For growing numbers of foreigners living in
, their international perspective on the real estate market is prompting them to buy homes or make property investments or both. "We cannot afford to buy in Japan England," said Tony McNicol, a British writer and photographer who has lived in Japanfor eight years and is looking for a house in , where he is living. "In Tokyo England, the average price of a house is over £200,000 and average income in is less than £25,000. And people won't lend you money unless you have big deposits or you buy somewhere really small." Britain
This sense that credit is tightening and real estate values are falling around the world just as Japanese property values appear to be headed upward is spurring small but growing numbers of foreigners to buy here.
The Ministry of Justice, which runs the country's real estate registry, does not separate out the homes purchased by foreign residents. But in a country where the number of such residents - and their length of residence - has grown conspicuously in recent years, there is substantial anecdotal proof of the trend.
In the most recent figures available, the ministry said the number of registered foreign residents had grown to 2 million - a 50 percent increase in 10 years - by the end of 2006. And in other tallies, it found that of the foreigners who left
in 1996, 377 had lived there longer than 10 years; by 2006, that number had grown to 1,517. While the counts recorded people leaving the country, the totals do show that increasing numbers of foreigners are living there for longer periods. Japan
For Steve Miller, a
Tokyoresident for 14 years, the thought of buying in his native faded over the years as prices there climbed. Now, "the real estate market has turned down in California Californiabut the houses are still very, very expensive," said Miller, who recently bought a home in the ancient capital of . "To think that I can buy a house in the center of one of the world's great cities is something you just can't do in Kyoto . California
"If you want to buy houses in
San Franciscoor , prices start at $1 million, $2 million," he said. " L.A. Kyotois affordable and close to an international airport, has got a modern industry, has universities, is close to , has beautiful nature and tourism. It has got all the things going for it." Osaka
, a property listed on nomu.com, the Web site of Nomura Real Estate Urban Net, a leading real estate agency, is offered at ¥73.8 million, or about $700,000. The 95-square-meter, or 1,020-square-foot, apartment in the Tsurumaki section of the Setagaya ward has a spacious living room, three bedrooms and two balconies. Tokyo
Takashi Ishizawa, senior real estate analyst at Mizuho Securities in
Tokyo, said that, very broadly speaking, residential real estate prices in 's major cities had fallen by about half since the peak of the bubble economy in the late 1980s. Japan
However, "the value of residential properties in big Japanese cities has been quite stable" in recent years, Ishizawa said. That assessment seems to affirm Miller's hunches. "The fact that the house prices have fallen for a long time leads me to think that they are already close to the bottom, so there is not a lot of fall room for the houses," he said. "You are starting from a very distressed market."
Miller is renting out his recently renovated wooden house, located near Shijo a tourist hot spot in
. "If the worst comes to worst and the land didn't appreciate and the yen didn't appreciate, I still have a nice house to live in and to retire into," he said. "On a number of levels it was an interesting purchase." Kyoto
One leading characteristic of urban properties in
is that the market is vast and diverse, Ishizawa said. In the 23 wards, or inner-city area, of Japan alone, there is a night-time population of 8.67 million; through development, real estate companies are adding about 30,000 new apartment units a year to the city's stock. By contrast, "the livable area in Tokyo is quite limited, for example," Ishizawa said. "Especially if you are talking about the safe and good neighborhoods." San Francisco
, known worldwide for its impressive safety statistics, worry about crime is not a factor in choosing housing, something that "broadens the scope of those looking for properties in a good environment," he said. Also, home sales to foreign residents are increasing partly because the one missing piece in the home-buying puzzle has now been supplied: home loans. In the past, Japanese banks, driven in part by a traditional xenophobia, rarely extended mortgages to foreign nationals unless they had become citizens. Big Japanese banks are lending to foreigners now, although the threshold is slightly higher than for citizens. Tokyo
Japanese loan providers used to take the one-size-fits-all approach, lending to a set standard at set interest rates. But in recent years, lifestyles of the Japanese began to vary, with more people working as independent contractors or becoming self-employed. In the past, "if you did not fit the prescribed standards, you did not qualify for a loan," said Takashi Yamamoto, director of mortgage services at GE Consumer Finance, in
. "We don't take that approach. We do risk-based pricing, so we lend at 2 percent if we can't lend at 1 percent, or 3 percent if 2 percent isn't enough and so on," Yamamoto said. Tokyo
Yamamoto acknowledged, however, that big Japanese banks were breaking into this onetime niche of lending to foreigners and independent professionals at various interest rates. "The competition is intensifying recently," he said.
And to the home-buying foreigner, the lending rates are a boon, reflecting still very low interest rates in
. Fixed interest rates for terms of more than 10 years can be as low as 2 percent at leading Japanese banks, with average rates standing around 3 percent. At GE Consumer Finance, interest rates vary depending on customers' credit profiles, but the top rate now is 4.6 percent. Japan
Most foreign home buyers are long-term residents and often are familiar with the local culture and language, a condition that reinforces their decision to go through a rather complex transaction.
"You should be able to read the documents in Japanese," said a recent German buyer who preferred to remain anonymous. "Or you should have a spouse who understands Japanese. Or else you don't have a handle on what's going on with all the papers being shuffled around."
♠ Posted by Emmanuel in Japan at 6/10/2008 12:11:00 AMThe height of the real-estate bubble in Japan culminated with the observation that the land underneath the Imperial Palace in Tokyo, all 3.4 sq km of it, was worth more than all of the real-estate in California. During those now-faraway times, it seemed that the Japanese were out to buy the world. We all know how that story ended--the Japanese banking sector was saddled with bad debts for the longest time after lending to fund real estate speculation. Today, Japan remains mired in a deflationary trap which can be traced to those crazy days. Fortunately for foreign real-estate investors, the popping of the Japanese real-estate bubble means that (gasp!) some prime real-estate there is now attractive to foreigners, even in key urban centres thanks to a prolonged real-estate slump. Better yet, those in the know can avail of extraordinarily low Japanese interest rates. Whereas Japanese banks were more reluctant to lend to gaijin (foreign devils) in the past, the lack of local interest has made them somewhat less wary of lending to outsiders. As usual, commerce has a way of overcoming prejudice. Interesting stuff from the International Herald Tribune: