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- Japanese Economy and Real Estate Market
Japanese Economy and Real Estate Market
1. The Japanese Economy
The scale of Japan's economy is second only to that of the U.S., at approximately US$4.4 trillion in terms of nominal GDP (2007), and third following the U.S. and China after adjusting for purchasing power parity. Japan has a well-educated work force and high levels of savings and investment rates, and Japan's economy is highly efficient, highly diversified and very competitive.
The country is also one of the world’s largest markets for goods and services, with its consumers possessing a high level of purchasing power. Moreover, Japan is a center of new trends and creativity and is often cited as a testing ground for new products, making it an attractive market for foreign companies.
[ Factors Behind the Strengths of the Japanese Economy ]
| - | Close cooperation between the industrial sector and the government, and among suppliers, manufacturers and distributors |
| - | Mastery of technology |
| - | Strong work ethic among the general populace |
| - | Household consumption expenditures one of highest among major developed nations |
| - | Enormous amount of personal savings and other financial assets of approximately 1,500 trillion yen, creating considerable purchasing power |
[GDP Comparison of Japan with Other Major Economic Regions] (US$ billion, 2007)
(Source: "10 Advantages to Investing in Japan" by the Japan External Trade Organization, March 2009)
2. Base for Business Activities in Asia
The Japan External Trade Organization (JETRO) conducted a survey of foreign-affiliated firms based in Japan in early 2008. The results show that one in five of these companies views Japan as a center for research and development and as a base for business activities in Asia, which is the most dynamic economic growth region in the world. In particular, Tokyo has an edge over competing Asian cities due to its economic scale and well-established infrastructure.
Japan is well-positioned to gain benefits from the region, offering technical expertise, production know-how and products to emerging growth countries like India, Vietnam, and China, which is Japan's largest trading partner. Japan can also expect a synergistic benefit from the regional growth and expansion in Asia.
3. Japan's Real Estate Market
Japan has the second largest real estate market after the U.S. The real estate industry in Japan comprises more than 10% of the total GDP. Although this value is smaller than that of the manufacturing and services industries, it exceeds the values for the steel, automobile and electric machinery industries.
After the collapse of the bubble economy in the early 1990s, Japan’s real estate market experienced a long slump, hitting bottom in 2003 – 2004, and finally regaining traction after one and a half decades. However, since 2007 it has again experienced a severe downturn. Currently, there is a shift from ownership-oriented business operations to real estate business operations focusing on “utilizing” properties.
Global and domestic investment capital inflows poured into Japan’s real estate market since Japan launched its REIT system in 2001. The development of the real estate securitization system led to rapid growth and the expansion of REITs and other real estate funds as well as the advancement of real estate monetization in Japan.
[ Size of Real Estate Markets around the World ]
(Source: Summary of White Paper on Land and Real Property (2008) by the Ministry of Land, Infrastructure, Transport and Tourism)
