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Tuesday, November 26, 2013

Japan's Real Estate Bubble is Back in 2014


I agree when taxi drivers start talking about investments with customers in the cab there is a bubble brewing. Right now in Tokyo, the initial steps are now beginning again. It is deja vu all over again. Now, about 5 times your annual income around 30M yen or US$300K, is the current sweet spot in metro centers. The overview is simple for the Japanese retail investor; since Lehman you tried FX online, followed by commodities like oil or coal, then gold for a while, and recently Japanese equities. With a consumer tax increase now slated for April 2014, it seems like now is the time to buy new real estate units. 

All over Tokyo, and other urban areas in Japan new condo construction is rampant with billboards everywhere showing new units for sale. These are not big units; 25-75 square meters, but they are new and well designed. As parents get older a big decision is being made; If we have an empty nest, is a single home really worth keeping? Perhaps it is time to sell the land underneath and buy a condo before the new tax kicks in? This may not make sense to other real estate markets overseas, but in Tokyo, Yokohama, Osaka, Kobe, Kyoto or Nagoya, it certainly does.

In Japan there is a depreciation driver with tax incentives that helps many locals, and the single house. Often wood built, it is soon worth nothing in accounting terms after 25+ years but the land still has worth. Last weekend, new projects in Tokyo to help build earthquake firewalls was complained about by many on some investigative talks show. It is now building price pressure due to the Olympic building boom that is driving new rail and expressways links already. As a result the city is changing fast and hopefully within 7 short years.

For non-residents not familiar, central Tokyo, still has single homes. You would not expect to see them in New York's Manhattan, or London's West End, terrace homes rule there, but not in Tokyo. In fact, that is what billionaire's live in. Many billionaires live in single home buildings. Abenomics; from a price-low December 2012, land prices in central Tokyo, (Hiroo or Azabu) are up as much as 44% on specific lots in less than a year. The average price today is still very low compared to the bubble peak prices of 1991, often no more than 30% of its former peak, so plenty of room to grow from a purchase today. The math is not complex, just do the numbers. Japan's farmers are old, office workers are young, and they work in big cities. The Japanese nation's population is shrinking, especially the countryside, 
but not its cities. 

There are NO nationality restrictions on ownership for these homes. Cash is all you need, unlike in other parts of Asia. There is NO real estate restriction based on an owner's passport, anybody can buy anything legally in Japan. Many Asian investors have clued in and are now buying land from older homes, putting up parking lots in the interim or a higher yielding convenience store, then waiting for the full bubble fever prices to return. With so many new maps with zones of specific lots to investigate (or avoid) from recent Olympic plans, a fascinating maze of profits (or problems) awaits the on the ground investor. To sell in future for 30-50% more in 3-5 years or less can be pretty compelling. The good old 10% return a year retail investor rule is back. So maybe retail investors have it right, again!



For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.


Tokyo                                                            Tokyo
       Mark Pink                                              Shinichi Nagasawa
Direct + 81 3 3505 3891                               Direct  +81 3 3505 3891
Email pinkmark@tmjpartners.com            Email nagasawa@tmjpartners.com

Monday, November 18, 2013

Job Update Tokyo: Long-Short Prop Trader in Japan


Back by popular demand; the Job Description Infographic.

Do you have what it takes to be a Long-Short Prop Trader in Japan?

Contact us at resume@tmjpartners.com if you think you do.

Wednesday, November 13, 2013

Japan's Retail Securities Rebound in Equities in 2014

To my surprise last week during a meeting with the president of a Japanese securities firm in Tokyo, I heard news of strong profits in Japan. After asking about how good profits are in 2013 compared to last year 2012, I actually heard the follwoing phrase, "It is not a question of any percentage better than last year, it is multiples better! If things continue like this, 2013 may be the best result we have had in 20 years since the bubble!" I have heard about some firms benefiting from the "Abenomics" rebound, but I had no idea it meant full multiples of improved results for certain firms already.

I then had to ask why results were so good and his response made sense to me; "Generally, our retail clients have been growing as a percentage of active trading, but they have changed what they trade. Last year many retail clients were trading FX, but the Yen crosses have not been very volatile or predictable this year. Gold has been in a down trend for a while, and is difficult to short, JGB rates are not moving up in the short term, so that really only leaves 2 asset classes left; Japanese equities and residential real estate."

I also had the opportunity to ask a few more questions to gain additional insight:

Q. How do you see equity markets in 2014 and what are your hiring plans? 
A. To be honest, there are NO headcount limits on retail sales people at our firm. If there are motivated equity sales people with basic or in-pocket retail clients, we would like to hire as many as we can in 2014. 
Q. In addition to equity sales what else is active? 
A. Real estate. We are actively looking for deal makers who can connect buyers and sellers of land and residential buildings especially in central Tokyo.

Moreover according to this president, overseas real estate investors from Asia into Japan are now growing. There has been a clear trend to buy larger older homes with gardens of 1000-2000+ square meters or more (1/4-1/2 an acre). Occasionally there are even 2 older properties side by side, and investors construct convenience stores on the property instead of parking lots. As the Abenomics story grows, an exit by 2020 around the Tokyo Olympics can take place, and a full condo building can then be built on the spot if the location is central and close to a train station. If we can find real estate staff who speak Mandarin, then that is the sweet spot. There is big flow in that direction. It is not a well covered market though, and few real estate professionals have those language abilities to do those kinds of deals. 

The retail sales momentum is clearly now on and Bloomberg touched on it last week with a great story. It is a clear snapshot of a Nomura Securities retail sales person closing like the good old bubble days, can we be in store for more bubble days again?

See full Bloomberg story here.

To find your next Retail Sales career look here.


For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.


Tokyo                                                              Tokyo
         Mark Pink                                                 Shinichi Nagasawa

Friday, November 8, 2013

Friday Feature Movie Review : "Jobs"


If Steve Jobs were alive he would not allow it to show in its current form. I would imagine his comment would be "fix it! It is too dry, not sexy enough, poorly paced and does not even have the Xerox scene, so fix it!". I must say that this seems about right.


To be clear this is a business movie and a drama, not a thriller. If you are big fan of the founder of Apple you will enjoy the movie. It is the non-believers who will be disappointed. I recognized many scenes and liked the visual feel for the 1970s that the movie brings to his early years. As many things in the movie his adoption is not given enough balance but that aside from that the acting is really good. In my view it is the story or screenplay that could use some tweaking. The visual flashbacks to India, the calligraphy courses he took at Reed College, and his drift toward design were all well done, though many others scenes were not included and needed to be. If you knew the overall story nothing would be new to you, however how and why he changed were not really explained well, and may have lost many of the audience. If there was a director's cut in a longer, full-3 hour version this would have been better. Too much seemed to be crammed into just 2 hours and sadly there was to much ground to cover. The look and feel of all of the key characters has comparison photos at the end and any casting pro would give high marks to the matches made. Ashton Kutchner really had his manner and walk down pat, but the lines were never consistent in quality.


If you are an easy sell for a business movie on Apple then you will enjoy yourself. However, if you hope to see a great movie that is about Apple, the tech image icon of our times and be enthralled by its founder's story, make another choice.


For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.


Tokyo                                                              Tokyo
         Mark Pink                                                Shinichi Nagasawa

Tuesday, November 5, 2013

14 Japanese Casino Locations Now in Play!

Last weekend a number of Japanese magazines and TV shows were talking about the soon to be passed casino law in Japan. As many as 14 clear locations across Japan are now being short listed. And to my surprise a number of solid arguments; pro & con have been discussed. 

It is not an easy, "no brainer", allowing a Macau or Singapore casino boom to repeat within a short amount of time. Korea walked down the same path 10 years ago, failed, and nobody generally asks "why"? Japan is asking why and how to find the right balance with the obvious merits and demerits of casinos. 

Among the 14 casino locations being discussed, Okinawa and the four main islands will all get some of them, and two seem worth looking at in more detail; Tokyo will certainly get a casino, and it will most likely be in the new Olympic village site called Odaiba, within Tokyo bay. 

There are already large condo developments currently being built and gaining consumer attention, with some reports confirming 3 times more condo model home visits now than before the Olympics were announced, as well near Nagasaki, a Dutch village concept called "Huis Ten Bosch" has a large parking space with a casino design already for investment once the new law is passed. The US$25M dollar building is expected to bring in more than US$250M in revenue within its first year! Huis Ten Bosch launched in 1992 and went bankrupt in 2003. It was a financial disaster that was bought 3 years ago by a Japanese travel firm HIS in 2010. At the time HIS shareholders questioned if the move would really bring any return. Hindsight is always 20-20 but if a casino plan was being lobbied for in the background then this shows a very different and VERY lucrative investment profile. 

Some of the basic facts being used to persuade the Japanese market mainly compare Singapore with Korea. Before Singapore opened its Marina Bay Sands casino and later Sentosa's Integrated Resort, around 9.7 millions visitors spent US$1200 per visit. Just 4 years later 2013 is looking at a forecast of 11.2 million visitors with each spending around US$1800 per visit, some 50% more. This is the positive path Japan wants to follow and repeat. The trick is with visitors versus locals. Korea tried to expand its casino footprint as well, but had rules that encouraged local Koreans to gamble 10 years ago, not overseas visitors. Sadly, a pawn shop town of lives lost to gambling sprouted around the casinos. The tax revenue never really justified enough numbers for "the common good" within the country. 

This is the balance Japan is currently trying to determine. Which overseas visitor focus is enough to encourage solid tourist dollars from Asia? How much local gambling should there be with its possible demerits, deserve counseling or help for those "unlucky at the table" who live in Japan?

There is no easy answer and with 14 possible locations now in play, many rule variants and combinations can come out. The next few months will see more and more information released to the public, while the momentum is clear, casinos are on track for Japan's future by 2014.


For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.


Tokyo                                                              Tokyo
        Mark Pink                                                Shinichi Nagasawa