I think Japan is finally realizing that real estate is a commodity.

I think most of the sales are to foreigners, with only a few Japanese snapping up these high priced condos. I fear this might start a rise in rents making it very costly to live in Tokyo, just as it has become in other big cities.

Japanese real-estate also loves Chinese money.

Sounds like a new bubble in that market....prices should,nt "double " in a year

This is an extension of a Bloomberg article that was very very flawed.

Yes a few extremely luxury places are seems sort of boom, but this is not transfering to the market in general.

But some people seem to have short memories and the author is a clear example of someone too young, not actually familiar with Japan or the Japanese market.

The majority of her experience is in the USA and she like many forgot that the Japanese did once see real estate as a commodity it was called the bubble economy and many older Japanese remember the tremendous losses they and others suffered when it collapsed.

Even most investment firms, banks, fudosan, etc...are not keen on this being repeated.

Indeviduals with extra funds for investment are more interested in slow and steady vs the possibility of a boom and bust like last time.

Honestly trying to associate sell a $50 million penthouse and other high luxury places in Tokyo to the Japanese "realizing that real estate is a commodity." is a bit of a stretch.

The original article was quite clear, low Yen and low interest rates in Japan was the driving force not "investment " or " commodity " it is as simple as in comparison to other major cities in the world, it is cheaper to buy in Japan, not one buyer was quoted as saying anything about investment!

A long time ago when we were thinking of our first home to live in, we had thought about a condominium, or as the Japanese say a mansion. One of our Japanese relatives who did contracting told us, "No, no, no, you don't want to do that!" Why not?, we asked. He said, "Buildings in Japan have very little value and usually depreciate in value, whereas land usually (depending on where you buy it . . . Location, location, location!) appreciates in value." A mansion/condo will sell for less than what you paid for it after ten or fifteen years, but land will more than likely increase in value. In Japan, you buy the land, not the building or condo that sits on the land. I think it's wiser to buy the land.

How many % points did these apartment drop during covid. ? Plus post Chinese investment money is looking for new ground. Australia is ridiculously over price due to this Chinese investment money finding loopholes. Pushing housing out of the reach of the lower middle class. 30 years ago renter were 30% of the market. Today it is 45 %. Those two factors of Covid serve price drop and Chinese money getting in, is the reason why we are seeing such a steep recovery.

This is a dim quote. Real estate in Japan is priced according to supply and demand. When it has gone down, as it has in large parts of the country, it has been due to lack of demand. When and where it has started going up, it has been due to new demand.

In the parts of Japan where real estate prices are going up strongly, and rest assured that this is real and has been genuinely happening, it is because of new demand appearing, not due to Japanese people (who are being condescended upon by this real estate expert) "finally realizing" some real estate gospel as preached in London, Sydney, or the US of A. Prices in places with no demand in Japan, i.e., most of the country, are still rock bottom.

kohakuebisu

Today 08:24 am JST

not due to Japanese people (who are being condescended upon by this real estate expert) "finally realizing" some real estate gospel as preached in London,

Nicely put!

This person worked in NY longer than Japan and presently only in the luxury market.

Bloomberg had a full article on the subject and it was as simple as this.

Foreign buyers are buying because Tokyo ( and it is basically only Tokyo) is cheaper than other major cities like NY Singapore, etc..

Domestic buyers are older Japanese taking advantage of low interest rates large full service luxury locations insuring themselves of a quiet retirement location with the option of care services once or if they need as the get even older.

Zero indication in both cases that they are buying as an investment but all indications they are buying as a security for the future, the HK, Taiwan, even China buyers are looking for a stable safe place in the event that things go really bad in those places and they have to get out.

The Japanese buyers are looking for a quasi retirement/care facility without actually being in a care home.

This is a fringe market and does not reflect on anything to do with the general real estate market or on the general Japanese public.

This is not only happening in Tokyo - there are other growth areas in Japan. And I don't think it's a bubble. Real estate has been underpriced for some time now. And considering that the price of everything else is going up while the yen sinks, it would be an aberration if land didn't go up as well.

Also, those Japanese with savings are looking for safe places to park money as well. Better to have an apartment than to watch your bank savings depreciate day by day.

Tokyo real estate is still extremely under valued when compared to similar tier cities such as London, New York, etc.

Should still have 200-300% left to grow in the next few years.

It’s just only another hype because they, the ones who are rich or grabbed all the inflated printed money, don’t know where to invest otherwise for higher profits. Luxury they already have everything thinkable, bank accounts, funds and stocks bring nothing or losses, conventional industries or farming bring nothing too and are even on a extinguishing path due to climate change forced de-industrialization, virtual or crypto coins are much too volatile and aren’t even substantial money, AI is a very big hype but in very most cases overrated and of course no one of them really understands that technology, extreme adventure travels to Titanic or into orbit isn’t something for everyone too and often unsuccessful deadly too. Well, where to put all the useless billions into? Yes, real estate in big cities and global hubs. That might work for a while, until something else comes up and attracts the big money.

To all Tokyo residents who like the idea of paying 300,000 Yen a month to live in a tiny 1K apartment in an old building in an average neighborhood - which is basically what trends like this in major cities around the world ultimately lead to - this will no doubt come as great news.

To everyone else, be prepared because if this trend persists it is going to suck.

Once interest rates go up there will be heck to pay. I think most young families take the maximum mortgage at the lowest adjustable rate praying it won't go up.

@stormcrow,

There are exceptions. We bought a manshon in the 1980s just before the bubble started. Three years later it had tripled in value, and we sold it and bought a house. Six years later, the house had almost halved in value when we sold it. (We managed to come out ahead overall.)

I think Japan is finally realizing that real estate is a commodity.

Low level corporate speak comment. It has been since the Bubble. And that is the problem.

https://www.theguardian.com/society/2017/feb/28/luxury-real-estate-housing-crisis-un-homelessness

Private Equity should be barred from real estate.