Why Tokyo’s Real Estate is a Better Investment than Singapore

  • Advice

When weighing up Singapore and Japan, many international investors and observers – and even some Singaporeans – consistently labor under a gross misunderstanding regarding the real estate situation in Japan. It is assumed that, because certain lifestyle elements in Japan can be expensive, that Japan is a consistently high-cost country. 

            The misapprehension continues with regard to the Singapore property market.

Japan is seen as the long-established by-word for post-war affluence, with Singapore a relative newcomer, a new contender born out of the much-touted “Asian Tiger” phenomenon. For this reason, Singapore is consistently viewed as “rising,” an impression compounded by the fact that Japan’s remarkable post-war story reaches a rather dull malaise in the 1990s, as stagnation and the lost decade show up Japan as rigidly affluent, and Singapore dynamically rising.

            So what is the truth? Well, undoubtedly, Singapore offers great investment opportunities for those seeking to invest in property, but a cursory look at Japan’s property market – especially the luxury property market, where the most rewarding investments are made – shows that the returns are impressive, and neither is the country prohibitively expensive. 

Buying Property in Japan

Japan is one of the few Asian countries which have virtually no restrictions on foreigners buying property, even less than Singapore. In Singapore, foreigners need to obtain permission from the government to own certain types of vacant land and detached houses. Moreso, some purchases may be prohibited unless you are a Singapore citizen or permanent resident. However in Japan, one needs neither citizenship nor even a residence visa and has to only send written notification to the Bank of Japan. Such openness to foreigners makes the whole process a breeze. But is it affordable, and can you make it work for you?

Abenomics and the Property Market

Current Japanese Prime Minister Shinzo Abe’s reflationary economic policies – nicknamed “Abenomics” – have drawn roughly equal amounts of praise and criticism. One area of the Japanese economy that has undoubtedly benefited, however, is the property market, as these policies inaugurated around 2013 a period of massive growth that continues apace. 

            Off the back of Abe’s policies of incredibly low borrowing rates, devaluation of the Yen and, most importantly, extensive development, Japan’s property market has been attracting a level of investment not seen in a long time, especially in places like the main Tokyo business districts where prices of luxury property have been rapidly growing. 

            And even locals seem to be riding this wave, wealthier older Japanese, who would traditionally invest in large suburban properties have found themselves investing in the luxury city center property market. This is seen in Japan as a solid investment, especially in light of increasing taxes like inheritance tax.

            Such a combination of local economic policy, friendliness towards foreign investment, and the rapidly increasing prices, especially in the luxury property market, have created a very promising situation in Japan, which Singapore, for all its more upstart dynamism, cannot match. 

It might come as a surprise to some, but Japan has plenty of the energy we often associate with younger Asian economies. There’s no telling what the future may hold, but for Japan right now, and within the property market at least, stagnation is not the order of the day. 

Editorial Department

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