Two decades of deflation, following the great Japanese property bubble burst in the early nineties, have left speculative investors on the sidelines as far as Japan is concerned. The ultra-safe and highly regulated business environment, tax incentives for foreign investors, and even the promise of spectacular cash-flow, in a world gone mad with negatively geared sub-prime properties, have not been enough to lure those who seek capital growth back to the land of the rising sun – until now.
Since the beginning of the year, and particularly in light of the recent European crisis, which seems to be headed nowhere fast, interest in Japanese property, and particularly in Tokyo office and commercial real-estate, is rising sharply – helped significantly by the first signs of would-be recovery in twenty years, as dropping vacancy rates and minute rises in rents seem to suggest the trend is finally reversing. Temasek Holdings Pte. Ltd, a Singapore state-investment firm, have this week joined the ranks of big names such as Goldman Sachs, Angelo Gordon, and even trouble-stricken Aviva Investors – which only last week reported it may close several of its international desks, fire a large number of employees, and possibly ditch its global REIT fund. All of the above have been actively purchasing office towers and commercial spaces in and around Tokyo’s hottest spots.
Spectacularly, Tokyo’s office space is outperforming Singapore and Hong-Kong, where rents have been dropping in the last 2-3 quarters. Japan’s government, which predicts it will break out of the deflationary cycle for the first time in twenty years, desperately needs the cash injection, as reconstruction efforts following the great 2011 earthquake, tsunami and subsequent nuclear spillage are ending – putting a damper on the expansion of the world’s third largest economy, which also happens to be home to the worlds largest trade deficit, and the worlds most swiftly aging population.
While China, one of the world’s largest polluters, hasn’t quite seen the light yet, other nations around the continent are doing their best to introduce cleaner, greener technologies into their property building techniques, as two large exhibitions planned for next month portray. Build Eco Expo (BEX) Asia, to be held in Malaysia, and International Green Building Conference (IGBC) in Singapore will showcase the world’s most advanced ecological building technologies, initiatives and achievements from the past year.
With an impressive cadre of over 200 exhibitors from over 30 different countries around the globe, and a gallery of leading speakers in the green leadership and green community fields, the two expos are guaranteed to draw an ever increasing annual crowd. One of the participants, Shimuzu Corp., has claimed earlier this year that it believes its new Tokyo headquarters building omits less carbon dioxide per square meter than any other building in the world – a bold claim which the company, which manufactures many of the technologies involved in achieving this aim, will seek to prove.
* Asia-Pacific’s retail property market continues to solidify, as Jones Lang Lasalle reports that investments in retail real estate rose 22%, to 12.4 billion USD, in the first half of 2012. China and India top the Asian retail index, followed by Indonesia, Turkey and Vietnam. China in particular, is highly regarded as the world’s most prospering retail and shopping centre market, and has been so for some time.
* Vietnam, as well, has seen more of the international property investment limelight this week, as CBRE Group, 2011’s largest revenue yielding commercial real estate services firm, acquired its affiliate company in Vietnam for an undisclosed amount – seeking to offer seamless integrated services in the country, which signifies south-east Asia’s increasing property investment potential.
* RREEF Real Estate, a unit of Deutsche Asset Management (Asia) Ltd, owned by the Deutsche Bank Group of Germany, has similarly been quoted this week as recommending investors to diversify their alternative investments, specifically including Asian real estate, to counter declines in traditional assets, such as bonds and stocks. RREEF, which holds app. 4.4 billion USD’s worth of Asian property assets, has issued a report earlier this year highly recommending investment in Japanese REITs (J-REITs) – and have now added the main cities of Jakarta (Indonesia), Kuala-Lumpur (Malaysia) and Bangkok (Thailand) to their list of recommended property markets.