Japan’s working population is expected to drop sharply in the coming decades, with those aged 65 and over already making up about a quarter of the national population and expected to reach 40 per cent by 2060, according to surveys conducted by the Ministry of Internal Affairs and Communications. But, as the adage goes, what goes up must come up down, and vice versa. The country’s declining population has paved the way for increased opportunities for foreign entry to Japan due to relaxed immigration policies. Some foreign investors have a keen eye on both real estate in Japan and a business/investor visa. Now, it may be possible.
Visa Reforms
On April 1, 2015, the Act for Partial Amendment of the Immigration Control and Refugee Recognition Act became law. Under this act, the former “investor/business manager” status was replaced with the new “business manager” category. The government reformed the visa policy to encourage top-class management to bring their overseas talent, skills, and business to Japan for stable and sustainable growth.
Prior to the reforms, some foreign investors hoped that investing in real estate would entitle them to a business/investor visa for a long-term stay. While purchasing a unit does not qualify an investor for the visa, purchasing residential/commercial buildings and applying building management skills may.
Even better, under Japan’s relaxed rules, foreigners do not need to be approved for the visa prior to entry. Applicants could get a temporary visa upon arrival with enough time to apply for the visa while in Japan. The Immigration Bureau will issue a residence card upon arrival for an initial four months to allow foreigners to apply for a residence registration certificate for extended stay, as a mid- to long-term resident. During this time, investors can open bank accounts and conduct other necessary preparation to establish a corporation to manage the building. Investors can contact the Immigration Bureau of Japan for more information.
Properties
A building purchase in a high occupancy area can cost from USD$200K to $1M on average, and generate immediate rental income from five to 20 units. Locations are divided into tiers. In tier one, for example, are the centre of big cities like Fukuoka and Nagoya where properties yield around 7 per cent; tier two being the outer suburbs of big cities such as Sapporo with a yield of 9 per cent to 10 per cent; and tier three being smaller townships with good profiles, with a yield of 10 per cent to 12 per cent, all net pre-tax.
While there is an attraction to Tokyo, property in the country’s capital is comparable to New York — limited, expensive and highly speculative. Real estate outside of Tokyo in a high occupancy area is a viable alternative and generates immediate cash flow from occupied units. And, if your property increases in value, consider it a bonus.
Indian Market
After Prime Minister, Shinzo Abe's meeting with India’s Prime Minister, Narendra Modi in December 2015, India opened its eyes to potential in Japan. The two countries agreed to "simplify their visa procedures for nationals of each other." Under relaxed visa policies, the validity of visas for Indians for business purposes was extended from five years to 10. Indians with experience in hospitality or building management are considering purchasing and managing buildings to qualify for the visa.
Japan, known for its homogeneous values and no-immigration principals, is confronted by demographic evidence of its declining and ageing population which only immigration can save. The government hopes that granting entry to more foreign business skills will help Prime Minister Shinzo Abe to make good on one of his pledges to increase management jobs by the 2020 Tokyo Olympics. For overseas investors, this move translates to opportunities of both — high-yield properties and possibly a business/investor visa, to make overseas property investing in Japan a win-win.
