Tokyo PM Real Estate Investment - Your Key to Growth

Posted by seoexpert131 on October 15th, 2023

Real estate investment offers diversification benefits, helping to manage risk. But it is important to understand typical property investment costs and risks in Japan before investing.

Investing in residential properties in Tokyo provides a reliable source of income and is often more profitable than other investments. Purchasing a property in areas that are slated for redevelopment can also lead to lower vacancy rates as the neighborhood becomes more modern and convenient.
1. Invest with Confidence

Investing in property is a highly diversified asset class that offers a low-risk, high-yield income stream. The potential for capital appreciation is an attractive bonus for investors. The Tokyo property market is enjoying robust demand from both domestic and overseas investors, particularly in the residential segment. The city’s low-interest rates and steady vacancy rates have created a favorable investment environment for those looking to diversify their portfolio with property investments.

With a wide range of commercial properties available, Tokyo’s commercial real estate market has much to offer. The city’s central wards are known for their high rental yields, and the booming economy and population growth are driving continued interest in the area. In addition, there are a number of large public real estate companies with strong market positions, including Mitsubishi Estate Co Ltd, Mitsui Fudosan Co Ltd and Nomura Real Estate Holdings Inc. 江東区 不動産売却

As more private equity players look to expand their Japanese operations, the country’s office market is attracting attention from global funds and regional players. For example, Hong Kong-based Baring Private Equity Asia has dedicated four people to the market and is focused on finding opportunities in hotels and office buildings.

The potential for a high ROI in the Japanese property market is encouraging a growing number of international investors to make Japan their next investment frontier. With the right knowledge and support, these investors can enjoy many benefits that come from investing in a property in Japan. This includes legal safety, translations, advice on unique market trends, and assistance with the property buying process. A PM can also help with obtaining the necessary permits and dealing with local authorities, and even handling property turning over for new tenants.
2. High Yields

The soaring price of real estate in Tokyo in recent years has prompted investors to seek out higher yields in the market. However, while the market does offer high yields, it is also a volatile investment and should only be considered as part of a diversified portfolio.

The good news is that Japanese real estate offers better yields than many other countries, delivering anywhere from 6% to 11% annually net pre-tax yields on average. Furthermore, the Japan property market is typically less affected by currency fluctuations than most international markets, making it a stable investment option to reduce overall portfolio risk.

Unlike some other real estate investment opportunities, where management and capital costs can eat into profitability, the Japanese property market is highly transparent, which means you can be fully aware of all operating expenses before investing. This enables you to make a well-informed decision about your investment.

Additionally, many residential property investments in Japan hand over the actual management of their assets to a company which can significantly decrease your overall investment risk. As a result, for every 0,000 you invest, on average, you can expect to receive ,500 a year in passive income in the 23 Special Wards of Tokyo alone.

Whether you are looking to invest in a single-unit condo or an apato or manshon building, yields depend on location and age, as well as renovation and maintenance costs. However, a thorough market research process and the support of experienced realtors and property managers can help you to maximize your potential for profit in the Japanese real estate market. This is especially important during a volatile environment like we are experiencing today.
3. Lower Risk of Vacancy

Real estate has long been seen as a tried-and-true strategy for diversifying investment portfolios and providing a steady source of income. Unlike stock markets, property prices tend to be less volatile and offer a reliable, predictable stream of cash flow that is relatively independent from market fluctuations.

The Japanese economy has been regaining strength in recent years, which is bolstering demand for commercial and residential real estate. This coupled with low-interest rates has led to significant price appreciation across many parts of the country, including Tokyo.

A number of factors have contributed to this, including the government’s economic policies, known as Abenomics, which have helped fuel consumer spending and business investment. In addition, Japan’s central bank has maintained a loose monetary policy since the global financial crisis, which has kept interest rates low and boosted asset prices.

With these factors in mind, investors can expect significant capital gains from property investments in Japan. However, investors should be aware of the risks associated with property investment, such as vacancy risk. This is why it’s important to work with a professional property manager.

Property managers can help to reduce vacancy risk by conducting tenant screening and marketing to find the right tenants. They can also help manage the leasing process, which can be a time-consuming and labor-intensive task. Some property managers offer a guaranteed rental yield, which means that they will continue to pay the owner rental income even if the property is vacant.

Another way to reduce vacancy risk is by buying property in areas with strong demand for rental housing. This includes areas close to transportation hubs, such as train or subway stations, and neighborhoods that are slated for redevelopment.
4. Accessibility

The property market in Japan is highly accessible for investors from overseas, with a relatively low correlation with other global markets. This makes it a valuable asset to diversify portfolios and mitigate risk. In addition, Japan’s stable economy and mature regulatory framework provide a secure environment for investment.

Real estate investments in Japan are typically made through publicly listed REITs (J-REITs), which are companies that invest mainly in commercial and residential properties. Publicly listed REITs have a favourable reputation among Japanese investors as moderate-risk investments, offering attractive yields and stable returns.

Many of the major public real estate companies in Japan are large and diversified, with strengths in the development, management and operation of real estate and other assets. Some have subsidiaries that act as asset management companies (AMCs) of J-REITs.

A number of major private equity players such as KKR & Co are moving in on the Japanese property market, lured by yield spreads with Japan’s low interest rates and prospects for deals to unlock the buildings, real estate subsidiaries and other under-utilised properties cluttering up many Japanese corporations’ balance sheets.

For example, one of the most well-established local public REITs is Tokyu Real Estate Investment Management Inc (Tokyu REIM). Tokyu REIM is a fully-owned subsidiary of the Tokyu Corporation, which has a 100-year track record of promoting urban development primarily along the Tokyu lines. Tokyu REIM’s objectives include maximising value for the unitholders of TOKYU REIT, through asset growth, sound debt management and enhancing the corporate image.
5. Convenience

With long-term leases and landlord-friendly laws, investing in real estate offers you a reliable source of income. Additionally, Japanese property markets tend to be less correlated with global markets than many other countries, making them a great way to diversify your portfolio.

Purchasing a property in Japan requires a lot of paperwork and time investment. To minimize your hassle, you should seek out a PM company who can handle the process from start to finish. These companies charge a fee, but they save you your most valuable asset: time. PMs take care of the most labor-intensive parts of property management, such as finding tenants, negotiating rent, and handling renewals. This allows you to focus your time and energy on other areas of your life.

Aside from minimizing your workload, Tokyo PM can also help you find the right property to suit your investment goals. The company’s research team has extensive experience and expertise in the industry, so you can be confident that the company will select the best properties for your investment needs. Its services also include providing advice on the local market, which is essential for investors looking to purchase a property in the country.

In addition to its office property investments, LaSalle has acquired 10 more properties, including one logistics and nine high-quality multifamily residential assets in Japan. This increases the total value of its Japanese property fund, LaSalle Japan Property Fund (LJPF), to JPY 157 billion GAV.

As of 2022, LJPF had a total of 16 properties, including 11 offices and three warehouses, with a combined floor area of more than 1.4 million square meters. The new acquisitions will enhance the fund’s core infrastructure exposure and further diversify its portfolio by adding logistics and multifamily assets to the fund’s current residential and commercial properties.