September 19, 2022. Hokkaido Newspaper.
Real estate in Hokkaido is attracting attention overseas. The Japanese Yen’s depreciation makes real estate a real bargain and the ultra-low interest rates are spurring investments in tourism and office use building. Real estate in Hokkaido is attracting the attention of foreign investors. Against the backdrop of the rapidly weakening yen, individual investors are purchasing houses and land in Sapporo and the Shiribeshi area due to the sense of affordability resulting from exchange rate differences. Institutional investors are also investing in Sapporo, where high yields can be expected, driven by strong office demand and Japan's low interest rate environment. As countries around the world raise interest rates to curb inflation, the inflow of foreign money into Hokkaido is likely to accelerate. Anticipating demand from foreign visitors to Japan "This is a once-in-a-lifetime opportunity now that property prices have actually fallen due to the weaker yen, making it easier to invest." Hu Mijia (56), an investor from Changhua County in central western Taiwan, said so. Hu, who visited Japan in July, is looking for real estate in Hokkaido to invest in, and has already decided to purchase an old house in Otaru. The old house has received approval for a private lodging business, and it is said that demand from tourists visiting Japan can be expected once the Covid19 pandemic border measures are eased. The exchange rate of the yen against the U.S. dollar was around 115 yen per dollar at the beginning of this year, but it plummeted to 139 yen per dollar in July. The decline accelerated again in late August, and on September 7, the exchange rate hit 144 yen to the dollar for the first time since August 1998, 24 years ago. The real effective exchange rate index, which shows the value of the Japanese yen against a wide range of foreign currencies, also fell in July to its lowest level in fifty-one years. A real estate company in Otaru, has received a series of inquiries from investors in the United States, Hong Kong, and other countries, and the number of inquiries since August has increased by about 40% compared to the same period last year. Business sites in tourist areas such as Otaru, Niseko, and Furano, as well as detached houses, are popular, and the number of sales, including appointments, has tripled from the previous year. Inquiries from overseas are also increasing in Sapporo and there are strong inquiries for high-rise apartments for sale in central Sapporo. Investor, Pauline Suzuki (52) from Los Angeles, USA, purchased land in the Niseko ski resort area on September 7. "We can expect land prices to rise in the future, and if the yen appreciates in the future, we can also expect foreign exchange gains.” Suzuki said. The yen exchange rate, which was around 109 yen to the dollar in September last year, plummeted by about 35 yen in one year. The price of a detached house worth 10 million yen went from $92,000USD to $69,000USD. Properties in Japan look about 30% cheaper than last year and real estate transactions will increase if the yen continues to depreciate. Hokkaido offers higher yields than Tokyo Behind the rapid depreciation of the yen is the widening interest rate gap between Japan and Europe. While the Federal Reserve Board (FRB), which is the central bank of the United States, and the European Central Bank (ECB) have raised interest rates one after another, the Bank of Japan has not changed its policy of continuing its ultra-low interest rate policy. Mr. Toyonaga, Director of CBRE's Sapporo branch, a major real estate service company, points out that, “The widening interest rate gap is causing overseas funds to turn their attention to Japanese real estate. This is because interest rates are lower than in other countries when borrowing the funds necessary to acquire real estate, and more profits can be expected after deducting the repayments from the income earned from rentals.” In June, an office building developed by a special-purpose company affiliated with a Hong Kong investment company opened in Chuo-ku, Sapporo. Compared to the Tokyo metropolitan area, where land prices are soaring, Sapporo is attracting attention as an investment destination with high demand for residences and offices, where investment costs are lower and yields are higher than in the Tokyo metropolitan area. However, it is unclear how long the ultra-low interest rate policy will continue, and some foreign investors believe that now is the time to sell, as they are wary of an interest rate hike. The Bank of Japan's monetary policy is likely to have a significant impact on the real estate market in Hokkaido.
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