Bank of China giving up to 95% loan, UOB 70% and OCBC 50% of valuation
[SINGAPORE] Buying property in Japan is no longer the preserve of high-net-worth individuals who'd casually pay $1.5 million for chalet in Niseko, a Hokkaido ski resort, complete with outdoor hot tub, if only to indulge in their love for skiing.
With the local banks now offering to finance property purchases in the Land of the Rising Sun, anyone with $1 million or so to spare can consider buying a property and living, possibly, in the heart of glitzy Roppongi in Tokyo and rubbing shoulders with the embassy types there.
A budget of that size could get one a new freehold two-bedroom apartment with roof terrace in Minato-ku - something along the lines of what Orange Tee is launching this weekend.
The development is the 140-unit Branz Azabu Mamiana-cho, which faces the Russian embassy and is a nine-minute walk to Roppongi Itchome station. The units are between 776 sq ft and 1,094 sq ft in size and in two- and three-bedroom configurations.
Prices range from $1.16 million to $1.87 million, or between S$1,495 and S$1,709 psf.
Here is a sweetener: The balcony or roof terrace, typically between 72 sq ft and 228 sq ft in size, does not count towards the total floor area; buyers do not pay for the space, unlike in Singapore, said Christine Li, Orange Tee's head of research and consultancy.
With local banks offering financing to Singapore investors, the profile of such property buyers could change slightly from that of the super-rich, she said.
She estimates that last year, 150 homes in Japan were sold to Singapore buyers; with accessible financing, she expects the number to cross 200 this year.
The properties favoured by these newer buyers are mainly in central Tokyo; they tend to be small, usually one- to two-bedroom units with prices starting at $400,000, said consultants.
The banks have responded to this investor interest. OCBC Bank and United Overseas Bank (UOB) began offering Tokyo property financing last year, joining Bank of China, believed to be the pioneer here in selling Japanese real-estate loans.
OCBC is willing to lend up to 50 per cent of the valuation; UOB is more aggressive, offering 70 per cent. Bank of China can offer up to 95 per cent if the buyer places a deposit with it.
Dennis Khoo, UOB's managing director and head of personal financial services in Singapore, said: "In response to customer demand, we expanded our international property financing schemes in 2013 to include Tokyo, Australia and Malaysia."
He added that these new programmes offer investors an opportunity to diversify their investment portfolio across geographies and complement the bank's existing property-financing schemes for properties in London and Thailand.
Phang Lah Hwa, OCBC Bank's head of consumer secured lending, said: "Buyers of Tokyo properties are sophisticated investors who understand the risks and rewards of purchasing properties in Tokyo."
She noted that the average loan size for such purchases has been around $500,000.
OCBC began selling overseas-property loans for London homes in March 2011. It has since put Melbourne, Sydney and Perth on its list; last year, it added on Kuala Lumpur, Iskandar Malaysia, Tokyo and New York.
Ms Phang said: "We have seen a healthy growth in our overseas mortgage portfolio in the past three years. In 2013, we recorded double-digit growth."
Japan seems to have hit the spot with property-crazy Singaporeans, who have been fanning out across the world in search of yields and capital appreciation.
Prime Minister Shinzo Abe has introduced various fiscal measures in a bid to lift Japan out of its two-decade-long slump, including that of easing building restrictions in certain test areas.
Ms Li added that non-Japanese need not fear curbs against foreign buying. "Japan is one of those with no curbs. The UK and Malaysia are introducing less-friendly rules for overseas buyers, such as capital gains tax; in Australia, foreigners looking to exit their property investment can sell only to Australians.
Add to this Tokyo's status as a mature market with almost-guaranteed rental. Occupancy rates are in the high 90 per cent, and gross yields are at 4 to 4.5 per cent.
source: Business Times - 7 Feb 2014