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August 26, 2013 - 7:28 am

And a few more updates from the last 2 months – https://www.moodys.com/research/Moodys-changes-outlook-on-Japans-real-estate-sector-to-stable–PR_277176?goback=.gde_2060426_member_243882374

Quote:

…Moody's Japan K.K. has revised the outlook on Japan's real estate industry to stable from negative.The change in the sector outlook reflects the appreciation in the values of commercial properties, as well as the increasing rents for new office buildings and the stable rents for properties such as logistics, retail and residences…Since the beginning of 2013, the move by Prime Minister Shinzo Abe's administration — which came into power in December 2012 — and the Bank of Japan to ease monetary policy has fuelled hopes that the country's inflation rate will increase. This expectation has in turn boosted property prices, a trend Moody's believes will continue over the next 12-18 months…Furthermore, because the supply for new office space is likely to remain limited for the next two to three years — especially for high quality and earthquake-resistant buildings –demand for Japan's leasing market for newly constructed office space will be strong…expectations of a continued increase in property prices have enabled J-REITs to expand their property portfolios by tapping equity markets to fund property purchases, given the improvement in investor sentiment…increase in inflation and a stable population count in Japan's major cities — such as Tokyo, Osaka and Nagoya — will support the stable outlook…

http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=356308

Quote:

…Japanese factories put in an unexpectedly strong performance in May, data showed, a further sign that the world’s number three economy is picking up as Tokyo embarks on a huge drive to boost growth…

…The figures showed industrial production jumped two per cent in May from a month earlier and add to an improving trade picture as exports to the US and China surge on the back of a weaker yen. The rise was the best since December 2011 and beat expectations of a 0.2pc uptick…

http://in.reuters.com/article/2013/06/21/japan-survey-idINDEE95K04V20130621

Quote:

…A rising number of Japanese firms are expecting profit growth this business year on a weaker yen and improving consumer sentiment, with recent volatility in financial markets having little effect on most earnings outlooks, the Reuters Corporate Survey showed.

The proportion of Japanese companies expecting a modest climb in profits ticked up to 48 percent, 1 percentage point more than three months earlier. Those predicting a steep rise in earnings jumped to 12 percent from 7 percent, the survey showed.

Corporate outlooks have become much rosier on the back of bold new policies from Japanese Prime Minister Shinzo Abe that have served to weaken the yen since late last year, boosting  exports. Exports last month rose at their fastest clip in more than two years……Electronics, machinery and petroleum companies were also among the firms saying they were seeing a pickup in demand. Although concerns about how soon the U.S. Federal Reserve will begin to wind back stimulus helped to pushed the benchmark Nikkei 225 stock average into bear market territory last week, 61 percent of firms responded that stock market moves over the last month or so had only a marginal impact on their outlooks…

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August 26, 2013 - 7:14 am

Interesting post, which I mostly agree with – structural reforms are needed to support the monetary easing policy, which is exactly what Abe's government is trying to form these days.

Quote:

…the bundle of monetary and fiscal measures might be suitable for stimulating the Japanese economy in the short term. But if these are not flanked by far-reaching structural reforms, any positive effects would ultimately turn into a straw fire…

Agreed, as Abe's been promising from day one, and slowly delivering – it's just that his pace and mentality, being Japanese, isn't much to the liking of the "fix it quick" advocates from the West. We've discussed this previously – you can't turn Japan's farming industry on its head and strip its useless subsidies overnight – you'll be catapulted out of office in a heartbeat if you do (to name just one such example) – but slowly preparing the groundwork for such a reform with statements such as "we aim to revise the farming industry to render it competitive and modern" means that's exactly where he's headed.

Quote:

…"A rise to over 25%” in the consumption tax “is ultimately needed to stabilize the nation’s finances,” Mr. Oguro said…"

That's only if the tax hike is the only stabilizing component of the agenda. It's not (see above example and the rest of the announcements, even further above). There'll be more to come, guaranteed – but again, you'll have to pace down to Japanese frames of change – they're not as quick as they are in the west. Neither are corporate spending habit changes, for that matter.

Quote:

…The new salvation religion being preached in Japan …is this: prodigious money-printing will devalue the yen, causing exports to skyrocket and imports to shrink. The resulting trade surplus will save Japan…"

No, that's not the mantra, it's actually far more detailed than that, with QE and financial stimulus being just part of the process – the rest, as demonstrated well these past few months, consist of structural reforms, including a much needed boost of the workplace in the form of women returning to it (75% of women, which are more than 50% of the population are currently not), further immigration reforms, corporate tax re-structuring, as mentioned in the post above, and other components elaborated upon in this discussion and others. Richter's simplistic, cynical view, which you share, is just that – simplistic and cynical. While I agree that 2% annual growth is over-optimistic, as are the timeframes and general rosy view the government tries to "sell", it's also very far from the total collapse some predict. Other, more balanced viewers, like Soros, GS, Deutsche Bank, Switzerland's largest bank and many other are already voting with their funds and will continue to do so. While Abenomics may not be "salvation", it's certainly the best chance at a reasonable and calculated return to growth that Japan's had for several decades.

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August 26, 2013 - 1:14 am

 

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August 26, 2013 - 1:13 am

Abe keeps heading in all the right directions – http://ajw.asahi.com/article/economy/AJ201307010067 –

Quote:

Central government bureaucrats have criticized Hiroshi Mikitani as a selfish businessman and tried to block his attempts at changing the status quo. But the chairman and CEO of Rakuten Inc. has found that his requests have been quickly satisfied by one figure in government: Prime Minister Shinzo Abe.

Since they first had a serious discussion on Nov. 19 last year, Abe has named Mikitani to an important government panel, and his administration has pushed forward sales of over-the-counter drugs on the Internet as well as online campaign activities starting with this summer’s Upper House election…

http://www.japantimes.co.jp/news/2013/06/13/business/abe-vows-to-draw-up-tax-steps-by-fall-to-boost-business-investments/#.UhqoJ0B-PmQ –

Quote:

…The tax breaks would target efforts by firms to replace old facilities with efficient and state-of-the-art ones, said the draft of the strategy that the Cabinet plans to endorse…adding they would be also designed to prompt the exploitation of new markets…

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August 23, 2013 - 1:07 am

David – curious to know (here in the forum's fine, so everyone can benefit) – how long can you claim depreciation post-purchase in the US, and what effect, percent-wise, did this have on your bottom line tax payable? Thanks for sharing!

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August 9, 2013 - 12:42 am

Watch out for that most common of traps "If they speak my language, I'll be right" – the US market, while full of opportunity, is also a shark-infested pool at times. Be sure to run your due diligence on any company you may choose to work with – financial, legal and client references at the very least. I can only testify that, for us and our clients personally, the language barrier turned out to be a purely technical thing – once that's breached (with reliable employees, in our case, or with operators who know their local markets, in our clients' case), we found the Japanese business environment (not to mention the tenants and professionals one deals with on a regular basis) is one of the most sheltered, comfortable and honest on the planet. Think Germany, Switzerland or Singapore in terms of reliability and legislation. I wish the US will someday rise to the challenge – unfortunately, it still seems to be lagging far behind in those regards. And Japan's probably the most "by the book" country imaginable – you're talking a country where people were, until not so long ago, committing ritual suicide for failing in their duties.  I've yet to see the Westerner who comes close to that sort of mentality.

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August 8, 2013 - 11:06 pm

Many of the people here have US investment properties – I'd wager a guess that at least 50% of them are at least slightly disillusioned, mainly due to the fact that its not the completely remote, easy to manage, hassle free investment they've been sold on. Often they'd have to deal with problems either in person, or at great expense.

if you want a remote, fully manageable experience I'd recommend Jay Hinrichs from these forums – he can provide high single digit returns (8-9% when we invested with him, not sure what it is now) guaranteed regardless of tenancy – essentially you're buying a note, not the real property – but still get half the equity upon sale. The best of all worlds, with modest and realistic returns, not the sky high tall stories others may sell to you.

if you're feeling more adventurous, I'd recommend Kyler Rice, who does what many may label "war Zones", but provides full management.

both seem to be very honest and reliable operators (although I haven't invested with Kyler personally).

the rest are, unfortunately, not always "complete package" providers – some will get you a good property and hold your hand all the way to the first tenant, and maybe a reasonable property manager with that, but after that you're essentially "on your own" – which is when, I think, most people start experiencing the vast differences between managing their investment locally and remotely in the US – tough, at least on the lower end properties. If you buy higher end properties, you'll most likely have an easier time at it due to the locales and tenant profiles, but returns would be far slimmer – basically a speculative play, which is more than a bit risky (but there are many here who can testify to have made a nice profit on theirs).

then again, you can always come invest with us in Japan – we provide a fully managed experience from offer to exit, including everything in between, with a far more comfortable business environment – although cannot guarantee growth of any kind – only 10-15% cashflow (net pre-tax).

best of luck! 

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August 5, 2013 - 6:45 am

https://www.moodys.com/research/Moodys-changes-outlook-on-Japans-real-estate-sector-to-stable–PR_277176?goback=.gde_2060426_member_243882374

Quote:

Moody's Japan K.K. has revised the outlook on Japan's real estate industry to stable from negative. The change in the sector outlook reflects the appreciation in the values of commercial properties, as well as the increasing rents for new office buildings and the stable rents for properties such as logistics, retail and residences… …hopes that the country's inflation rate will increase. This expectation has in turn boosted property prices, a trend Moody's believes will continue over the next 12-18 months… …Furthermore, because the supply for new office space is likely to remain limited for the next two to three years — especially for high quality and earthquake-resistant buildings –demand for Japan's leasing market for newly constructed office space will be strong…

As mentioned, our favourite residential investment areas (Fukuoka, Kumamoto and the rest of Kyushu) have already gone up 30-50% in our bracket (entry level, older blocks, studio and one-room apartments built 1974-1995) – meaning, deals that were available at $20,000 total purchase costs in those areas are now at $30,000 and rising. Rents have risen accordingly so far, so yields are still there to be had, but entry levels have gone higher. The $20,000 deals can still be found, but not in the top areas anymore (now finding them in Kitakyushu, Kurume, and occasionally Nagasaki). Other high yield locations that can be had for $30,000 and up are the outskirts of Kobe, Toda (which is a small town adjacent to Tokyo on the NW side – still virtually unknown to foreigners, but closer than either Kawasaki or Yokohama, surprisingly enough), and Sapporo city in Hokkaido – although, deals there are being snatched within a matter of days or sometimes hours, so feels like prices will return to their pre-3/11 levels in no time – most likely the drop there is due to the drop in international tourism post-Fukushima – which is now beginning to taper off, as tourists return to the area. As more and more banks, pension funds, and high-net worth families and REITs from Singapore and Hong-Kong have also been increasingly active in the last few months, it's more than likely things will continue to climb, at least for the next 2-4 years, as Moody's suggest – our impressions are similar.

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August 2, 2013 - 11:45 am

Watch out, Jay, you might get sued for "TORTIOUS INTERFERENCE WITH CONTRACTS, BUSINESS RELATIONSHIPS AND BUSINESS EXPECTANCIES" lol

(folks, this is probably a good opportunity to say that, if you're after a reliable US operator, (and one who won't give you any reason to sue him or question his credentials), look no further than Jay, above. Joined his clientele last year and, so far, cannot fault him – deal with him directly, and you'll find that you're in very good hands.

hats off to truewholesale houses (as for metro property group, wouldn't have a clue, sorry)

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August 1, 2013 - 7:28 am

Might be due to the fact that a larger and larger portion of US investors, before or after their first purchase, have moved on to Japan Tenants that stick around for 4-5 years on average as opposed to 4-5 months, never damage a property and almost never pay late (not to mention evictions, which just don't exist), net pre-tax returns of 10-15% (and beyond, as some here can testify, but that's rare), and the safest business environment on the planet. You can't buy a $1 house like you can in Detroit, but you can still get a tenanted property for as little as $30,000 (all purchase costs included) – and that's only if you go through a buyers' and managing agent like us or other similar ones – if you do it on your own, it's even less.

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July 27, 2013 - 1:35 pm

International banks like Citi and HSBC sometimes do lend for overseas purchases with the properties as security – strictly "A" class though (or, in other words, highly speculative plays with close to neutral cashflow). Our clients sometimes secure finance in the form of business credit lines, personal loans or low interest credit cards – but the vast majority seem to be cash buyers.

not to put too fine of a point on it, but if you can't pull together $30k for a purchase, I would very much doubt if you'd be able to service a mortgage, particularly if you take exchange rate fluctuation risks into account (not saying this is your case, as I don't know anything about you, just a general comment).

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July 23, 2013 - 1:16 am

Freckle wrote:

…He's goner. Writings on the wall…

Freckle wrote:

…He was always predicted to take the upper house short of some major catastrophe…

Love you, Freckle, really do.

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July 21, 2013 - 4:30 pm

Freckle wrote:

He was in the low 70's. He's goner. Writings on the wall. When you need teen bands, sumo and FB to get by things are definitely looking sad. I doubt if half his followers are old enough to vote.

http://www.bbc.co.uk/news/world-asia-23396234

Quote:

…Japanese Prime Minister Shinzo Abe has won a majority in the upper house, exit polls suggest.

His Liberal Democratic Party and its junior partner New Komeito were set to get at least 71 of the 121 seats being contested, broadcaster NHK projected.

This would give him control of both houses of parliament for the first time in six years…

Any other graph-adorned predictions we should take note of?

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July 6, 2013 - 8:45 am

Alright, I'll bite – please lay down the freckle formula for a new and improved Japan. I'm all ears.

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July 6, 2013 - 3:51 am

Not sure what optimism has to do with anything? The fact that I happen to agree with what Abe's doing at the moment on most fronts has nothing to do with my backing for him or any other PM – not sure why you assume that. I support people who's thinking and actions concur with my own – if Abe's replaced by someone who has similar policies, they'll have my equal support (moot point, since I don't intend to become a Japanese national, so my "support" is purely theoretical in the political sense).

my optimism is due to faith in the Japanese mentality and approach to life – as well as in some particular policies the current administration happens to be pursuing – and is a very fleeting thing (for example, some of Abe's china-related rhetoric has very little support from my end).

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July 5, 2013 - 1:05 pm

Good luck with that notion, Freck  you might want to hedge your bets a bit, if you truly believe all of what you just wrote.

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July 5, 2013 - 8:49 am

"What you talkin' 'bout, Willis?"

http://online.wsj.com/article/SB10001424127887324251504578581370843445726.html

Quote:

With polls predicting an almost certain victory for Japanese Prime Minister Shinzo Abe's party in a parliamentary election later this month, the focus is on whether the premier will treat victory as a mandate to push ahead with bold measures seen as vital for economic growth.

Six months into office, Mr. Abe continues to enjoy a high approval rating of around 60%, backed by support for his so-called Abenomics economic-policy of easy money, heavy spending on public works and pro-growth measures…

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July 1, 2013 - 3:17 am

Yes, but it's not just "making an economy look good" – these "feelgood" vibes are actually directing money into the country. Consumer and business confidence aren't uselses airy-fairy measures – they show potential for future growth as much as any other figures. Speaking of potentially "good vibes" that boost growth, here's another recent one – Coutts are also banding in with Soros and GS in betting on Japan – Coutts Push Japan in Private Wealth Singapore Summit

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June 27, 2013 - 11:55 pm

Been seeing alot of these in Dubai – http://www.china.org.cn/world/Off_the_Wire/2012-09/17/content_26539412.htm

Quote:

…a number of brokerage firms disappeared with the money they should have had transferred from tenants to home owners. Gulf News reported earlier this month that two broker firms, MFRE and FHS, were owned by a 38-year old Emirati national, although the Real Estate Regulatory Authority or RERA allows one person to obtain one brokerage license…

One of the reasons I chose to work mainly japan is the confidence that this sort of thing almost never happens there…although a realtor does lose an arm to a katana attack on occasion

have you heard/had similar experiences in your time in Dubai, se7en?

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June 26, 2013 - 6:56 am

Would love to hear from anyone's who's bought into any of those – it must be three years at least since I noticed the first one being promoted…any takers with some success (or other) stories to tell?

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