The Appeal of Japan

There are several different motives for living in Japan:
1. Working opportunities for foreigners are restricted to certain areas like technical specialist roles, finance, academic, programming and English instruction. Japanese fluency and cultural sensitivity are otherwise major stumbling blocks.
2. Liveability. Japan offers a very desirable living environment with modern services, conveniences and cultural engage. This is the benefit of a big city and it appeals to Asian and western skilled immigrants alike. The issue is arguably the entrenchment of Japanese "polite culture". You might wonder: "Who would object to politeness?" Any outsider who arises at the conclusion that politeness equates to engaging in 'cultural rhetoric', and otherwise appealing for 'outsider consideration' by diminishing your own ego whilst venerating Japanese culture. Whilst you can spurn Japanese values, the exposure to 'difference' has its own rewards, and one can celebrate how the Japanese live. The Japanese are in effect living how we all will be living 30 years from now. I frankly wish everyone was further progressed. This says nothing of Japanese values but simply their "bureaucratic organisation". 

3. Seasonal: The country offers a departure from Southern hemisphere seasonal weather. Not that the southern hemisphere needs a respite given its relatively mild winters.
4. Safety: Japan remains a very safe place to live and hold property.
5. Investment: The Japanese economy is often considered a "basket case". The reality however is that it is priced accordingly. Property prices outside of city centres has been kept low by falling real wages and housing oversupply. Japanese don't so much 'sell houses' as buy anew: whether next door or in the city. If there is any vulnerability it is in the prospect of higher taxes as taxes on land, particularly low - end property, are relatively modest. Low end property owners can pay as little as  $150-250 a year in rates, depending on the age and size of their house and land, as well as its location. The other benefit of property is that it's a real 'hard asset', and since not overpriced, Japanese property is not vulnerable to currency debasement concerns. You might however want to consider vulnerability to major earthquakes when buying. Here again, Japan benefits from an oversupply of property and modern design and engineering standards. This has become a national imperative.
6. Expat friendly. Being a big country you might have expected Japan to be "unliveable", but fortunately many Japanese speak some English,  most things are automated (even ordering food), and there is a great deal of English signage and many 'work-arounds'. You can find great places to drink and eat when you can meet with people all around the world.
7. Cost of living and business: The requirements for a business visa are quite onerous, and whilst income taxes are fairly high, operating costs are low. The same for the cost of living. The sustainability of the old fashioned corner store is a testament to the low cost of business in Japan. The obstacle is not financial, but rather cultural. This is why most foreigners target foreigners for business.
8. Technology. Japan has lost its technological lead however it remains a substantive player and is strong on technological adoption, making it a great place to buy toys like this display model at the Nissan Show Room in Ginza, central Tokyo.

Buying a new house in Japan

There are other options other than buying a foreclosed property. These options include:
1. Buying a used home on the market
2. Building a new home - whether a mansion, condo, or a stand-alone townhouse in the inner or outer suburbs of Tokyo  (or other major city).

One option of buying a new home from a developer. I was out walking in the Adachi district of northern Tokyo the other day, reflecting on the appeal of this type of the proverbial stand-alone  home.

It is fair to say that these villas might be construed as making sense for some people:
1. More storage than a strata property, both for cars, toys, other possessions.
2. Proximity to schools, nurseries and parks by virtue of the space for these facilities in the district. I.e. Proximity to a river flood plain makes particular sense given the sterilization of this land by flood restrictions for anything but flood mitigation and open spaces and sporting facilities.
3. Perception that wooden houses are safer structures than strata high rise structures.  This is a question that depends on your comfort with modern engineering in the midst of earthquake events, and how that exposure might play out in terms of sustained asset prices. I would suggest that engineering standards have closed the gap. The question is whether the developer can be trusted to not take any short cuts.
4. More freedom for kids to roam, ride their bikes, and play safe. Perhaps there is  more tolerance of noisy kids if this is the targeted market for the subdivision.

Of course such subdivisions have their disadvantages:
1. What is the point of paying for land value if there is no surplus land for you to develop?
2. What is the likelihood of your vertical strata space having value in future given the ubiquitous availability of it? There is one reason for hope, and that is a good location strategy that results in your community benefiting from a new rail line. 
3. Isolation from the conveniences of the city, or even a regional city. There are of course levels of convenience. Can you ride home from the station? Will you otherwise have to pay for kids and family to travel concurrently to the city. In such cases, you are better off living near a regional city in a "modern" mansion, knowing the lifespan of older mansions is diminished by lower engineering standards.
4. The depreciation rate on new houses is very high. Marketing costs and manipulative sales strategies can see buyers pay too much compared to existing homes.  It's not necessarily that home developers are ripping off the customer, but that the costs of a new building are high, and many non-discerning buyers are prepared to make emotional or haphazard "trusting" decisions upon the urging of sales driven companies.

You can buy a modern villa of 100m2 in land area and house floor area contained in a compact 2-storey house for around Yeq 390-420,000. These are very constructed homes with a lot of space. Not so comfortable given the smallness of rooms.

One of the reasons you might welcome a villa is foe the sun and breezes, but consider your window sizes and fly screen options. Consider that your neighbor's house might be as close as 0.5m away, reducing air flow and light to lower floor. Do you want any garden?

The problem with buying new is that the fresh paint smell doesn't last.  The value of a new home will fall rapidly on purchase over the first 5 years. You might also suffer the result of poor neighbour's if their practices are evident. i.e. If they are untidy.

There are other important considerations though:
1. Are you buying on a good train line with respect to entertainment and shopping centres
2. Are personal connections served? You would hope to live there for 15 years if you are going to buy new, otherwise those early depreciation rates are going to be costly. Renting such a place is going to be costly in terms of depreciation too. Be sure to lock in a long term customer to fully realise that "new home" premium.
3. Is there scope for new train lines? A geospatial gap to fill? This creates upside for more lines and competition, which improve connections and stimulate population growth and development of services. Development is not equal. We need to make decisions that improve our odds of success.
4. Are the prices for rail reasonable? I bought on the Seibu Ikebukuro line because it's cheap. Some lines however are very expensive, like the Nippori Toneri Line. The price is a reflection of capital costs, competition, line length and the incomes of the market catchment.

There are two types of unwary people that buy villas:
1.  Young families buying their first home
2. Older couples who are looking for a retirement home close to their children & families, or plausibly a better house on their local community. Often it's a preference to remain in their home town. 

Bike touring in Japan

One of the best reasons to buy foreclosed property Japan is to take advantage of the fabulous infrastructure for domestic travel. We all hate paying too much, and in Japan, people have paid too much for 'over-capitalised' infrastructure that borders on the insane. i.e. Looping bridges and highways that parallel the coast on pontoons. Great facilities, roads and pathways, which are a boon for bike tourers.

Here is a set of resources for bikers thinking about travelling around Japan, provided by a person who has done it. I am personally more interested in the opportunities for whitewater kayaking, and I spent a lot of time touring around on a Japan Rail Pass checking out the various rivers that run along a litany of Japanese river valleys.

Dronelius Cornelius Sminchauchan Part 1 - hints and tricks
http://cycloscope.weebly.com/blog/budget-travel-in-japan

budget travel in Japan, a rough guide

Hints, tips and tricks to travel Japan on a very low budget. A guide to Free camping, supermarkets,…

CYCLOSCOPE.WEEBLY.COM

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Dronelius Cornelius Sminchauchan Part 2 - itinerary
http://cycloscope.weebly.com/.../japan-on-a-budget-pt2-a...

Japan on a budget pt2: a suggested itinerary for bicycle touring and not

CYCLOSCOPE.WEEBLY.COM

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TPPA to rejuvenate Japanese agriculture in short term

One of the interesting aspects about Japan is the irony of the place. I say this for a number of reasons, among them:

1. A nation that pays its farmers not to plant crops
2. A nation, long famed for the most expensive real estate in the world, that perplexingly has the cheapest property, in the most convenient locations that Westerners could imagine
3. A proud nation lacking in constituents with self esteem
4. A considerate nation lacking in empathy for others

On this note, I draw attention to another prospective opportunity for adventurers that might gain traction, if only because it is 'counter-cyclical'. Japan is one of a number of Asian Pacific nations that is reforming its trade laws. Japan has long been open to trade reforms, however the nation has oft resisted these changes because:

• Change was considered electoral suicide in Japan - particularly the topic of farm support
• Food security was considered a key consideration

Today, priorities seem to have shifted, and so there is good reason to believe that Japan might in fact support agricultural and trade reform. The reasons to suspect this are:

• The prospect of importing cheap food from abroad
• The high cost of living in Japan due to high food costs, and its corresponding impact on low income families, who are growing in number
• The declining importance of farming due to the aging population
• The appeal of opening up trade opportunities for Japanese industry, even if that means corresponding closure to a long history of mercantilism on agriculture
• The spiraling Japanese public debt, and thus the corresponding need for Japan to end its subsidies on agriculture

We might then wonder whether Japan is seeing the writing on the wall, and thus dropping its previously mercantilist strategy, for what might be construed as a far more enlightened and fairer posture to all concerned. Paradoxically, it appears this strategy is having the opposite affect. The Japanese government has increased support for Japanese farmers to stop rice farming. i.e. This funding could be construed as:

1. A payoff to ease the burden on farmers entering retirement, i.e. The bulk of Japanese farmers are over 65yo, working small land plots compared to their competitors, with modest farm equipment.
2. A capital incentive for Japanese farmers, where they remain committed and their farmlands prove suitable, to opt for a different type of agricultural product, that is more sustainable in a post-reform era.

The implication is clear. There will be several changes in the post-reform period:

1. More commercial acumen as committed younger farmers and corporate farmers have positive incentives to shift to more marketable, higher margin crops. Clearly in the past, the guarantees of farm support only gave Japanese older farmers the incentive to persist in what they were doing, so they just became more 'entrenched' in protectionism. 
2. Higher economies of scale in the new era. There will need to be a great deal of consolidation of existing farms. Most likely we might expect farmers, not to sell their land, but instead to lease lands for a modest retirement 'farmland' income. 
3. Greater land availability. It is inevitable that some of this land will become available to 'new farmers'. The question is whether it will be quality land, and whether the 'shards of land' offered will be desirable in the new era. After all, corporate farmers will want to consolidate their interests, and not have their interests scattered across the country. There is every reason to think that they are already identifying the farms with the greatest appeal in terms of access to markets, fertility, and centrality to their existing interests. Notwithstanding the appeal of 'proximate land', the corporate farmer has a trump card up his sleeve. Japanese agricultural land is zoned for agriculture, so corporate farmers will know that, even in 'growth areas' close to cities, there will be land that retiring farmers will have no choice but to accept a 'low-price' deal in order to secure use of land. 

The opportunity of course to buy farm land in Japan is not restricted to Japanese nationals, however there is a need for any investor to pay membership dues to the Japan Agriculture Association (JA). The appeal of farming in Japan is strong for a number of reasons:

1. Low yield, low margin rice farming lands are going to give way to higher yielding, higher margin crop selection
2. Asian crop competitiveness is destined to fall as farms in Asia's emerging markets prefer to work in factories rather than on farms. This of course will take time. 
3. Higher farm equipment utilization rates can be expected to cut farming costs. Historically farmers in Japan, whilst cooperative, have not been particularly engaging when in came to sharing farm equipment. This, and the smaller plot sizes, resulted in small scale farm machinery, which is an approach mirrored in Asia, and otherwise a boon for Japanese farm equipment manufacturers.

The other appealing factor is the possibility of buying cheap and moribund 'scrap' infrastructure at auction. A great number of Japanese farmers have gone broke, and retain shards of Japanese farm lands and infrastructure as a result of poor business and lifestyle decisions. Some have become alcoholics. In any case, a substantial number of properties have ended up in the courts as foreclosed properties. Given the prevailing attitudes to farming in Japan, this does offer a counter-cyclical opportunity for others. Consider that:

1. Japan is reforming the sector
2. Japan's hinterland has amongst the best rural infrastructure in the world, with great connectivity to the main Japanese cities, i.e. Rarely is an isolated rural hinterland more than 90 minutes train from a major city, or three hours from a mega-tropolis like Tokyo, Osaka, Fukuoka, or arguably not Sapporo (Hokkaido). Yes Sapporo is substantial centre, but the cold north is not well suited to agriculture anyway, given the cold climate, or short seasons. 

If you are more interested in Japan's farm sector, and the opportunities to buy farm land in Japan, consider our Japan Foreclosed Property guide. Most of the buyers are 'small scale' Westerner farmers married to Japanese spouses, however there is scope for those with greater capital resources to seek a business visa for the purpose of pursuing a farming business. This obviously requires vetting by the Ministry of Foreign Affairs of your business proposal.

The strategic opportunity in Japan could be considered to lie in the future of Japan. Consider that Japan is struggling to kick-start its economy. There is every reason to think that objections to immigration will be swept away by economic imperatives, and that more Indians, Chinese, Filipinos and Koreans, will mean the introduction of more restaurants with 'peculiar' or exotic food supply needs, and the expectation that this produce will be supplied locally in Japan. This is therefore an opportunity to anticipate if one sees Japan moving in the same direction as other Western countries.
It seems however that it is the Trans-Pacific Partnership Agreement (TPPA) that is to kickstart Japanese agriculture. It is probable that the opportunities to buy foreclosed Japanese rural property will be in this early stage, and that latter-day entrants will be left to fight over infertile, remote land in the 'full priced' private property market.


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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com