Mainland Chinese money flows through every corner of the globe. The economic powerhouse has grown and grown at an amazing pace over the past 30 years. Personally, I can remember, 22 years ago, visiting a growing city in southern China called Guangzhou. At that time a small city with not much going on. I had crossed the border from Hong Kong to visit the Holiday Inn, at that time one of the only foreign hotel chains in China. The hotel was built on a 3 lane expressway. The only traffic using the road were bicycles, a few mopeds and the odd bus. What were the Chinese thinking building such a road? Fast forward to today, they were planning for the growth and Guangzhou, like so many other Chinese cities is now a massive city, a major part of the huge Chinese economy.
The growth has been phenomenal bringing the living standards for the majority of Chinese up and creating a new class of communist super rich. Opulence and the display of wealth are everywhere in new China. The nouveau riche class know how to spend but also how to invest and grow their fortunes. Chinese individuals and Chinese companies are buying up businesses, shares and real estate all over the globe and building wealth, they hope for generations to come.
Where are the Chinese investing?
A great article this week on inman.com answered that very question and “Here Are The Top 5 Markets Chinese investors are pouring their cash into“, the results by investment volume are;
- The United States – US$39.7 billion
- Hong Kong – US$23.1 billion
- The United Kingdom – US$22 billion
- Australia – US$17.4 billion
- Japan – US$4.9 billion
The results are not too surprising, but focusing on Japan, as I always do, I was interested to read the reasons for Japan’s allure to Chinese investors. The Olympics in 2020, the continued urbanisation of the country, and finally high yields. But I almost fell off my chair when I read high yields of 4-5%. Where are they investing??? JPI and our customers would not even look at a property with a 5% yield, there is no point. Instead, we seek out properties with returns of 7, 8 or 9%, find a JV partner, purchase the property, and benefit from a stable respectful tenant that helps JPI and our investors grow.
Come join us.
Download our free ebook today to see what opportunities you could benefit from.
Fancy a free house in Japan?
Seriously, in Japan, this really happens! Stumbled across a somewhat sensational article this week about the Japanese Government giving away houses! Yes, there is not a lot of facts or follow up in Eliza Dumais’ article on thrillist.com but it caught my eye. Having lived in Japan for the past 20 years, I know this happens. Local governments in rural and semi-rural Japan are desperate for tax dollars. The Japanese countryside is beautiful but apart from the rice fields, what work is there for young Japanese people? So, the rural labor pool drains into the nearest cities leaving more space and less people in the countryside.
Not all of the free houses will look like this!
So why would buy real estate if they are giving it away?
These houses and apartments that are being given away are less than inviting. You may get lucky with a modern house in a nice town but unless you are running an internet business for an income and will to travel great distances for your social life, what life will you have there? The vast majority of houses being given away are old and dilapidated, left empty as the next generation seeks employment and convenience in cities. As the article states, other houses may hide a darker history as well.
What does this mean for JPI investors?
It highlights our strategy of buying properties in cities close to a train station is the right thing to do. People in Japan demand convenience above everything else. Tenants will put up with higher rent, noise, small area and basic furnishing as long as they are close to a station and ready for work. The reason houses are being given away is because they have no real value. Imagine in your own country a beautiful old house on a large pot of land, huge demand but Japan is different. Convenience and location are the biggest factor when seeking accommodation and JPI has the local knowledge to find and manage these properties. Take a look and Japan Property Investments today to see how you can join us on this exciting investment journey.
If you want to read the full article on Gifted Housing, click here.
What has that got to do with Japan?
Sim and I obviously read a lot about property. While we both love reading about Japanese property we each have our niche reads as well, and mine is the UK property market. I had to share this article with you all the week, fascinating stuff!
UK house prices
Always in the news, the ups and downs have for the past 5-8 years been mostly ups but now with the global uncertainties and the local BREXIT mess, UK house prices are wavering. The article from Merryn Somerset Webb writing for the Financial Times is fascinating. It charts the historic changes in house price way back to 1796, when the majority of people had no hope of ever owning their own home. Fast forward to the baby boomers and the upheaval of 1970s Great Britain and of course Magaret Thatcher. All in all a fascinating, complicated, well-written piece well worth your time.
So, again… What has that got to do with Japan?
Not very much if I am honest. But the article does go to show how different the UK and Japanese residential real estate markets are. The UKs ups and downs, constant government intervention with various budgets and laws, rule changes and tax interference. By comparison, Japan’s real estate market is categorised by a massive bubble that grew and grew then burst 30 years ago. The UK currently full of uncertainty and change, while Japan keeps plugging along slow and steady. The FT article asks “Will UK house prices ever rise again?” This question around a volatile (volatile is not negative by the way) marketplace where prices could yo-yo for some time to come. Reading the article in stable post stagnation Japan made me once again realise just how lucky I am to be invested in Japan, safe in Japan with a stable future.
Take a look at the full article here, it is well worth a read. And if your interest in Japanese residential property is peaked, come on over to www.japanpropertyinvestments.com to find out more about opportunities in Japan.
Fascinating article this week in Japan Today.
Japan has become the first G7 nation and only the second country in the World to have more assets than the Gross Domestic Product or GDP. Just let that sink in for a minute… did you get it? It phenomenal. In an era where so many individuals, companies and country’s run up huge debts with no means, or desire to pay back, Japan has been slowly acquiring assets. And I do mean slowly, this took time and planning to span several governments and finance ministers. Only the Japanese could do this.
So what does that mean you and me?
Well as investors in Japan it highlights how the Japanese think. Long-term and low risk. The same as any sensible property investment strategy. The Japanese like saving, it’s well known. However with the average Japanese is saving in the bank or the post office, yes the post office! The Japanese Government has been taking these savings, and taxes and slowly building an immense asset base.
When will the expected inflation kick in?
That is hard to predict. As real estate investors here in Japan, we are hoping inflation away a while longer. Let’s build our own asset base while inflation is sleeping and then benefit together from increased rents and land prices. What do you think? Send us your comments and join us to invest together, grow together.
Here’s a link to the full article, enjoy!
Investing in property is one of the many ways that can help us to be financially free. It is what the smart and rich people do it all the time, however, it does carry fear for many people. This is understandable given the large sums of money involved, it is a big purchase!
Here are six of the most common fears that trick people into not investing:
FEAR OF FAILURE
If you don’t have experience, it’s easy to feel like property investing is something you’ll never be able to achieve
Loss in property value, inability to keep up with maintenance, the prospect of terrible tenants, and all the stress that comes with owning a property is enough to deter any of us. The media also helps fuel this fear with stories popping up weakly with horror stories of investing.
- Setting up a “rainy day” financial buffer
- Researching your purchase carefully
- Surrounding yourself with a team of independent and unbiased advisers
FEAR OF BEING SWINDLED
There is so much information available about property markets that it is easy to get lost in what is correct and what is not. This information can make the would-be investor distrustful of those who “appear” to be there to help. Many so-called “advisers” have a vested interest, while real estate agents represent the vendor and project marketers are there to make money for the developer. Healthy skepticism can actually be valuable because it allows you to think twice before diving into what could potentially be a poor choice.
- Trust your instincts, and if it doesn’t feel right, don’t do it.
- Read and subscribe to trusted property experts
- Employ the services of a qualified buyers agent
FEAR OF BEING INEXPERIENCED OR UNINTELLIGENT
Investing can seem so overwhelming that sometimes it’s just easier to avoid it all together. They worry they don’t have the experience or the knowledge to purchase a property. People also fear what other people think of them and that investing in property is risky.
- There are many sources, from books and magazines to online blogs, which can help you to build your knowledge before investing. You don’t need to understand every single aspect of it to make an effective choice.
- Read, listen and watch from those who have successfully invested in property
- Employ a professional to help you. They can make the process easier and give you the best chance of choosing quality properly and making wise investment decisions.
FEAR OF FUDGING THE NUMBERS
Investing involves numbers and keeping track of these numbers is a vital part of property investing. You need to be able to estimate a property’s potential cash, expected rental income, necessary repairs and maintenance, insurance, taxes, and payment for any expert advice you’ve received along the way.
- Work with trusted accountants and advisors.
- Learn to use spreadsheets.
FEAR OF GOING BROKE
Investing in property means taking a risk that you could lose money and the outcome of your investment cannot be predicted with complete accuracy. Suburbs/towns/cities rise and fall in popularity; future developments in the area can make a property less desirable to tenants; a property can decline in value due to a number of reasons, and the economy is forever fluctuating.
- Choosing your investment wisely,
- Buy investment grade property in a location that is likely to outperform the averages.
- Seek the help of a professional
FEAR OF MAKING THE WRONG CHOICE
There is nothing worse than parting with a large amount of money to end up with a poor result. This is what can happen if the property isn’t chosen carefully.
- Research beforehand to gauge what types of properties are likely to be in continuous strong demand in the future by a wide demographic who can afford to and will be prepared to pay a premium to live in that area.
- Choose properties that have positive lifestyle factors such as close to CBD, parks, schools, shopping centers, and public transport.
- Talk with experts, real estate agents local council, buyers agents
Finally increases in land prices
A massive 0.1% rise in land prices across Japan. Okay, maybe not that massive depending upon where you are living but for Japan this is HUGE.
After 27 years of declining land prices, Japan is seeing what Sim and I have been predicting for the past few years – growth! There are a number of different reasons for this increase and you can download our e-guide to read all about them. Briefly though, the economy is primed to rebound from the years of stagflation and economic neglect. Recent government economic reforms and the enormous expansion of inbound tourism have boosted the economy. There is a hotel building boom ahead of the Olympics and this trend is set to continue well beyond 2020 with ambitious and realistic governmental goals for inbound tourists. Immigration is up, bringing in people to take care of those jobs the locals don’t want to do. Whilst the Japanese population is shrinking, immigration is reversing the overall trend and cities are growing in numbers again.
It really is a great time to be in Japan, the rugby world cup starts in 12 months and the Olympics and Paralympics the year after that. It is now the best time to be invested in Japanese real estate with the very real possibility of capital growth to accompany the excellent monthly returns we have always enjoyed.
Take a look here at the full Nikkei Asian Review’s article on land prices and contact me today on [email protected] to begin profiting