A few days ago I chanced upon an article on a website urging readers “Why you shouldn’t buy Japan Property” and while the article does raise a few valid points, I think that it overall shows a lack of nuanced understanding of Japan and Japanese property. Here are the points raised in the article

1. Property in Japan is not an asset

That statement is actually, quite true. Mentality towards property in Japan is very different from where I am from (I am from Singapore), and it is also true that the resale market is weak, with people preferring to demolish and build again (I have explored this a little more in detail here).

However, the article is over-dramatic and assumes that buildings only last 20-30 probably due to damages from earthquakes. This is not true. The 20-30 year lifespan is the amount of years it takes for a wooden year building’s value (22 years) to depreciate to zero. This valuation is for tax purposes, and for a reinforced concrete structure, which makes up a major portion of apartments for investment purposes, is 47 years.

In addition, even after the value of a building is zero, owners can still continue to lease out their apartments. In fact, some investors will choose older buildings to invest in as property taxes are lower and/or the apartment is in a good location. The point to note that most properties are under freehold ownership in Japan, if you’re able to buy near stations or in good locations, the land which the house is built on remains very valuable, and most importantly, building standards are extremely high in Japan and structurally, many houses are still sound in Japan even after 20-30 years.

2. Demographics

While Japan’s population is falling overall, population in Tokyo, Nagoya and Osaka has seen population growth, and Tokyo is expected to continue growing.

My point is, it’s definitely unfair to brand the whole country in the same fashion.

3. Geopolitical relations

My main gripe with the article was this point made about how unstable things are in the Far East and while I am not going to comment or speculate what I think is going to happen as I am not an expert in diplomatic matters in the Far East, I think what was written by the author reads more like platitudes off tabloid paper than a well informed opinion.

For example:

“However, ancient rivalries and geography are two things which don’t usually change.

Investors should be aware that history often repeats itself. A further rise in tensions could, at the very least, cause uncertainty. At worst, they could wreak havoc on Japan’s financial markets.”

One needs to know that China is a practical country and they are unlikely to attack or invade Japan just because they got bigger. Japan is actively working on making its country more visitor friendly, and has seen tourism boom in the last few years.

If you have any comments or feedback, please feel free to drop us a message. We’d love to hear your thoughts.