Adam German is Vice President of Business Development at Housing Japan and a well-known figure in both the marketing and sales side of Tokyo real estate. Originally from Canada, Adam has been behind some of the most successful international residential property services in Tokyo.
Housing Japan is the leading real estate agent for international clients looking to rent, buy or invest in the Tokyo property market. They cover luxury homes, private estates, resorts and large-scale developments; while providing a broad range of specialist advisory, management and transactional services.
What are the defining moments in Tokyo/Japan real estate/tourism history?
Tourism history is definitely defined by Shinzo Abe’s election in 2012 on the platform of what is now known as Abenomics. Prior to that, despite the brand that Japan had, tourism played a minimal part of the economy.
Since the commencement of Abenomics, inbound tourism numbers have risen 243%. This has been a boon not only for hotel operators but also AirBnB hosts who have taken advantage of the lack of hotel supply nationwide.
That said, another defining moment for tourism hospitality is on the horizon with AirBnB forcing hosts to provide a government approved registration number in order to keep listing their property on the platform in a legally compliant manner. It is estimated that 80% of AirBnB listings in Japan are operating illegally and thus after June 15th of this year, many listings will disappear overnight.
Where the tourists will stay after that is anyone’s guess at the time of writing. Hotels are building at as rapid a pace as they can however they can’t seem to build fast enough. Combine that with Japan’s very tight labor market, construction is also proving to be difficult to secure.
Realtors, who have long sat on the sidelines during the inbound boon, have started to wade into the short stay waters, either by offering property management services catering to daily, weekly or monthly stay tourists or by acquiring properties on their own book to operate themselves. The government has outlined what hosts and operators need to do in order to cater to tourists out of residential buildings however this has proven too much for the individual host to take on which is where the real estate companies are coming in.
Where are the emerging markets that people should be looking to in Tokyo/Japan that you think will have upside?
For long term yield, any metropolitan area that has a rising population is a good candidate for buyers to come into. Fukuoka, Sapporo and Osaka come to mind as ex-Tokyo destinations for investment capital. Japan has a famous demographic problem but that doesn’t apply to the major cities which are the benefactor of rural migration to the cities. This population increase, along with the cheapest lending in the developed world, forms the base foundation for capital appreciation as well.
Why did you first come to Tokyo/Japan and get into the real estate industry?
Originally I came to Japan to study karate so I graduated university and started looking for English teaching jobs. I was hired by a now bankrupt company who then had schools nationwide. When hired they asked if I had any preference in location and I said anywhere is fine. That anywhere turned into the exact geographic center of Tokyo in a place called Kudanshita.
I ended up staying for longer than I thought I would and realised I wanted to do something more than teach. An opportunity came up to get into residential leasing brokerage and I took it. That was over a decade ago and the rest is history.
What advice would you have for those looking to come into markets like Tokyo/Japan and set up a real estate business?
Learn Japanese. All contracts & negotiations are done in Japanese and if you come in without speaking the local language, then you are reliant on what the translator is telling you. Every link in the chain is another opportunity for miscommunication, both big and small. I’ve seen many licensed brokers in other countries come to Japan without a good grasp of written and spoken Japanese and unfortunately fail miserably despite having a strong track record in their home market.
How do you best help a buyer or investor?
Clear offerings with clear explanations based on clear understandings of where both the non-Japanese and Japanese sides are coming from.
This is much more than offering services in English; successfully brokering a deal between non-Japanese and Japanese parties requires a deep knowledge and experience base pertaining to where each side is coming from based on many years of living both in and out of Japan while working in real estate.
How do you best help a vendor selling their property?
What we offer is both a traditional selling experience to the Japanese market as well as the international exposure that no other company can offer.
Sounds cliché however it is true. There are other brands working in Japan that look international however once their services are engaged, it becomes very clear to the seller that these seemingly international brands are actually very Japan only based operations.
We offer a truly global experience when sourcing buyers for your property. We offer the type of marketing services that an international seller is used to while at the same time appealing to the tastes of the local Japanese market.
What would you like to see changed in the industry in 5 years?
I would love to see the industry adopt a much more technologically based approach to operating. Despite it being 2018, real estate in Japan is archaic in terms of the amount of paper that is used and how properties are marketed. There are a lot of practices that are working well in non-Japan markets that could easily be implemented here but aren’t for various, stubborn reasons.
What are the opportunities in the market place at the moment?
Development of residential buildings in central Tokyo geared towards catering to short stay tourists.
What advise do you have for people looking to buy real estate in Tokyo/Japan?
Educate yourself first on the market. A broker will be able to help point you in the right direction but real estate anywhere doesn’t sit in isolation within the broader economy but forms the basis for all other economic activity; case in point you are reading this on or in some type of real estate right now.
Learning what makes the market in Japan tick will give great insight into where the market is headed allowing you, the buyer, to make decisions separate from the herd mentality.
Who are currently buying in Tokyo/Japan, where is demand coming from, where is the buyer interest at the moment?
In Tokyo, more and more Japanese are beginning to purchase investment property and owner-occupied properties. 60% of the population in Tokyo rents which makes the rental market very stable however given the lending environment for Japanese, more are starting to look at purchasing.
For example, if you are a Japanese person paying taxes in Japan, you can borrow up to 100% at 100bps fixed for ten years with a 35 year loan term.
Foreign involvement in the Tokyo market reached a peak of 11% in 2016 which was the highest ever recorded. To put this into perspective, foreign involvement in London RE is upwards of 60% and New York is 42%.
Where do you see Tokyo in 10 years?
I see the Tokyo market in 10 years resembling Sydney or London after their Olympics. Those two cities had sound economic practices in place already when they had their games. While those economic policies weren't perfect, the result since their Olympics has been much better than a place like Rio.
Tokyo too is coming into the 2020 Olympics as well as the Rugby World Cup in 2019 with economic policy that would have happened with or without the games. Simply put; I see Tokyo in 10 years to be where pre-Brexit London was prior to that fateful decision.
For more information about the Tokyo property market email Adam German from Housing Japan via the contact details below.
See more from Adam German of Housing Japan:
What 2018 means for Tokyo real estate
Churis Akasaka – How this vast Akasaka Condo Renovation Sold
Event brings Singapore property investors together with leading Japanese developer
