater efficiency and ease of use.

Every foreign entrepreneur in Tokyo basically all have the same mantra; sell to the Japanese. This is not a surprising idea seeing as how the foreign market in Japan is in the serious minority. Break the foreign population down further into English-speaking Westerners and the numbers of us in Japan shrink even further.

When it comes to investment properties, the same mantra holds true; buy a property that can be rented easily to Japanese people for residential purposes. Sounds simple right? It is, once you have found the right property.

Often, when most think of buying investment property in Japan, many tend to think of luxury homes/condos or office space. However, buying investment property that can cater to the middle income range Japanese person whose ilk make up the vast majority of Tokyo’s population can still satisfy yield expectations by lowering the risk of higher than expected vacancy rates. Simply put, there are more Japanese people in Tokyo who can afford to rent an apartment for ￥80,000 a month than ￥250,000 a month.

For Japanese people to rent, they have in their minds that they must have 6 months’ rent in hand just to sign the lease and get their keys. Key money for example, which is a ridiculous throwback from after the second world war, is paid by Japanese people and is thought generally as something that everyone does and no one can get out of.

This is especially true in the under ￥100,000 a month rent range. The metropolis of Tokyo, which includes Kanagawa, Chiba and Saitama prefectures, is still the largest metropolis in the world. However, looking at the demographics and income levels for the average Japanese person, the vast majority can only afford between ￥60,000 – ￥80,000 a month for rent.

The majority of Tokyo renters tend to be single people, young and either going to school or just starting their careers. Despite Japan’s overall shrinking population, there is still an influx of native’s coming in from the rural areas to Tokyo specifically due to lack of economic and educational opportunities in their hometowns.

Christopher Dillon, author of “Landed: The Guide To Buying Property in Japan” illustrates best the changes over the next couple of decades in Japan’s demographics in a recent presentation he gave at the Foreign Correspondents Club in Hong Kong. To best view the following video, you should probably plug in a set of headphones.

Japanese real estate: Bargain or black hole? from Christopher Dillon on Vimeo.

Imagine you buy one large condominium that can provide a healthy 7% net yield if rented out at your projected rent of ￥750,000 a month. This can put you in a tough spot if the unit sits empty for a couple of months, leaving you to cover a mortgage expenses and property management costs with no rent revenue being generated. Generally, 2 or 3 months with an empty investment property like this one can wipe out a year of net income gains while the unit was rented.

Take the same money used to buy the one luxury condominium and buy (or build/renovate) a 2-story wood frame apartment building with 8 – 10 units that can be rented out for between ￥60,000 – ￥90,000 per month. Find a property manager who will not charge key money, allow the tenants to use a guarantor company and you have just lowered your risk of an empty investment property. Why? Your building targets the largest demographic in Tokyo regarding budget, you are offering cheaper contract fees with no key money, and depending on if you built the building from scratch or renovated an existing structure, you can offer better quality apartments than the building down the street.

Many of us think of Tokyo as a place to introduce new products and services but have you thought about taking a traditional service like providing housing and making it easier for Japanese people to lease? Examples include offering no key money locations, offering better quality designs at market rates and allowing your property to be used as SOHO (small office / home office). These investment opportunities exist and the market is here waiting.

Tokyo Apartments For Sale | Tokyo Apartments For Rent | Real Estate Japan