japan real estate and tokyo residential market overvie · japan real estate and tokyo residential...

Japan Real Estate and Tokyo Residential Market Overview

for The Westminster Nanpeidai

Japan Capital Markets – May 2016

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AGENDA

• Japan Economy Overview

• Abenomics Improves Economy

• Tokyo Residential Market Overview

• Shibuya Now and Future

• Exit Strategy

• Asian Investors Update

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JAPAN GDP TIME SERIES

Stable GDP growth to be expected towards 2020

Source: Oxford Economics

FORECAST

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NIKKEI 225 TIME SERIES

A steep growth is confirmed after the Abe administration

Source: Nikkei Indices

2012 2013 2014 2015

Abe Administration

2016

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HKD/JPY CROSS RATE HISTORICAL

Hong Kong Dollar has been enjoying historically strongest level

Source: Oanda

17.12

9.85

14.13

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LAND PRICE VS NIKKEI 225

A significant correlation is seen between these two indices

Source: Nikkei Indices, Ministry of Land, Infrastructure, Transport and Tourism

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LAND PRICE MOVEMENT (SHIBUYA RESIDENTIAL)

Latest survey shows the continuing positive movement

Source: Ministry of Land, Infrastructure, Transport and Tourism “Chika Koji 2016”

Note: As of 1 January each year

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The Bubble

Economy

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AGENDA





• Exit Strategy


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ABENOMICS SCORE CARD

Stable growth is seen during the past three years

Source: Oanda, Nikkei Indices, Reuters.com, ARES, Japan Reit.com, MLIT, JNTO, Cabinet Office, Tokyo Metropolitan Government

Jun-13 May-16 Change Notes

HKD/JPY Cross Rate 12.57 14.13 12.5% JPY, monthly average

Nikkei 225 13,677 16,666 21.9% JPY, monthly average

Land Price

(Shibuya-ku Residential) 961,900 1,054,000 9.6% JPY per sqm, as of 1 Jan

Inbound Tourists 8.4 million 19.7 million 136.1% Yearly total (2012, 2015)

GDP Growth (Nominal) 0.8% 2.5% 1.7% Yearly total (2013, 2015)

CPI 99.7 103.6 3.9% Year 2010 = 100 (2012, 2015)

Population (Tokyo 23-ku) 9.1 million 9.3 million 2.9% Monthly total

(Jun 2013 and Apr 2015)

5-yr Swap Rate 0.48% -0.08% -0.56%

REIT Yield 3.80% 3.28% -0.52% Monthly weighted average

(Jun 2013 and Apr 2016)

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BUSINESS SENTIMENT DIFFUSION INDEX

The sentiment has been in the positive territory since September 2013

Source: “Tankan Survey” conducted by The Bank of Japan

Abe

Administration

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COMPANIES’ PRETAX PROFIT

Scores record high level

Source: “Statistics of Corporations” conducted by Ministry of Finance

Abe Administration

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AGENDA





• Exit Strategy


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TOKYO’S CENTRAL 5 WARDS SUPPLY/DEMAND ANALYSIS

Contract rate has been hovering at around 90% after the GFC

Source: Real Estate Research Institute

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POPULATION GROWTH

Tokyo population has been increasing during the past 15 years

Source: Tokyo Metropolitan Government

Concentration of population leads…

• Shortage of quality residential units/properties

• Price applications are seen especially in some selected popular destinations

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AVERAGE UNIT PRICE TRENDS (NEW DEVELOPMENTS)

Price continues the upward trends

Source: Real Estate Research Institute

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SECOND HAND MARKET CONTRACTED PRICE TIME SERIES

Price is “9-year high”

Source: at home Co., Ltd.

Note: As of December each year except Q1 2016 is for March. “Greater Tokyo” includes Tokyo, Kanagawa, Chiba and Saitama Prefectures

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AGENDA





• Exit Strategy


SHIBUYA IN NUMBERS

• About 10% of all listed companies’ head offices in Tokyo are

located in Shibuya-ku

• The lowest office vacancy than any other submarkets in Tokyo

• Ranked No. 1 in Tokyo for the number of large scale retailers

(10,000 sqm+ sales area)

• Labour force population (age 15~64) is over 70% of all populations

in Shibuya, which is much larger than the Japan average

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SHIBUYA AT A GLANCE

One of the busiest commercial districts in Tokyo

Source: Tokyo Stock Exchange, Company Websites, Ministry of Economy, Trade and Industry, East Japan Railway Company

SHIBUYA RESIDENTIAL MARKET OVERVIEW

• Shibuya is one of the three wards of Tokyo which provides the

highest condo sale price per sqf in average

• Shibuya’s average annual income is the second highest in Tokyo,

which is about 2.7 times larger than the Tokyo average

• Shibuya-ku’s 3 bedroom+ units are less than 5% among all

available residential units in the ward

19 Source: Next Co., Ltd., Ken Corporation, Ministry of Internal Affairs and Communications

SHIBUYA AT A GLANCE

Shibuya is also recognised as the high class residential area

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SHIBUYA STATION

Above Shibuya Station (2016→2027)

Dogenzaka Area (2015→2018)

Redev. Area

Redev. Bldgs.

SHIBUYA IN THE FUTURE

Redevelopments progressing 200m away from The Westminster Nanpeidai

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SHIBUYA STATION

NANPEIDAI

SHOTO

SHOTO

• Area: 0.28 sqkm

(1.9% of Shibuya-ku)

• Pop.: 2,472


• Only 4 units being

leased now

NANPEIDAI

• Area: 0.15 sqkm


• Pop.: 1,674


• No rental vacancies

SHIBUYA NAMPEIDAI AND SHOTO

Two high end residential area nearby Shibuya station are significantly small

Nanpeidai Project

(Tokyu Corp. HQ)

Shibuya

Garden Tower

Daikanyama

T-SITE (Tsutaya)

Nippon Steel

President’s House

Takeo Miki

Memorial House

La Tour

Daikanyama

SHIBUYA STATION

REDEVELOPMENT

AREA

NANPEIDAI

DAIKANYAMA

SHIBUYA NANPEIDAI

Harmonising with vibrant and quiet neighbourhoods

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AGENDA





• Exit Strategy


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CASE STUDIES

Actual examples of value appreciation

Completion: May 2014/ 7F – 62.83 sqm

The Parkhouse Nishi-Azabu Residence

The Parkhouse Nishi-Azabu Residence

Completion: May 2014/17F – 70.09 sqm

April 2014

JPY 77.5 million July 2015

JPY 98.0 million

April 2013

JPY 77.5 million

April 2013

JPY 94.5 million

March 2015

JPY 115.0 million

April 2013

JPY 94.5 million

Source: Jones Lang LaSalle

Park City Osaki The Tower

Completion: May 2015 / 24F – 44.01sqm

May 2014

JPY 52.6 million

September 2015

JPY 63.0 million

May 2014

JPY 52.6 million

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WHO IS DRIVING THE DEMAND OF SECOND-HAND CONDO?

The key word is the “compression rate” of inheritance tax

Source: Ken Corporation

If you have JPY 150 million, the assessed value for inheritance tax will be…

In Cash & Stock

JPY 150 million Compression rate: 0% • Assessed value is always the same as the cash amount

Acquired a unit in a 100 units low/mid rise condominium

JPY 32.4 million Compression rate: 78.4% (approximately) • Land price is valued based upon “rosenka” (80% of current price)

• Building price is decided in between 40-60% of construction price

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AGENDA





• Exit Strategy


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ASIAN INSTITUTIONAL INVESTORS UPDATES

The institutional investors from Asia are seen…

Source: Real Capital Analytics, Nikkei Kenplatz

Dynasty Holdings (Taiwan)

• A retail property called “Nakaza Kuidaore Building” in Osaka

• Acquired from UK based fund Grosvenor and Tokyo Tatemono

• Dynasty won the bidding process

• Price was USD 74.9 million and closed in early 2015

China Investment Corporation (China)

• A commercial property called “Meguro Gajoen” located in Tokyo

• Acquired from Mori Trust

• Acquisition through LaSalle Investment Management

• Price was USD 1,167 million and closed in early 2015

A High Net Worth Investor (Philippines)

• A hotel property near to the Narita International Airport

• JLL Hotels & Hospitality Group and Capital Market teams advised to the buyer

• Price was undisclosed and closed on January 2016

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THANK YOU

japan real estate and tokyo residential market overvie · japan real estate and tokyo residential...

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