In this interview for the Worldfolio, Mr. Yuji Oike, President of CLEARTH LIFE, discusses the most recent trends in Japan’s real estate market and delivers a compelling analysis as to his company’s future and growth strategy.
Since the introduction of Abenomics in 2012, a sense of stability has been created in Japan with the fiscal stimulus and monetary policies introduced by former Prime Minister Abe. Land prices have been increasing for two years, and the value of commercial and residential areas for 4-5 years in Tokyo’s metropolitan. Of course, last year the coronavirus brought much disruption which brings some uncertainty for 2021. What is your outlook for the Tokyo real estate market for 2021 and 2022?
We feel the market is currently in stagnation, meaning that the market is neither in an ascending or descending pattern but more so in the waiting area between. There are always such patterns in the market, but we feel that mid to long term, there will be huge benefits to the real estate market brought by the building of a new linear bullet train (Superconducting Maglev) which will bring quicker access from Tokyo to Nagoya and Osaka. This new bullet train will bring more opportunities for the overseas markets to easily connect through Haneda, Narita, and Centrair airport in Nagoya. Additionally, more vacancies in offices now which is indicative of the transitioning and filtering out of those companies who are not going to survive. I think that this natural process is taking place now whereby such companies who would have occupied that office space are not going be able to survive.
We are seeing that commercial prices in the train station areas, new airline hubs such as Fukuoka, and even Niseko in Hokkaido are increasing because of foreign entries into local real estate markets. From your perspective, what real estate opportunities have been created outside Tokyo? What regions would you recommend for our readers?
Based on our experience, we see that our overseas investors focus on the central areas of the city because they consider it safer and more stable. Our mission as a company is to develop the real estate, lease it, then provide services after so that the return to the investor is higher. We research yearly such new cities like Fukuoka and Nagoya, and they do have a certain amount of demand but compared to Tokyo, they have much less. In terms of the attractiveness for our clients, we therefore focus on Tokyo mainly for our Japan operation. This is partly explained why we have expanded our operation abroad to new places such as Phnom Penh, Cambodia where we have developed. We consider this market is attractive because of the younger population demography and similar to Tokyo somewhat in that it is fifty years behind in development but has huge future potential.
We know that Japan as a country has a population that is steadily declining, but in cities like Tokyo and Osaka we see the opposite trend of population is increasing. However, according to Mitsui Trust Management this increase in the major city’s populations such as Tokyo and Osaka will peak by 2030. How will these changes in populations affect your business model moving forward?
Yes, Japan is experiencing a steady decrease in its population and we think yes Tokyo’s population will peak by 2030-35. We have set our plan in place to deal with this by focusing our business model on central Tokyo since we know that this area is becoming increasingly more popular with older buyers because of the ease of access of services in this central area. We understand that the demand for real estate in this market will not decrease despite the changes in populations, and we believe that for our clients there will still be demand for such locations. Additionally, the Japanese mentality and lifestyle is changing in relation to investments for real estate, and we are noticing that there is an increasing demand for a second home other than the original family house.
Mr. Yuji Oike, President of CLEARTH LIFE
Your company’s flagship product is of course your CONCIERIA brand apartments for which you have sold more than 20,000 units and have an extremely high occupancy rate. The concept is all about total service solution for your clients, but can you tell us more about why your apartments would be so attractive to potential overseas investors in the Tokyo real estate market?
We mainly deal with Asian customers from Hong Kong, Singapore and Taiwan, and the feedback we receive is that our apartments are of the highest quality. Once they inspect our apartments, they are very impressed with the Japanese maintenance and service which ensures that the buildings still remain in pristine condition despite the age. This reassures our customers that the purchase of real estate here is a worthy investment. More so the price is attractive compared to the price in those Asian cities, despite Japan having a higher GDP its property market represents excellent value for investment. Another plus point we have for our buyers is that many investors in Asia are purchasing a property that is not built yet, we however are offering a more secure investment that is already built.
Japan is famous for its high-quality service where the “customer comes first”, and in the case of your company we see such a concept being implemented with your CONCIERIA brand which is a total solution for property ownership from the initial purchase, to its leasing, to its sale later on. Can you tell us how you are looking to translate this uniquely Japanese level of service to foreign buyers from places such as the US and Europe? How are you helping such buyers understand the value of your apartments?
Currently we are focusing mainly on the Asian market – Hong Kong, Singapore and Taiwan specifically – we organize seminars in these locations to explain the attractiveness of our service to potential clients in these locations, and I work closely with our sales team to organize such events. We utilize other tools such as Facebook to market and during our seminars we are often interviewed by local media which helps us disseminate our unique services. For us the Asian market is ideal because in terms of the time difference it is much more efficient, and it’s easier for those clients to access Japan. But in the future with the change to 5G, IoT and other digital services, we will adapt our model to try and sell to such clients if the technology allows for a seamless purchase. We do have some European clients who appreciate the safety and stability of the real estate market here, and we have been able to work successfully with them. There are some barriers need to be broken down which we believe relate to this in that our potential US and European buyers don’t know how stable it is here. From an investor’s point of view, we are also looking for new markets such as Paris and London, and we are presently seeking a good agent who could help us enter these markets.
Oike-san, thank you very much for receiving us today. Our last question is in relation to you and to help our audience get to know you better. If we were to come back in ten years and repeat this interview all over again, could you tell us what you would like to have achieved by then, what is your vision for the company?
I would like to change the Japanese mentality in relation to investment. Japanese especially in the older generation have the opinion that it is better to save the money and keep it in the bank account rather than put it into an investment such as real estate. This is because their older Japanese pension system was able to sustain itself but nowadays it cannot do so in the same manner. In this sense the real estate market makes sense as an alternative to reliance on the pension, and I want to promote and help make this change. Within ten years, we think the Japanese market will be controlled by foreigners if Japanese don’t change this mentality and invest in real estate. In terms of the company, we have established around 10,000 customers within our thirty-year existence, but we would like to double that amount in ten years’ time so that we have more penetration throughout the market. We want to create an environment that allows more foreigners invest in Japan and at the same time Japanese investors go abroad, and we will be one of those companies that will be at the forefront at promoting this type of cultural exchange. Instead of focusing mainly on new buildings, we will also focus on maintenance of existing buildings, we want to increase the number of properties that we have maintained. These are my visions for the company that I would like to have achieved in ten years’ time.