JAPAN IN 2018 CONDOS, BUDGET HOTELS, SHARED OFFICES AND BITCOIN

As the Olympics nears, accommodation demand starts to soar; at the same time, shared offices are becoming popular while BitCoin inches closer to general acceptance despite wholesale theft of an exchange’s entire virtual currency reserves through hacking.

Condos – or, more accurately, newly or recently built residential condos, are one of the only assets that’s gained in value in 2017-not only in Tokyo, but all over the country.

In contrast, prices of land, houses and commercial property have flattened out. A lot of investors have been moving from commercial to residential, simply because yields are higher, and the residential market is considered to be more stable overall. Commercial rents are also forecast to drop, at least in Tokyo, which is another reason to go for residential properties. In central Tokyo specifically, as the 2020 Olympics draws closer, demand is very high, and oversupply hasn’t really hit that hard yet – hotel vacancies are going to be closer and closer to zero in the next few years, and a lot of these buyers are local or foreign investors with an eye to the short term stay hospitality market. Luxury or at least very comfortable, well sized properties, in close proximity to major train stations, and with good facilities, are going at a premium these days – but that doesn’t necessarily mean a sustainable market post-Olympics, so still a case of “buyer beware”.

Budget accommodation– Another asset class that has generated a lot of interest due to the upcoming Olympic Games is lower budget hotels, 2 and 3 stars or guesthouses, which is where budget or middleclass tourists tend to stay. With hotel vacancies in and around Tokyo forecasted to be close to nil towards 2020, this is a popular investment asset class as well, and will probably become more popular over the next couple of years.

Shared offices– as covered here previously (http://asianpropertyreview. com/v2/rise-modern-shared-spacejapan/ ), shared work spaces are a big thing in Japan – and all over the Asia-Pacific region. They are gaining in popularity, and are the go-to choice for startups, smaller companies, or even larger companies with a flexible staffing footprint, such as temporary staff companies, legal offices, etc – to the point where they’ve been eating up a lot of prime office property, and pushing down commercial rents.

Digital currency – not only BitCoin, but other virtual currencies, are doing very well in Japan, with the government declaring last year that all digital currency transactions will be free from consumption tax. There are already more than 5,000 stores accepting BitCoin as payment nationwide, not including a large eye-wear franchise with 334 shops, “Megane Super”, which has just announced they’ll also be accepting the currency in all of their shops soon.

Japan also has its own share of other cryptocurrencies, including NEM, a Japanese blockchain-based virtual coin that’s suffered a significant setback end January, as 58 billion JPY’s worth (approx USD534 mil) of the currency has just been stolen from Japanese virtual currency exchange Coincheck’s computers – nearly the company’s entire NEM reserves. Coincheck has quickly announced that they’ll compensate owners out of their own company funds, but the NEM has still lost approximately 20% of its value as a result, and the entire market capitalisation of cryptocurrencies plunged 10% as a result as well.

Regardless, more and more diverse product spheres are now jumping on the Japanese digital currency wagon, with some property managers in the real-estate sector accepting BitCoin as well, and even one daring property agency that has just announced that they’ll be selling the country’s first building – valued at approximately USD6 mil – via a BitCoin transaction in the coming weeks.

The company hasn’t commented on other currencies, but it certainly does expect to continue using BitCoin, specifically, for future property transactions as well.

Ziv Nakajima-Magen is Partner & Executive Manager, Asia-Pacific, Nippon Tradings International (NTI), which specialises in assisting investors in capitalising on Japan’s vast property market. He can be contacted at: info@nippontradings.com or +81 92 600 1613 . www.nippontradings.com

 

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