Japan Country Report 8-10May2014 at Johor Bahru 1
Abenomics To overcome so long deflation economy, Prime minister Abe adopted next policy. Easy money policy 2% inflation target Limitless easy money policy Depreciation of Yen Active Financial Policy Big public investment Growth Strategy to inspire investment Easier conditions for investment & Trade Participation to TPP(Trans Pacific Partnership) Not fulfilled yet 2
Monthly Report(April.14) by Japanese Government Economy is recovering at a moderate pace. However because of last minute buying spree before consumption tax increase (5 8% this April), it becomes weaker. Private consumption is weak. Investment has recovered. Export is almost flat. Production is almost flat. Firms feel business condition is improving. Corporate profits are improving. Forecast is cautious. Employment is improving. Housing construction is decreasing. Price for consumers is picking up slightly. 3
GDP Against the former Budget Year % by Mitubishi Ufj Research & Consulting 2012 2013(fore cast) 2014(fore cast) 2015(fore cast) Nominal GDP -0.2 1.9 2.0 1.6 Real GDP 0.6 2.2 0.5 1.2 Domestic Demand 1.4 2.7-0.1 0.7 Consumption 1.5 2.2-1.0 0.4 Housing 5.3 9.3-1.2 1.1 Investment 0.7 1.2 2.9 3.3 Inventory -0.1-0.3 0.1 0.0 Public consumption 1.5 2.1 1.6 1.6 Public investment 1.3 16.9-0.3-7.2 Overseas Demand -0.8-0.5 0.3 0.6 Export -1.2 3.3 4.3 5.3 Import 3.7 5.5 1.9 2.3 GDP deflator -0.9-0.2 1.5 0.4 4
Economic Indicator Against the former Budget Year % by Mitubishi UFJ Research & Consulting 2012 2013(for ecast) 2014(for ecast) 2015(for ecast) Current balance(trillion yen) 4.4 7.1 9.0 10.5 balance on goods(trillion Yen) -6.9-12.4-11.2-9.2 balance on service(trillion Yen) -2.5-1.6-1.6-1.4 balance on income(trillion Yen) 14.7 16.8 17.3 17.7 Industrial Production -3.1 3.4 1.6 3.3 New Housing(ten thousand units) 89.3 100.6 89.9 87.7 Unemployment rate 4.3 4.1 3.9 3.9 Domestic Corporate goods price -1.1 1.9 3.4 0.8 Consumer Price -0.3 0.9 2.8 1.0 Yen/Us$ 83.1 100.2 103.0 104.6 Call Loan Rates 0.082 0.072 0.070 0.070 Newly Issued Government bond rate (10years) 0.78 0.69 0.75 0.92 5
Japanese real estate market outlook(2,014 1st quarter) Price of land in urban area is recovering Rent of office is recovering. Rent of residence is recovering. Rent of commercial is going up in some area. Hotel market is very well. Occupancy ratio up Logistics market is quite tight. REITS are up because of Tokyo Olympic. Forecast of property market is optimistic. 6
Movement of officially assessed value of land blue line:tokyo Commercial land Redline: Osaka Commercial 7
Rent & Vacancy Rate Tokyo Class A Office building Blue line : Rent Red line :Vacancy rate 8
Price Index Second Hand Condos Green line :Metropolitan Area Blue line : Tokyo 9
Office Rent Tokyo Blue line : average Red line:super big Orange line: Big Brown line: under medium 10
Forecast of Rent Tokyo Central three wards big offices by NLI Research Instiute 11
Rent Index of Condos Tokyo Green line: One Room Pink line: DK Redline: Family Blue line : Average 12
Asking Rent of Condos Tokyo 13
Rent of ground floor in down town blue line: Ginza Red line: Shinjyuku 14
Number of visiting foreigner 15
Occupancy ratio of hotels Japan red line : 2013 16
Vacancy ratio of logistics blue line :Tokyo Red line: Osaka 17
J-Reit Index(2012=100) 18
Investment amount by J-Reit 19
Forecast of property investment bad Rather Bad Avera ge Fairly Good Good 20
Investment to Japanese properties by foreigners Japanese properties have no regulation over foreigners who can buy and hold just as same as Japanese. Rights of properties are quite clear and are protected by law. Return on investment is relatively high compared with the cost of money. By leverage,say,60-70%borrowing,the return on equity will nearly double over the yield of the property. 21
Investment to Japanese properties by foreigners (2) Foreigners started to buy Japanese properties because they are relatively cheap. Taiwanese Individuals are buying mostly condos & shops. Singaporean are buying office, residence, logistic and hotels. French company Kering (Guchi & other brands),axsa & German fund have bought commercial & Office buildings. I American fund (Fortress Investment)has bought Sheraton grand hotel. 22
Major Developer s South Asian project Mitsui Fudosan : Condo projects in Malaysia, Thai & Indonesia Outlet Park in K.L Mitsubishi Condo Project with Capitaland in Singapore & Condo Project in Vietnam Daiwa house : Industrial Site development in Vietnam & Indonesia Rep Office in K.L Tama home : Service apartment project in Cambodia Sumitomo R&D has set up Representative office in Singapore. NTTUD has set up representative office in Singapore. Tokyu livable set up Singapore office Mitubishi Shoji : Condo project in Phillipine with Ayala land 23
Some of Japanese developers want to go abroad They mostly want to go to developing Asian countries. Some are interested in London. They, except a few big one, do not know how to proceed and lack staffs for overseas business. They need local partners. They would like to develop by themselves with foreign partners. If we provide a proper project, they will study seriously. It will take time to make decision, because they do not know the market and the detailed research is necessary. 24