People stand at a window of an observation deck in Tokyo, Japan
© Bloomberg

It is a cliché that Asians are especially fond of property assets. The Japanese, scarred by the 1980s bubble, may be an exception. Since late 2012 the Topix stock index has risen about one-third in US dollar terms. Tokyo’s property market has been a slouch. According to Japan Real Estate Institute (JREI), between November 2012 and August 2015 secondary market condominium prices in the Tokyo metro area rose only 12 per cent, and that was in yen. In dollars, prices are down by a quarter.

Tokyo metro prices have also lagged behind those in all of Asia’s major cities. Based on JREI data, condo values in the Japanese capital halved between October 2010 and April 2015. Even in local currency terms, Tokyo prices rose less than all regional capitals with the exception of Ho Chi Minh City and Seoul. Asia’s best performer has been Shanghai: residential property rose 36 per cent in US dollar terms between October 2010 and April of this year.

Tokyo rents are similarly moribund. Savills says they are nearly a tenth below 2008 levels, despite gradual increases since 2012.

Sentiment is positive, though. A study from the Urban Land Institute (ULI) and PwC found that over 300 real estate professionals worldwide ranked the city as the region’s most promising for 2016. Tokyo’s status as a haven, along with low interest rates and high loan to value ratios, gave it the edge over 22 other markets. The weak yen, especially for buyers whose own currencies are pegged to the dollar, adds to the appeal.

Tokyo’s longer-term prospects are more mixed. Japan’s ageing population is not good for demand, and changes in inheritance tax for tower flats, which are taxed at values well below market prices, could also hurt. Low interest rates — which have helped to fuel a recovery — could bring later refinancing problems, according to the ULI and PwC report, especially if Abenomics fails and price stagnation leaves high loan-to-value debt exposed.

Still, in the near term, with inflation and economic recovery at the forefront of the political agenda, rates are likely to remain low, enticing domestic buyers. Speculators in places like Hong Kong, where house prices have more than doubled over the past 15 years, might find Japanese property — down 30 per cent in the same timeframe, according to Economist data — attractive. After all, Asians do not just love property at home.

Email the Lex team at lex@ft.com

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