{"id":52384,"date":"2017-02-22T16:51:23","date_gmt":"2017-02-22T22:51:23","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=52384"},"modified":"2017-02-22T16:51:23","modified_gmt":"2017-02-22T22:51:23","slug":"tokyo-real-estate-prices-rise-ahead-of-2020-olympics","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/tokyo-real-estate-prices-rise-ahead-of-2020-olympics\/","title":{"rendered":"Tokyo real estate prices rise ahead of 2020 Olympics"},"content":{"rendered":"

By Zhu Zhu<\/strong><\/p>\n

Since Tokyo was selected as the host city of the 2020 Olympics Games more than three years ago, home prices in the city have been increasing. \u00a0Whether those increases will continue is an open question.<\/p>\n

Residential property and condo prices in Tokyo have risen\u201416 percent and 27 percent respectively\u2014since Sept. 2013, when Tokyo was selected as the site of the 2020 Olympics Games.<\/p>\n

Graph showing Japan residential property price index. (Source: Japan Ministry of Land, Infrastructure, Transport and Tourism)<\/figcaption><\/figure>\n

<\/p>\n

One of the reasons for condo price increases may be that more people are investing before the Olympic Games, some experts say.<\/p>\n

\u201cMany people believe that the condo prices will go up after the Tokyo Olympic Games, especially in Tokyo, so they invested before that, pushing up the condo prices in Tokyo,\u201d said Lei Zou, a real estate agent at Real Consulting in Tokyo, in an interview.<\/p>\n

Condo prices in 23 wards of Tokyo increased by 13.7 percent in January from a year earlier, according to the Real Estate Economics Institute.<\/p>\n

\"Residential
Residential apartments at Akihabara, Tokyo. (Zhu Zhu\/MEDILL)<\/figcaption><\/figure>\n

Low interest rates in Japan may be another reason for rising home prices. Japan’s key overnight discount rate remained at 0.3 percent, where it has been since 2009 after the bursting of the Japan real estate bubble in 2008, according to Federal Reserve Economic Data. Lower borrowing costs encourage investment in housing and real estate by making such purchases more affordable.<\/p>\n

Jiro Yoshida, an expert of the Japanese National Land Council, and research fellow at the Housing Research and Advancement Foundation of Japan, sees less impact from the 2020 Olympics.<\/p>\n

\u201cI doubt [there is] any material impact of the Olympic games on the aggregate real estate price,\u201d Yoshida said in an interview.<\/p>\n

\u201cGDP and interest rates are the two most important determinants of the aggregate real estate price.\u201d Yoshida said. \u201cYou see a strong correlation between the current GDP growth and the home price appreciation rate.\u201d<\/p>\n

\"Graph
Graph showing the correlation between GDP growth home price appreciation rate. (Source: Graph provided by Jiro Yoshida)<\/figcaption><\/figure>\n

However, Japan\u2019s GDP growth slowed in 2016.<\/p>\n

\"Graph
Graph showing GDP in Japan. (Source: Trading Economics)<\/figcaption><\/figure>\n

\u201cSince the economic growth is smaller for the past year, the housing price appreciation may become smaller soon,\u201d Yoshida said.<\/p>\n

Foreign investment, particularly from China, may also be boosting the real estate market.<\/p>\n

\u201cStrong condo prices are clearly affected by Chinese people\u2019s investments. However, their strong demand is coming to an end because of the Chinese government regulation about foreign investments,\u201d Yoshida said.<\/p>\n

The Japan government requires a permanent status for Chinese investors, Zhao said.<\/p>\n

\u201cMany of my Chinese clients are investor immigrants. Also the housing loans are tricky for foreigners to apply now. Even though the maximum loan amount a foreigner can apply for from a bank may be $50,000, they can open 20 different bank accounts to borrow a total of $1 million,\u201d Zhao added.<\/p>\n

Some Tokyo residents think buying homes is a good investment no matter what impact the Olympic Games may have.<\/p>\n

Shou Naomichi, a young adult, bought a condo after working for a couple of years in Tokyo.<\/p>\n

\u201cI bought a condo because the loans you need to pay each month are quite similar to the money you spent on renting,\u201d said Naomichi. \u201cSince I can afford the down payment, even if I rent it to someone else later, his\/her rents can cover my loan payment anyway. I think this is a good investment.\u201d<\/p>\n

He was not sure whether the Olympic Games would have a positive impact on the real estate market, so he didn\u2019t take that into consideration, Naomichi said.<\/p>\n

\u201cMany Japanese people don\u2019t dare to invest in real estate nowadays after the real estate bubble burst in 2008,\u201d he added.<\/p>\n

Whether the increasing home prices trend will continue or get stronger after the Tokyo Olympic games is still a mystery.<\/p>\n

\u201cI feel that at this point, the Olympics have already been fully priced into the market. If anything, it has had the largest impact on the hotel sector, where there is a great deal of supply planned,\u201d said Erik Hansen, an associate in Japan at Savills, a global real estate services provider.<\/p>\n

\u201cI think you could say that the Olympics have had some positive knock-on economic effects,” Hansen added, such as helping the Japanese government focus more on attracting tourism and overseas investment to the country.<\/p>\n

Photo at top: Commercial and residential buildings in Tokyo.(Zhu Zhu\/MEDILL)<\/div>\n","protected":false},"excerpt":{"rendered":"

By Zhu Zhu Since Tokyo was selected as the host city of the 2020 Olympics Games more than three years ago, home prices in the city have been increasing. \u00a0Whether those increases will continue is an open question. Residential property and condo prices in Tokyo have risen\u201416 percent and 27 percent respectively\u2014since Sept. 2013, when […]<\/p>\n","protected":false},"author":353,"featured_media":52398,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,3516],"tags":[],"class_list":["post-52384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-winter-2017"],"yoast_head":"\nTokyo real estate prices rise ahead of 2020 Olympics - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/tokyo-real-estate-prices-rise-ahead-of-2020-olympics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tokyo real estate prices rise ahead of 2020 Olympics - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Zhu Zhu Since Tokyo was selected as the host city of the 2020 Olympics Games more than three years ago, home prices in the city have been increasing. \u00a0Whether those increases will continue is an open question. 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