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

In a recession, there is usually one investment which is a safe bet — real estate. And now is a good time to consider buying property in Japan, says Christopher Dillon, a Hong Kong – based writer and principal of Dillon Communications Ltd, a boutique consultancy.

Born in Canada, Dillon lived in Tokyo from 1989 to 1992, before moving to Hong Kong. He has since worked with some of the world’s most successful companies, including Bechtel, Deloitte, the Economist Group, Manulife, Munich Re and Wal-Mart. He is also the author of “Landed: The guide to buying property in Japan,” which followed his first book, “Landed: The expatriate’s guide to buying and renovating property in Hong Kong.”

From time to time, Dillon leads small-group and one-on-one communications workshops for senior executives in China, Hong Kong, India, Japan, Korea, Singapore and Taiwan, and is also in demand as a speaker at conferences and seminars.

RealEstate.co.jp recently met Chris along with sister-site Japan Today to hears more about real estate investment in Japan.

How often do you visit Japan?

Three or four times a year, on average. Tokyo is one of my favorite cities.

Is now a good time for overseas investors to consider buying property in Japan, especially considering the high yen?

It’s a good time to invest in Japanese property, but you have to be selective. For example, I like Tokyo, which benefits from migration from other cities and prefectures. As an investor, I also like older apartments in working-class neighborhoods. These properties are inexpensive, yields are good and there is strong, stable demand.

I also believe the bad news about Japan has been overdone. If all you know about Japan is what you read in the papers, you’d have to conclude that the country is a smoldering ruin. Japan has problems, but it remains the world’s third-largest economy, it has advanced technology, a skilled, educated work force, and tremendous social cohesion.

The yen’s strength is not major issue. The Americans and Europeans seem intent on keeping their currencies weak – to the detriment of Japan, Canada, Australia and other countries – and I don’t see that changing any time soon. Furthermore, the Economist’s Big Mac index shows that the yen is overvalued by just 5% on a purchasing-power parity basis.

What are some peculiarities of the Japanese real estate market that you don’t see in other countries?

Japan differs from Western housing markets in many ways. One of the biggest is in the preference for new property. In Japan, used homes represent about 13% of total sales, compared to 78% in the United States and 89% in Britain. That is changing, as the Japanese government encourages the construction of long-life homes, but many people still see homes as consumable items.

Also, the idea of a “handyman’s special” — where you buy an old, decrepit home, fix it up and resell it — is uncommon in Japan. Most home are demolished after 30 years and rebuilt.

Another difference is the lack of insulation. Given that Japan imports almost all of its energy, double-glazing, thermal insulation and other environmentally friendly technologies have been slow to catch on. A fourth difference is in the accessibility of information. In the United States and Canada, the Multiple Listing Service (MLS) and zillow.com give buyers a huge amount of data. The Japanese equivalent to MLS, the Real Estate Information Network System (REINS), is only available to real estate agents.

Are you personally looking for investment property in Japan? In which countries do you invest?

In October, I bought an apartment in Tokyo and I’m always looking for interesting investments. I also own property in Hong Kong.

Are there particular areas in Tokyo where people can look for bargain properties?

Prices in grittier areas, like Adachi-ku and Itabashi-ku are surprisingly inexpensive. If you want to live in Azabu or Hiroo, on the other hand, you’re going to pay for the privilege. The irony is that working-class neighborhoods in Tokyo are not like working-class neighborhoods in other cities, which are often rundown, crime-ridden and poorly served by transportation and other infrastructure.

You can also find bargains in rural areas, but you have to consider the economic viability of the community where you’re buying. With declining populations and the hollowing-out of Japan’s manufacturers, there have been lots of cutbacks to essential services, like hospitals, schools, train services and so on. Those cutbacks don’t bode well for your quality of life or rental yields.

Talk to Chris directly

Chris Dillon will be leading an online webinar in which he will share his insight and experience on the Japanese property market. If you are interested in finding out more, the webinar is open to all.

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