Photo: 陈霆, Ting Chen, Win
Overseas real estate investment by Japanese buyers is on the up, according to new figures. China has established itself as a major power in the global real estate industry, snapping up Golden Visa opportunities in Portugal and overtaking Canada to become the biggest spenders in the US.
Japan, though, could also become a force to be reckoned with. Overseas real estate investment by Japanese buyers has been expanding since 2011, thanks to expectations hat demand for real estate in Japan will diminish in the long term because of the declining population, as well as desire from investors to diversify and reduce risk.
The most active investors have been real estate companies and general trading companies as well as other non-financial companies, with a preference for office properties, but capital is diversifying into hotels, apartments and other sectors.
In America, for example, there has been investment in cities such as San Francisco, where investment plot sizes tend to be larger than in other area. In the hotel sector, which accounts for 12 per cent of investment in the US by value, almost all acquisitions have been in Hawaii.
The favoured regions for investment are North America and Europe – although in terms of investment for development purposes, Asia has been the major target destination.
In Europe, investment is concentrated in the United Kingdom, as is common with overseas investors.
How much are Japanese buyers spending? A lot less than China: Chinese investors splent a staggering $28.6 billion on US real estate in 2014 alone, according to the National Association of Realtors. In 2014, Japanese investors spent just $1.8 billion worldwide, according to CBRE While this figure is down 6.9 per cent year-on-year, though, it is the third largest since 2007 and a surge of 28 per cent compared to 2012’s total of $1.4 billion, a sign that appetite is certainly getting bigger.
Indeed, expansion of outbound real estate investment by Japanese investors has coincided with increase in overseas investment overall; spending by Japanese companies has seen a continuous increase after bottoming in 2009, and the amount in 2013 was 20 per cent above the previous peak in 2007, reflecting the growing interest of Japanese companies in investing abroad.
North America accounted for 75 per cent of investment in 2014, with $1.3 billion spent on real estate, while Europe attracted $210 million, followed by Asia with $160 million. Investment in North America increased dramatically year-on-year last year, reaching 1.3x the amount recorded in 2007.
CBRE forecasts the growth to continue in futuer years, partly through the Government Pension Investment Fund (GPIF). The GPIF has as much as JPY 141 trillion (approx. USD 1.2 trillion) of assets under management and plans to begin investing some of that into alternative investments.
“Assuming that it will invest a similar proportion of its assets in real estate as other Japanese public pension funds, and in overseas real estate as one of the major USpension funds,” comments CBRE, “the total amount of investment in overseas real estate by GPIF could be at par with the total outbound real estate investment level recorded in 2014.”