Foreigners like what they see in Tokyo’s real estate market

Since fall of last year, the real estate market in Japan has entered a temporary lull, however, compared to Japanese buyers, foreigners are showing interest in the market and seem not to have been scared off by the subprime mortgage crisis and the economic downturn.

Eighteen months prior to the market slowdown, a mini-real estate bubble brought a sudden climb in land prices in central Tokyo. Prices of apartments, new and old, increased, and many owners seized the opportunity to put their homes on the market. It was just when the market was awash with properties that the subprime mortgage crisis hit, and concern over an economic downturn led buyers to hold off.

Since this spring, market activity is returning as many properties became affordable due to the price adjustments during the slow market. The outlook in the Japanese real estate market remains uncertain, with realtors filing for corporate rehabilitation law and bankruptcy rehabilitation. But properties in central Tokyo seem as popular as ever.

People in the industry say that now is a good time to invest as there are a lot of properties on the market, and in a recovering market there is no such thing as a fixed price, so be ready to haggle. Newly developed properties still command a high price, and older properties within the Yamanote line area are offered with land ownership.

For properties in central Tokyo, existing homes, especially larger developments that offer convenience and privacy, would be a good purchase choice. The value of such well-established apartments, as represented by Hiroo Garden Hills, will only increase. Foreigners are seeing good potential for capital growth in Japan's property market as land is affordable here compared to cities like New York and London. At the same time, more foreigners are being stationed in Japan for longer; and some marry Japanese citizens and start a family — always motivation to consider purchasing a home.

Compared to five or six years ago, it is much easier to invest in the Japanese property market, with more and more of Japan's real estate corporations offering bilingual brokerage services such as the Mitsui Real Plan. The number of local and foreign banks offering loans catering to foreign residents is also increasing.

Although the number of long-term residents is increasing, most expats leave Japan after a few years. Foreigners with a short-term perspective of their life in Japan would probably be better off renting. The rental system of many conventional real estate companies is not very foreigner friendly to say the least as most rental contracts require a co-signature by a guarantor, who more often than not has to be a Japanese national with a stable financial background. In such cases, there are real estate companies that provide rental and relocation services specifically for foreigners, to make your search for a home that much easier.

Many foreign companies in Japan such as banks and securities firms have been affected by the subprime mortgage crisis and are reducing the rental allowance budget for expat staff. Other firms that left Japan and relocated to cities like Singapore and Shanghai, however, are returning because the education, climate and business environment here are better.

Because of the changing circumstances surrounding foreign residents, companies with a wider variety of rental properties, from premier apartments with hotel-like bilingual services to affordable studios as well as fully furnished serviced apartments, are becoming competitive in the international community's rental market.

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