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December 11, 2009 Would I recommend retiring in Japan?

Someone asked me the other day whether I would recommend retiring in Japan. The person was from the Philippines, so they were already living in Asia, and wondering if Japan would be any better. My response to that depends on the type of life you are after, and your adaptability. Japan does have some very favourable advantages, though given the low cost of property in both countries, I see no reason why some of you could not consider a life in both countries for the reasons mentioned in other posts – such as the Japan Rail Pass, not to mention the cheap flights form the Philippines (Clark, Manila) to Japan (Osaka, Tokyo, Nagoya) – as little as Y4000 ($80) with Cebu Pacific in sale season. Read the Philippines Inquirer for details.

The benefits for retirees in Japan are:
1. Cash card - Its easy to draw on a foreign savings account from any Japan Post Office. All of them have access to the global Mastercard/Visa network (Cirrus-Maestro) now.
2. Safety - Japan is the fastest country in the world. Break-ins are not common, and it is a harmonious place, so little treat violence. Youngsters tend to be respectful of older people, so they also tend to be helpful.
3. Food: The food is very good. Its healthy; there is a lot of variety. It might not be the cheapest place to buy food, but older people eat less anyway, and tend to interact with people in the community. It would help to have a group of friends in your community, particularly to help with utility or getting a tradesperson.
4. Forums: There are very supportive forum communities in Japan where you can obtain really good advice from people in the same situation.
5. Culture: Living in Japan is a chance to experience another culture – a culture far different from any other. The place is unique. I tire of the shopping malls in the Philippines with their generic malls. Japan offers many fresh and interesting experiences.
6. Transport: You will unlikely require a car in Japan. A bicycle and bus is sufficient, though a car makes sense in rural areas. A scooter is a good idea too as Japanese people are very considerate of bipedal mode. The clear benefit is the Japan Rail Pass for non-residents. You can see a lot of Japan on these passes.

I don’t see medical facilities as a big obstacle, though clearly before you settle somewhere you should ensure there is a local doctor who speaks English. It would also be helpful to have an English-speaking companion to translate your symptoms into Japanese. I suspect most doctors would know a lot of English because they attend conferences. This is particularly true for city doctors. I think you would only want emergency services if you are old or unhealthy. If you are relatively young, or need some delayed treatment, you can always fly to the Philippines for more expensive medical care. The services there are fantastic.

The obstacles are likely to be:
1. Language: Older people are less inclined to learn new languages, though if you have time, there is nothing stopping you trying. In any respect, Japanese people are surprisingly good at English…at least understanding it. In most cases, they just lack confidence in speaking. I never bothered to learn. I simply use sign language. Language is particularly a big problem setting up your home. When I first moved there is was a 6mth adjustment, and I did have issues with technical issues like routing emails through my cell phone. Foreigners are frowned upon by some telco technicians because we demand a higher level of service because we don’t speak technical Japanese.
2. Cost of living: Japan is more expensive than a lot of countries. This is true for food, entertainment, eating out at up-market restaurants. Utilities are very expensive, but then so is the Philippines for many things, and the service is far poorer.

The ease of living in Japan also will depend on your adaptability and your ability to make friends who can help you with any obstacles. This is of course most difficult when you first arrive in Japan, to buy the property, and to finally settle there. After those challenges…all becomes routine. Living abroad is becoming for popular. Retiring abroad is also on the increase since people have decided that life is about experiences – not dying in some familiar place.
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Andrew Sheldon www.sheldonthinks.com
http://foreclosedjapan.sheldonthinks.com/

December 11, 2009 Cost of property in Japan

The cost of property in Japan – like anywhere else – varies considerably. Most people would be surprised by just how cheap property can be, as well as how expensive. The most expensive property is of course in the central Tokyo. It is typically those areas with expensive, exclusive homes, or otherwise those areas with exceptionally good subway connections or convenience to sought after districts like Roppongi, Shibuya, Shinjuku, etc. The cost of the most expensive properties is hardly worth mentioning. Any city property is a ‘growth asset’ so if you are able to find a place with a yield over 8% you are doing well. This is particularly the case in the cities because increasingly Japanese elderly people are retiring in city areas.

At the other end of the spectrum property in rural areas can be as cheap as $10K. Be careful to examine exactly the nature of the type of property. Are you leasing the land, or is it freehold title? I have been able to find some exceptionally cheap property in rural areas. I have even heard of people been given houses to remove the owners of the ‘tax burden’. In depopulating Japan these properties are particularly attractive to foreign tourists who want to take regular holidays. What is the appeal? I can think of several benefits:
1. Low cost of property - under $30,00o for a decent place
2. Low government taxes - I pay just Y30,000 (US300) a year
3. Proximity to services - Japan is frowned upon for its population ‘crowding’ but thats only the east side of the country. The west is not so populated and has wonderful wilderness areas.
4. Japan Rail Pass - One of the reasons I know about Japan so much is because I have made great use of the Japan Rail Pass over the years. Very good value for foreigners (tourists only, not residents). Why would you want to reside in Japan? Just have extended holidays there.
5. Activities - Japan has a great array of activities.
6. Safety - Japan is without question the safest place to live, or to hold property. I don’t even bother insuring my place. Mind you the place could burn down and the property would still be worth more than I paid. :) That is the benefit of buying foreclosed property.

If you are looking for a place in Japan, I’d recommend something close to Osaka, Tokyo or Nagoya so you have easy access to international flights. If you are looking for semi-rural property, something in the Mito area, or Saitama prefecture would be fine. If you are looking for something in more wilderness areas, I’d avoid the colder Western side of the country and find something in Wakayama prefecture, or Fukushima area. The colder NW is cheaper, but probably not a desirable place to live. As far as city living goes I like Tokyo for the ‘plethora’ of choice in facilities and its gaijin culture, and Fukuoka is great because of its relaxed, friendly style. Every time I go to Fukuoka I have a great night.
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Andrew Sheldon www.sheldonthinks.com
http://foreclosedjapan.sheldonthinks.com/

December 10, 2009 Type of foreclosed property to buy

Many buyers will be unsure what type of property to buy in Japan. I have several suggestions which will make you reflect more on your decision. The most important factors are:
1. Neighbours: Foreigners in Japan are subjected to discrimination in Japan. The nature of discrimination I don’t find terribly intrusive or threatening. Its more of a quiet detachment which makes them more scared of you. When you do something wrong you will probably never redeem yourself, and being in a strange country you will probably make an error. If you have a Japanese partner, then of course it makes a great deal of difference, particularly with the women. Since you are buying foreclosed property you want to avoid the possibility of angst from the previous owner. You therefore want to avoid properties with a legacy of family ties, like neighbouring brothers and sisters, etc. You are safe from a family legacy if you buy in a subdivision. You are not buying in non-urban land. A reader made a good point. Being in a rural area means you become the focus of attention. 
2. Charges: Charges on property in Japan are relatively low compared to other countries. Insurance costs are low, small lots mean that land taxes low, though there is also a tax on land improvements, so it is variable. Apartments or ‘mansions’ carry a very high charge to cover future improvements, as well as on-going maintenance. This charge is excessive and is justification for avoiding such strata-type property.
3. Depreciation: Japanese buildings depreciate significantly after 12 years as a result of the aging style and finish of the building. This ‘aging’ is because Japanese property is built for ‘function’ rather than lifestyle or aesthetic. For this reason I would caution against buying property which is going to deteriorate in value faster rate than your return on investment grows. The implication is that you want to buy a property with a high percentage of land value. This is likely to occur closer to the city centres. Mind you, modern buildings are better designed, so will likely keep their age better in future. The alternative is buying land with an old building on it and giving it a face-lift when required. If taking this approach I would tend to opt for one-story houses to avoid stress on the wooden frame and potential risks of poor design or workmanship.
4. Land area: Attempt to get as much land area as possible. Westerners are not accustomed to living on top of each other. If you are placed in the position of having neighbour problems, better to have some space between them and yourself.
5. Improvements: I would caution against buying property in rural areas which is outside a subdivision. There are several reasons:
             a. Short cuts: There is the possibility of short cuts being taken with respect to property approvals. i.e. Unlicensed water tank.
            b. Shared infrastructure: The old way of building was not regulated. For instance, if you buy a farm house, the septic or water might be connected through a neighbour’s property (i.e. a relative of the previous owner). The property was thus designed as part of a community. It is preferable to avoid this style of property if there is any uncertainty about the existence of such ‘shared’ infrastructure.
            c. Property boundaries: The property boundaries in the case of rural property are not so clearly established, so I would suggest avoiding rural property if the land area is small, or any improvements are close to the property boundary. There will not be any property disputes if you buy in a subdivision.
6. Geological risks: I would be inclined to avoid some of the subdivisions one finds perched on the sides of mountains on the fringes of cities. Japan is a geologically unstable area, so any building on or near step structures poses risks. The risk of land slide arises due to unstable slopes, but also because of rising hydrostatic head as water builds-up behind retaining walls. There are drainage holes to avoid this risk, but some structures are better designed than others.

For these reasons I consider properties in the 12-18yo age range as the best buys in semi-rural settings. Certainly I would be looking at the younger end of the market for rental properties, though ultimately it’s a question of how well the property has been maintained. One of the properties we purchased was 12yo old, however internally it looked brand new after we painted the wallpaper. The cost of building in Japan is very high so I would be looking at ‘liveable’ structures which can be renovated by recladding than building a completely new structure.

Refer to our Japan foreclosed property report for more details.

December 10, 2009 What is foreclosed property?

A foreclosed property is a property which is subject to forced seizure and sale by a lending institution because the borrower/homeowner has fallen into arrears on the interest repayment, triggering a debt recovery action. In Japan, debt recovery proceedings are undertaken by the Prefectural Court Offices.
Foreclosed property is a feature of many developed countries and some developing countries (like the Philippines) which have established formal proceedings for the liquidation and recovery of unpaid debts.
Insofar as the lender is concerned, the prospect of being foreclosed might not be a bad thing. Given that some property buyers bought their properties at excessively high prices, it might make more sense for some home owners to abandon the property rather than pay the debt. Why pay a debt if the property value is less than the outstanding loan amount? This is possible because property prices were falling at an average rate of 9% per annum until 2006, whilst any property over 12 years old will also experience a stronger rate of depreciation. For this reason, why hold onto such property. If the Japanese home buyer does not need a credit rating, they are better off abandoning the property and buying a new property in a relative’s name.
You can understand also that a lot of home owners will continuing making payments on home loans even though asset value < loan amount outstanding. The reason they will retain the loan is the fact that at the current low interest rates in Japan, it is likely to make more sense to make those payments rather than sell. The implication however is that Japanese banks are likely to face an anomalously high rate of defaults as interest rates rise. I would however suggest this dynamic is only likely to operate among the lower income Japanese households.

December 6, 2009 Mining Stocks Professional Edition


If you are serious about trading mining stocks, then this book is for you.

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Author:
Andrew Sheldon
Mining Analyst, Investment Consultant
www.SheldonThinks.com

December 4, 2009 Gold Boom

Learn how to profit from the gold boom.

This short 20-page ebook provides an explanation of why gold prices are destined to rise to over $1800/ounce based on current pricing parameters.

November 15, 2009 Signs of life in Japanese government policy

Already there are signs that the new Japanese government is looking at policies to stimulate economic activity. The Japanese government has bureaucrats around the world which look at public policy ideas in various countries. The new Japanese government appears to be taking several policy ideas from Australia (not necessarily the originator):
1. Immigration – The LDP could not sell the idea of increased immigration, though the current government is considering such a move.
2. Cash incentives for new parents – Australia had the $5000 baby bonus

The aging of the Japanese population and declining population thanks to a higher death rate than birth rate is the reason for the policy. This of course is good news for property buyers; particularly property buyers in the fringe areas of the major cities. We know immigrants prefer the larger cities (say over 2mil population) for several reasons:
1. Greater support from fellow country people
2. The availability of services for their culture, e.g. Local government info in multiple languages
3. Greater job potential
4. Less discrimination
5. Greater availability of accommodation
The outer areas become more popular because of the high cost of land in inner city areas. Many Asian immigrants will of course be accustomed to living in small apartments….but Japanese ‘boxes’? One can expect property near outer satellite city stations to attract the greater share of interest.
This policy will of course take time to unfold. Japan is currently subdued like the rest of the globe, but expect other stimulus coming out of the recession. Recently the outer suburbs have experienced population losses as people were moving into apartments in the inner city. Its probable that foreigners would offset this trend to some extent in years to come.
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Andrew Sheldon www.sheldonthinks.com

November 11, 2009 Outlook for Japan

Most property buyers in Japan tend to be Japanese residents. For them the prospect of buying in Japan is less controversial. The reasoning goes: You need a house, foreclosed properties are a huge discount to market price, there is a huge inventory of foreclosed properties ensuring a good choice….where do I buy your book? :)
These people can also look abroad, but not knowing when they are going home, and the issues of looking for property abroad, and not wanting to put all their money in gold, is probably going to lead them to Japanese property. Fine.
That said, the Japanese economy is likely to perform well in future….after the slump that is. There are some promising aspects about Japan:
1. Reform-minded government can be expected
2. Household debt has wound back over the last 16 years
3. Low interest rates

When we look at Japan, one cannot ignore the relationship of Japan to its neighbouring countries. Aside from holding a lot of US treasuries (for what they are worth), Japanese enterprise has a lot of investment in Asia. The question of when and if Japan will allow increased foreign immigration is difficult to say. I tend to think it will target higher productivity and retraining rather than imported labour. We must remember that Japan is effectively outsourcing jobs already. There are Filipinos, Chinese, etc doing contract work for Japanese companies, both in Japan and outside. This is a global trend. So the question then becomes simply who will care and entertain the aging parents. Probably middle aged children and robotic pet dogs.
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Andrew Sheldon www.sheldonthinks.com
http://foreclosedjapan.sheldonthinks.com/

September 26, 2009 Recommended Property Markets in Asia-Pacific

There has been a bit more interest in our Japan Foreclosed and Philippines Property Reports of late. More interesting perhaps is the shift in the types of buyers. I detect greater interest from professional investors in Japan, as opposed to most buyers who are foreigners married to locals.

There is less interest in New Zealand, which is understandable given the recession, and the changes to the NZ immigration classifications, and all-round job losses. The strong $NZ is neither helping the economy, nor providing foreigners with the incentives to invest there. We are not complaining. We bought property there when the forex rate was 50-55 USD, now its 67c, so all is good. Property at the bottom-end of the market, where we bought is holding up well, and I expect inflation to keep it that way. On our side, there have been no more drive-by shootings, which has kept property prices higher. We are hoping that the thieves who took the water heater have not come back, as we are currently in the Philippines. The missing water heater no doubt drove a few customers away, and allowed us to get a real good price. Top that off with the fact that when we bought the outlook was particularly bad, and the 70′s plus couple were probably looking at a repeat of the Great Depression, which they would have heard tirelessly about in their childhood.
I am also encouraged by the appointment of a right-wing politician Don Brash to a productivity inquiry. The government is keen to catch up with Australia.
In Japan we bought a property which is not in a “Urban Designated Zone” though given the level of housing construction in this valley in the mountains west of Tokyo, we are expecting a re-zoning in coming years, and a shift to town water/sewage supplies. We are comforted by the construction of high-value ‘lifestyle’ townhouses on the hill for Y30mil a piece. That should help our property purchases for just Y2.8mil. I provide more property buying strategies in our Japan Foreclosed book.

In the Philippines, we are also happy to report that our properties in Lipa City are looking good. Lipa is a growing city with a lot of promise. It is well located between Manila and Batangas. Great for foreigners who like to go to Puerto Gallera. It has the attraction of a cooler climate since its at an elevation of 400m, and there are areas which are even higher. It has three shopping malls, though I must say its still “franchise city”. There have been some attempts to establish higher-end restaurants, but each has failed. I was particularly fond of the Korean restaurant. Fortunately there is now a new Savory franchise in SM Lipa which actually makes franchise food particularly tasty.
We are most pleased with our investment in Lipa. Both properties were foreclosed property purchases. One was in an upmarket subdivision. Not the typical place we would normally buy, but were were looking to buy something secure we could live in and store stuff whilst overseas. We got such a good price – P2700/m2, when they are selling them onsite for P4500/m2.
The prospects for the other property are even better. We understand that a private school developer is negotiating to buy a foreclosed lot on the highway near ours, so this should add to the value of this property, and step up the pace of local development. I have long believed this area would have a small shopping precinct, and I believe that the single entry/exit into Lipa City, which is congested now, will result in a diversion to take the pressure off the existing road.
The extension of the tollway is shown in red, my expected connectors are shown in green, and our hot spot is shown by the pink circle. There are a number of other attractive features. There is talk of the Fernando Air Base being used as a commercial freight facility. If this facility does indeed great converted into a commercial facility it will do a great deal for land values because the grounds of the Air Base are phenomenal. Nicest gardens around. This would make great facilities for high-end accommodation and/or restaurants. Its hard to envisage another shopping mall for another 10 years, but this also would be a good place for it. The Philippines population isa growing by 2% per annum, and given the rising industrialisation, more people are heading to commercial centres on the fringes of Manila. Manila is too congested. Filipinos care about their lifestyle more than anything else. Which is why call centres are being established in satellite cities like Lipa. The implication is that Lipa’s incomes can be expected to grow quickly, as the population grows quickly. I don’t even expect the recession to reduce remittances, nor do I expect much decline in call centre developments in the Philippines.

As I anticipated a year ago when I released the Philippines property report, the Philippines market is remaining one of the most prosperous places to invest. Given the Chinese-based heritage, I think you can expect a lot more Chinese investment in the nation as well. Japanese and Korean retirees will also feature. Where do you think these Korean and Chinese holidayers will retire as they age. Remember it is the old people with the money, the children want to live in the Philippines to learn English on the cheap, and to escape their discplinarian parents. The dynamics are on the wall. The Philippines will be the next tiger economy. Mind you the pickings are getting pretty slim. Pretty well every other economy has taken off. There are many other reasons why the Philippines is appealing. e.g. Its the only Asian country with generous visa conditions. You can stay in the Philippines for 18 months without leaving the country. That’s just as a normal tourist, hence most people don’t even bother with a retirement visa. For further information check out our 2-volume eBook set on Philippines property and receive a free list of Philippines bank foreclosed properties.

Andrew Sheldon
www.sheldonthinks.com
http://foreclosedjapan.sheldonthinks.com
http://nzproperty.sheldonthinks.com
http://philippinesrealestate.sheldonthinks.com

September 22, 2009 Regional growth in the Philippines

Here are further signs that the Philippines economy are retaining their strength as we predicted in our property report. The implications for Philippines property are significant. It must be appreciated that call centres are emerging as a significant employer of Filipino labour in the country, as call centres around the world close in favour of Philippine operations. Well not close, so much as downsize, as there are significant constraints teaching a Filipino to speak like an Aussie or NZ, or how to spell Auckland. General knowledge was never a strong point for any country in Asia. English is a strong point for the Philippines, so expect this trend to continue. The lack of general knowledge is a cultural divide which will closely be closed. In the meantime there is still a huge market for call centres in the Philippines.
Most call centres are being established in Metro Manila, but slowly they are shifting out into regional satellite cities as well as other cities around the country. More call centres will be built in regional cities as communications infrastructure improves. The attraction is the cheaper labour in these regional areas. The cost of living is lower and staff are more loyal since there tends not to be so many competing call centres to poach your staff. People are more relaxed and lifestyle orientated, but that is an obstacle as well, as much it might help to retain staff.
The impact of call centres is readily apparent. You can imagine the impact on a small city to suddenly have a few call centres in an area. Each of these students is living at home, earning $400 per month, and they want to eat out and drink with friends. Whereas I used to eat at empty restaurants in Lipa City, now they can be full of young people. There is a Starbucks coming to Lipa City…..about a year after a number of smaller coffee shops sprang up. Likely some of these businesses will fail and become upmarket bars instead. The growth of such services will make these places more attractive to business executives wanting to relocate out of Metro Manila. The Southern Highway from Manila is currently being upgraded. Eton City is planned in between, which will be just a 1hour commute from Lipa City. There are already a number of high class golf-residential resorts in the Lipa City area. There is already 3 shopping malls – SM, Robinsons and Fiesta. The place is overrun by franchises, but expect more boutique-style businesses in future.
This is just one of the locations progressing in the Philippines.
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Andrew Sheldon www.sheldonthinks.com
http://foreclosedjapan.sheldonthinks.com
http://nzproperty.sheldonthinks.com
http://philippinesrealestate.sheldonthinks.com

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