Which asset class to invest ? -Recommendation of Japanese property investment- Part 2

The asset classes to be recommended for non-Japanese investor as the exposure in Japan are as follows:

Priority would be

1 Logistics

2 Office

3 Specific retail

4 Residential

5 Hotel

6 any assets by M&A

Below No 4 will be explained further.

4 Residential

Q: Why

A1: Marketability, Japanese will keep living in Japan for future several decades even under the aging society. Thus, the residential apartment would be stable assets. ,

A2: Corporate flats revival: young workers who are in twenties and thirties have preferred to living corporate flats again, given the innovative technologies in the apartment.

A3: More lease apartment preferred: younger generations have remained less wealthy compared with ten years ago, due to the saturated economy.

A4: Student accommodation boom: as the emerging countries in Asia have born wealthy social class and Japan has been the most popular destination for non-Japanese students to live. This will continue over middle to long term, although the number of student in Japan has been decreasing. Thus, student accommodations in university neighborhood will strongly be demanded.

Q: Which Area?

A : central of large cities such as Tokyo and Osaka, or students residents area in other regional cities

5 Hotel

Q: Why?

Over the next couple of years, hotel assets would be quite uncertain as investment targets. For past decade, Japanese central government has been launching “Welcome Japan Champaign” to grow the tourism as Japan’s top industry. However, under the COVID-19 new normal, tourism booming will be uncertain. Thus hotel would not be the good investment target.

However, hotels have been developed in good commercial areas and hotel, as an investment asset, would be demolished and redeveloped into other use such as residential or medical facility.

6 Last but not least　M&A

M&A deals have been good deal source for investors. Looking at past decade, companies which have recorded profits but have to close due to the lack of successor, have been increasing in number. The service providers who facilitate M&A have also been increasing in number. Companies to be merged usually have good assets in good locations and therefore, investors can have good properties through such M& A deals. Japan M&A center has been a sort of pioneer in this field.

Therefore, regarding the priority, we would like to suggest the following