Japan Real Estate and Tokyo Residential Market Overview for The Westminster Nanpeidai Japan Capital Markets May 2016
AGENDA Japan Economy Overview Abenomics Improves Economy Tokyo Residential Market Overview Shibuya Now and Future Exit Strategy Asian Investors Update 2
JAPAN GDP TIME SERIES Stable GDP growth to be expected towards 2020 FORECAST Source: Oxford Economics 3
NIKKEI 225 TIME SERIES A steep growth is confirmed after the Abe administration Abe Administration 2012 2013 2014 2015 2016 Source: Nikkei Indices 4
HKD/JPY CROSS RATE HISTORICAL Hong Kong Dollar has been enjoying historically strongest level 17.12 14.13 9.85 Source: Oanda 5
LAND PRICE VS NIKKEI 225 A significant correlation is seen between these two indices Source: Nikkei Indices, Ministry of Land, Infrastructure, Transport and Tourism 6
LAND PRICE MOVEMENT (SHIBUYA RESIDENTIAL) Latest survey shows the continuing positive movement The Bubble Economy Note: As of 1 January each year Source: Ministry of Land, Infrastructure, Transport and Tourism Chika Koji 2016 7
AGENDA Japan Economy Overview Abenomics Improves Economy Tokyo Residential Market Overview Shibuya Now and Future Exit Strategy Asian Investors Update 8
ABENOMICS SCORE CARD Stable growth is seen during the past three years Jun-13 May-16 Change Notes HKD/JPY Cross Rate 12.57 14.13 12.5% JPY, monthly average Nikkei 225 13,677 16,666 21.9% JPY, monthly average Land Price (Shibuya-ku Residential) 961,900 1,054,000 9.6% JPY per sqm, as of 1 Jan Inbound Tourists 8.4 million 19.7 million 136.1% Yearly total (2012, 2015) GDP Growth (Nominal) 0.8% 2.5% 1.7% Yearly total (2013, 2015) CPI 99.7 103.6 3.9% Year 2010 = 100 (2012, 2015) Population (Tokyo 23-ku) 9.1 million 9.3 million 2.9% Monthly total (Jun 2013 and Apr 2015) 5-yr Swap Rate 0.48% -0.08% -0.56% REIT Yield 3.80% 3.28% -0.52% Monthly weighted average (Jun 2013 and Apr 2016) Source: Oanda, Nikkei Indices, Reuters.com, ARES, Japan Reit.com, MLIT, JNTO, Cabinet Office, Tokyo Metropolitan Government 9
BUSINESS SENTIMENT DIFFUSION INDEX The sentiment has been in the positive territory since September 2013 Abe Administration Source: Tankan Survey conducted by The Bank of Japan 10
COMPANIES PRETAX PROFIT Scores record high level Abe Administration Source: Statistics of Corporations conducted by Ministry of Finance 11
AGENDA Japan Economy Overview Abenomics Improves Economy Tokyo Residential Market Overview Shibuya Now and Future Exit Strategy Asian Investors Update 12
TOKYO S CENTRAL 5 WARDS SUPPLY/DEMAND ANALYSIS Contract rate has been hovering at around 90% after the GFC Source: Real Estate Research Institute 13
POPULATION GROWTH Tokyo population has been increasing during the past 15 years Concentration of population leads Shortage of quality residential units/properties Price applications are seen especially in some selected popular destinations Source: Tokyo Metropolitan Government 14
AVERAGE UNIT PRICE TRENDS (NEW DEVELOPMENTS) Price continues the upward trends Source: Real Estate Research Institute 15
SECOND HAND MARKET CONTRACTED PRICE TIME SERIES Price is 9-year high Note: As of December each year except Q1 2016 is for March. Greater Tokyo includes Tokyo, Kanagawa, Chiba and Saitama Prefectures Source: at home Co., Ltd. 16
AGENDA Japan Economy Overview Abenomics Improves Economy Tokyo Residential Market Overview Shibuya Now and Future Exit Strategy Asian Investors Update 17
SHIBUYA AT A GLANCE One of the busiest commercial districts in Tokyo SHIBUYA IN NUMBERS About 10% of all listed companies head offices in Tokyo are located in Shibuya-ku The lowest office vacancy than any other submarkets in Tokyo Ranked No. 1 in Tokyo for the number of large scale retailers (10,000 sqm+ sales area) Labour force population (age 15~64) is over 70% of all populations in Shibuya, which is much larger than the Japan average Source: Tokyo Stock Exchange, Company Websites, Ministry of Economy, Trade and Industry, East Japan Railway Company 18
SHIBUYA AT A GLANCE Shibuya is also recognised as the high class residential area SHIBUYA RESIDENTIAL MARKET OVERVIEW Shibuya is one of the three wards of Tokyo which provides the highest condo sale price per sqf in average Shibuya s average annual income is the second highest in Tokyo, which is about 2.7 times larger than the Tokyo average Shibuya-ku s 3 bedroom+ units are less than 5% among all available residential units in the ward Source: Next Co., Ltd., Ken Corporation, Ministry of Internal Affairs and Communications 19
SHIBUYA IN THE FUTURE Redevelopments progressing 200m away from The Westminster Nanpeidai Above Shibuya Station (2016 2027) SHIBUYA STATION Dogenzaka Area (2015 2018) Redev. Area Redev. Bldgs. 20
SHIBUYA NAMPEIDAI AND SHOTO Two high end residential area nearby Shibuya station are significantly small SHOTO SHOTO SHIBUYA STATION Area: 0.28 sqkm (1.9% of Shibuya-ku) Pop.: 2,472 (1.2% of Shibuya-ku) Only 4 units being leased now NANPEIDAI NANPEIDAI Area: 0.15 sqkm (1.0% of Shibuya-ku) Pop.: 1,674 (0.8% of Shibuya-ku) No rental vacancies 21
SHIBUYA NANPEIDAI Harmonising with vibrant and quiet neighbourhoods Nanpeidai Project (Tokyu Corp. HQ) SHIBUYA STATION REDEVELOPMENT AREA Nippon Steel President s House Shibuya Garden Tower La Tour Daikanyama NANPEIDAI Daikanyama T-SITE (Tsutaya) Takeo Miki Memorial House DAIKANYAMA
AGENDA Japan Economy Overview Abenomics Improves Economy Tokyo Residential Market Overview Shibuya Now and Future Exit Strategy Asian Investors Update 23
CASE STUDIES Actual examples of value appreciation The Parkhouse Nishi-Azabu Residence Completion: May 2014/ 7F 62.83 sqm April 2014 2013 JPY 77.5 million July 2015 JPY 98.0 million The Parkhouse Nishi-Azabu Residence Completion: May 2014/17F 70.09 sqm April 2013 JPY 94.5 million March 2015 JPY 115.0 million Park City Osaki The Tower Completion: May 2015 / 24F 44.01sqm May 2014 JPY 52.6 million September 2015 JPY 63.0 million Source: Jones Lang LaSalle 24
WHO IS DRIVING THE DEMAND OF SECOND-HAND CONDO? The key word is the compression rate of inheritance tax If you have JPY 150 million, the assessed value for inheritance tax will be In Cash & Stock JPY 150 million Compression rate: 0% Assessed value is always the same as the cash amount Acquired a unit in a 100 units low/mid rise condominium JPY 32.4 million Compression rate: 78.4% (approximately) Land price is valued based upon rosenka (80% of current price) Building price is decided in between 40-60% of construction price Source: Ken Corporation 25
AGENDA Japan Economy Overview Abenomics Improves Economy Tokyo Residential Market Overview Shibuya Now and Future Exit Strategy Asian Investors Update 26
ASIAN INSTITUTIONAL INVESTORS UPDATES The institutional investors from Asia are seen Dynasty Holdings (Taiwan) A retail property called Nakaza Kuidaore Building in Osaka Acquired from UK based fund Grosvenor and Tokyo Tatemono Dynasty won the bidding process Price was USD 74.9 million and closed in early 2015 China Investment Corporation (China) A commercial property called Meguro Gajoen located in Tokyo Acquired from Mori Trust Acquisition through LaSalle Investment Management Price was USD 1,167 million and closed in early 2015 A High Net Worth Investor (Philippines) A hotel property near to the Narita International Airport JLL Hotels & Hospitality Group and Capital Market teams advised to the buyer Price was undisclosed and closed on January 2016 Source: Real Capital Analytics, Nikkei Kenplatz 27
THANK YOU 28