Tokyo-based GlobeLink is a specialist marketing and consulting company that targets wealthy Chinese consumers. They recently conducted a survey of wealthy Chinese investors to find out where they want to invest and why.
A total of 100 consumers from the top wealth bracket in China were surveyed. The participants all reside in major cities in China, and are interested in investing in Japanese real estate.
Top answers from the survey:
- Q: How much do you plan to invest? A: 10 ~ 50 million Yen (46%)
- Q: What is your main reason for investing? A: Safety/security (28%)
- Q: What do you want to know about investing? A: Japanese real estate laws
- Q: Where do you want to invest? A: Hokkaido (24%)
- Q: Do you feel you know enough about investing in Japan to do so? A: Yes 19%, No 81%
GlobeLink relied on outbound call centers to conduct the survey between March 16 and 17, 2012. The 100 participants matched the criteria below:
- Place of residence: Shanghai, Beijing or Guangzhou
- Income level: “Luxury class” and high income (annual income over 25,000 RMB/month, or 3930 USD/month)
- Age: 35 yrs and older
- Interests: Property investing
Summary of results:
From the results of the survey, it became apparent that although the participants expressed interest in investing in Japanese real estate, many had not taken any action towards doing so.
33% expressed interest in attending seminars relating to investing in Japan, and 40% said they were interested in visiting Japan to inspect properties in person.
Q1: What type of investment property are you most interested in?
The majority were interested in resort apartments (an apartment in a resort area that may have features such as onsen baths, or access to ski fields etc). The second most popular property was office buildings.
Only 14% were interested in one-room apartments, or studios, for investment purposes, but these actually provide the highest yield (up to double digit returns). Resort apartments provide a negligible rental return at best as tenancies can be seasonal. Resort properties also incur relatively high monthly management fees. On a 2-bedroom condo they can range from 30,000 – 50,000 Yen/month (380 ~ 630 USD) and up, despite the initial purchase price being as low as 5 million Yen. For an investor earning $50,000/year, condo fees of $5,000 ~ $7,500/year on a vacation home can represent a large chunk of your income.
Q2: How much would you invest?
The majority have an investment budget of between 10 ~ 50 million Yen (125,000 ~ 630,000 USD). A third have a budget of less than 10 million Yen, while just 8% would spend over 100 million Yen (1.25 million USD).
Q3: What are your most important reasons, or expectations, for investing? (Several answers)
The safety or security of their asset was the number one response, followed closely by profitability (or return) and capital gain.
It now becomes apparent that Chinese investors have a lot to learn about the Japanese property market. While returns can be high on certain properties (studio apartments), there is a very low chance of achieving capital gains. Furthermore, while resort apartments are the most desirable investment for participants, these offer neither returns nor capital gain.
Q4: What do you want to know about most when investing in Japanese real estate? (several answers)
Property laws and regulations in China can be quite restrictive, so it is not surprising that this is a topic they are the most interested in. They will be happy to find out that property ownership laws in Japan are in favor of the owner, and there are currently no limitations on ownership by foreigners.
Q5: When do you plan to invest?
Q6: Where do you want to invest? (several answers)
Q7: Are you interested in attending a seminar on investing in Japan?
Q8: Would you be interested in visiting Japan to inspect properties?
Q9: Were you aware that investment properties in Japan can generate a gross yield of around 5%?
Over 90% of respondents had no idea of expected rental returns in Japan, despite having a desire to invest in the country.
Q10: Do you feel you have enough knowledge about the property market?
Source: GlobeLink Press Release, July 27, 2012. Download PDF file (Japanese) here.