Here are the reasons why Tokyo property MAY appreciate:
1. Tokyo's population is STILL expanding and is the only city to see strong population growth of 100k per year! I foresee Tokyo's population growth will continue until 2024, before declining like the rest of the nation, unless the Japanese people change their culture!
2. Olympics in Tokyo.
3. Japan is certainly very affordable. Tokyo's price to income is roughly around 8x, compared to Singapore's 23x. It's the cheapest property market in Asia !!
4. The gross yield over borrowing cost of holding a Tokyo property is over 2.5 percentage points, vs 1 ppt in Singapore, 2.5 ppt in London, 3 ppt in New York.
3. Japan is certainly very affordable. Tokyo's price to income is roughly around 8x, compared to Singapore's 23x. It's the cheapest property market in Asia !!
4. The gross yield over borrowing cost of holding a Tokyo property is over 2.5 percentage points, vs 1 ppt in Singapore, 2.5 ppt in London, 3 ppt in New York.
Here are the reasons why Tokyo property WILL PROBABLY NOT Appreciate:
1. I met a friend today, who's relative bought an apartment for JPY55m in 1995. After 19 years, the market price is only JPY35m! It is true that Japanese properties tend to depreciate over time, just like a new car! The sweet spot is to buy 20 - 30 year old properties, not new apartments!
2. Japan's population is shrinking. There's no political will to allow large scale immigration because they are generally xenophobic. Japanese women are unwilling to give birth to more babies because the men are not willing to share more household chores and they are not willing to let in domestic helpers from developing countries. Either way, the culture will have to change or the nation perish.
3. The entire country is an earthquake risk. The insurance policies do not cover the market value of the buildings, but merely the cost of building it. It will be a catastrophic loss if your building suffered major damages in an earthquake measuring over Richter scale 7.
4. The Tokyo region is due for a major quake.
5. USDJPY will probably weaken. So even if you enjoy capital appreciation in JPY terms, you could lose it when converted back to SGD.
6. There is no transparent data on past transactions. It makes it more difficult to analyse trends. Vacancy rates of apartments are scanty.
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| Tokyo Apartments Built in the 1980s... Fully Depreciated, Higher Yield, Better Capital Appreciation. |
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| 20-year apartment chart. Finally rising. But if you buy new, you sell old. For every year, price depreciates by 2.5%. If you buy new, and intend to sell after 5 years, you have to ensure that the 5-yr chart appreciates by over 12.5% to have any appreciation. |
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| New apartments are tall, beautiful, made of glass. But includes a big fat developers' profit |
Japan split over how to tackle ageing issue
Proposals include encouraging more births and accepting new immigrants
CONFRONTED with dire predictions that the Japanese nation faces "decimation" of its population as a result of rapid ageing, policymakers are beginning to take such threats seriously but they remain deeply divided over how to tackle the worsening problem.
The split is over whether or not crisis can be avoided by measures to raise the nation's birth rate or whether it requires immigration on a major scale in coming years - a deeply sensitive issue both politically and socially within Japan.
The matter could come to a head next month when Prime Minister Shinzo Abe's government presents its eagerly awaited long-term economic growth strategy for Japan, setting out a series of policy measures including those designed to tackle population decline.
While the threat of Japan's population falling from some 128 million now to an officially estimated 87 million by 2060 and to just 42 million within 50 years appears to be still a long way off, radical new policies are needed right away if this fate is to be avoided, experts argue.
The implications for the world's third-largest economy are enormous, says Hidenori Sakanaka, former director of Tokyo Immigration Bureau and now executive director of Japan Immigration Policy Institute. Japan's "demographic order will break down" without drastic action, he adds.
Japan's working population will fall from 81 million now to 49 million by 2060 if the current low fertility rate of 1.35 continues, says Mr Sakanaka. Levels of "production, consumption, tax revenues, public finance, pensions and social security will become impossible to maintain".
The former government immigration chief wants Japan to admit some 10 million new immigrants over the next 50 years, with around 100,000 being admitted annually from now onwards. There is "no other method" than "accepting immigrants on a large scale" equal to European rates, he says.
But an advisory panel set up by Mr Abe to examine Japan's looming demographic crisis claimed in a report published last week that changing Japan's social security system to encourage more births is the best way to maintain the population at around the 100 million level.
Akio Mimura, head of the Japan Chamber of Commerce who headed the panel, pointed out that no national consensus has been achieved on the highly sensitive issue of immigration, and that the panel is therefore not recommending that more immigrants be allowed to live and work in Japan.
"Instead, we should first make as much effort as we can by trying to raise the birth rate," Mr Mimura was quoted by The Japan Times as saying. The advisory panel is calling more of Japan's social security budget to be allocated to child-rearing households to encourage more births.
Maintaining Japan's fast-ageing population at an economically viable level of around 100 million people would involve raising the national fertility rate (ratio of live births to population in an area) from 1.41 at present to 2.07 over the coming 50 years, the advisory panel said.
This is next to impossible, however, Mr Sakanaka says, as birth rates are declining in most advanced countries. Neither will attempts by the Abe administration to get more women employed in the nation's workforce and to encourage people to work longer solve Japan's problems.
The government's promotion of such palliatives "reveals a desperate desire to avoid at all costs opening up the nation to immigration", Mr Sakanaka told the Foreign Correspondents Club of Japan in Tokyo last Friday.
In a detailed paper he has prepared on many aspects of the issue, he warns that "if we remain a nation closed to immigrants, our population will become decimated and Japan will plunge into the chasm of annihilation".
He challenges the idea that "Abenomics can put Japan's economy on a growth path while the producer and consumer population continues to decline". Without a new immigration policy as one of its "arrows", the set of policies known as Abenomics are doomed to fail, Mr Sakanaka charges.
He urges the government to change its attitude from one of "sitting down and waiting to die" to actively nurturing a multi-ethnic society with a "Japanese-style immigration policy" that offers a stable workplace for foreigners, skills training and permanent residency.
Japan needs "care-giving immigrants, agricultural and fisheries immigrants and construction and production immigrants", with a balance being maintained among countries from where the immigrants are drawn, he says. Japan also needs to sharply increase its intake of foreign students.
"In the 21st century, it is the world's common understanding the the best method to open up a country is through immigration," Mr Sakanaka says. "The international community dispassionately considers that unless Japan opens up its doors to immigrants it will not be a truly open country."
The split is over whether or not crisis can be avoided by measures to raise the nation's birth rate or whether it requires immigration on a major scale in coming years - a deeply sensitive issue both politically and socially within Japan.
The matter could come to a head next month when Prime Minister Shinzo Abe's government presents its eagerly awaited long-term economic growth strategy for Japan, setting out a series of policy measures including those designed to tackle population decline.
While the threat of Japan's population falling from some 128 million now to an officially estimated 87 million by 2060 and to just 42 million within 50 years appears to be still a long way off, radical new policies are needed right away if this fate is to be avoided, experts argue.
The implications for the world's third-largest economy are enormous, says Hidenori Sakanaka, former director of Tokyo Immigration Bureau and now executive director of Japan Immigration Policy Institute. Japan's "demographic order will break down" without drastic action, he adds.
Japan's working population will fall from 81 million now to 49 million by 2060 if the current low fertility rate of 1.35 continues, says Mr Sakanaka. Levels of "production, consumption, tax revenues, public finance, pensions and social security will become impossible to maintain".
The former government immigration chief wants Japan to admit some 10 million new immigrants over the next 50 years, with around 100,000 being admitted annually from now onwards. There is "no other method" than "accepting immigrants on a large scale" equal to European rates, he says.
But an advisory panel set up by Mr Abe to examine Japan's looming demographic crisis claimed in a report published last week that changing Japan's social security system to encourage more births is the best way to maintain the population at around the 100 million level.
Akio Mimura, head of the Japan Chamber of Commerce who headed the panel, pointed out that no national consensus has been achieved on the highly sensitive issue of immigration, and that the panel is therefore not recommending that more immigrants be allowed to live and work in Japan.
"Instead, we should first make as much effort as we can by trying to raise the birth rate," Mr Mimura was quoted by The Japan Times as saying. The advisory panel is calling more of Japan's social security budget to be allocated to child-rearing households to encourage more births.
Maintaining Japan's fast-ageing population at an economically viable level of around 100 million people would involve raising the national fertility rate (ratio of live births to population in an area) from 1.41 at present to 2.07 over the coming 50 years, the advisory panel said.
This is next to impossible, however, Mr Sakanaka says, as birth rates are declining in most advanced countries. Neither will attempts by the Abe administration to get more women employed in the nation's workforce and to encourage people to work longer solve Japan's problems.
The government's promotion of such palliatives "reveals a desperate desire to avoid at all costs opening up the nation to immigration", Mr Sakanaka told the Foreign Correspondents Club of Japan in Tokyo last Friday.
In a detailed paper he has prepared on many aspects of the issue, he warns that "if we remain a nation closed to immigrants, our population will become decimated and Japan will plunge into the chasm of annihilation".
He challenges the idea that "Abenomics can put Japan's economy on a growth path while the producer and consumer population continues to decline". Without a new immigration policy as one of its "arrows", the set of policies known as Abenomics are doomed to fail, Mr Sakanaka charges.
He urges the government to change its attitude from one of "sitting down and waiting to die" to actively nurturing a multi-ethnic society with a "Japanese-style immigration policy" that offers a stable workplace for foreigners, skills training and permanent residency.
Japan needs "care-giving immigrants, agricultural and fisheries immigrants and construction and production immigrants", with a balance being maintained among countries from where the immigrants are drawn, he says. Japan also needs to sharply increase its intake of foreign students.
"In the 21st century, it is the world's common understanding the the best method to open up a country is through immigration," Mr Sakanaka says. "The international community dispassionately considers that unless Japan opens up its doors to immigrants it will not be a truly open country."
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