Foreclosed Japan, Philippine Real Estate, NZ Property

Strategies for buying property close to stations

2012-01-05T12:53:00.000-08:00

In my book on buying foreclosed property in Japan I raise a number of strategies for buying property in Japan. This story in the Japan Times highlights the application of one such strategy when buying property. The East Japan Railway Co is building a new railway station between Shinagawa and Tamachi stations. This type of 'infilling' will become more common, so its a good idea to identify the locations in which this is likely to occur and to buy property in those locations. The sites to look at are in areas where subways might be extended or new stations added. The principle guiding your decision-making will be:

1. Local minimum population density - look at neighbouring areas

2. Distance between train stations - look for anomalies

3. Explanation for anomalies - why is there no station there? Topographic anomaly so no settlement; perhaps a park, etc.

4. Growing population density - historical evidence that the area is growing in population. High rise developments, new stores like HokkaHokkaTai and McDonalds, etc are good signs to look for, but you can also look at Japan's very good population statistics. They offer you monthly changes in demographics.

5. Space for growth - stations need to be supported by near-station development. It is harder to develop a station if the railway company cannot build some type of shopping precinct to service it.

This approach can work on outer city lines or inner city lines. Of course, our intent is to be close, but not too close to such a development. We want to live close to amenities, the railway station. There is a big periphery around a likely site, and this raises your prospects of buying such a property as a foreclosure. You will find it hard to get such a property in Kanagawa, but not in Saitama. If we are going with this model, we are buying the foreclosed property to 'hold' as a rental property as we want to profit from anticipated future development. After a proposed new station is announced, you can expect property prices to double...as your property, which might be 7km from a railway station, might now be 3km away. Clearly we do best if we buy close to an existing line, but not too close.

This strategy can be applied to both land leases and freehold properties, as long as you are able to get an extension on your land lease. Read more about the nature of this development, as it will give you an idea of the dynamics of this approach.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Muslim rebels deserve fair consideration

2012-01-02T19:16:00.000-08:00

Living in the Philippines, you often here expatriates say that there is no risk living on the southern island of Mindanao. There are even those self-righteous souls who live in some of the more dangerous parts of the island. The reality however is that 'self-righteousness' can be very risky as human qualities go.

In this article, an Australian, Warren Rodwell, 53yo, is the latest person to be held captive by some Muslim rebel group. He is probably an expat of no consequence to anyone but those who know and love him. To the abductors he is worth just P1 million ($20,000).

In a certain context, we might argue that it is highly unfair or unethical for these Muslim rebels to resort to such measures. The reality however is that Rodwell's (Australian) government has effectively sanctioned the terrorists. We might ask what is an appropriate measure for a group of people to do when they are marginalised by their political system. Muslim people of Mindanao lived an autonomous, independent life on the southern island of Mindanao for centuries until the Spanish-American influence sought to resettle people from the more densely-populated northern & central islands to the south. This culminated, under democracy, in the marginalisation of the Islamic people, and their consequent disempowerment and loss of identity under "Catholic" policy. That's democracy you say! Well, this is just one of the problems with democracy. Extortion! Statutory law makes it possible for governments to use democracy for the purposes of extortion. Now whilst extortion is allowed under arbitrary statutory law, there is a common law tradition of extortion being illegal. Sadly, a fairly good tradition of common law has been trumped by arbitrary statute law in the West, and thus the Philippines.

Democracy is a system of extortion which imposes upon people the values of the majority on the basis of some arbitrary jurisdictional boundary. At this time, the boundary was sanctioned by the power of the Spanish, and sanctioned I guess you could argue by politically-allign Spanish colonists and the Catholic-supported Philippine government of the north. The Americans had a part in the resettlement as well, with the US-inspired Homestead Act, which saw large estates broken into 20-hectare losts for resettlers.

I personally think every effort should be made to negotiate a fair settlement with these people, with full recognition and empathy for their right to autonomy, and possibly sovereignty, given the existence of an independent Muslim state nearby. Personally, I'd prefer to see the Philippines become a federation of states, or a pan-ASEAN nation established along the likes of Europe with a common currency. Maybe this is the future, but the breaking down of trade barriers is likely to see this happen anyway.

I return to my original point. Filipinos are generally the most affable people. If they resort to extortion - its generally for good reason. In this case, whether we discuss the NPA or Muslim extremists, it is fair to say they are fighting extortion with extortion. Their marginalisation under democracy has been an act of extortion far grander in scale than anything they have perpetrated. For this reason, I hope the authorities give them due regard in these peace negotiations. I do not however expect it.

I will be the first to concede that there are Muslim terrorists with illegitimate interests in the world. The reality is that most of them are illiterate. I am not. These particular Muslims have a legitimate grievance against the Philippines (and arguably the American and Australian) governments for initiating, or otherwise sanctioning or tacitly endorsing the acts of their military forces.

Read more of my posts and you will readily see that democracy is not the only alternative to autocratic tyranny; its just a proxy for a representative's extortion. There is not a single form of democracy. Representative democracy is not really a form of democracy; its an extortion racket. You want democracy; then the only legitimate form for a nation-state is a 'meritocratic' democracy, where reason is the standard of value.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Is the DPJ doomed? Not just yet.

2011-12-28T17:55:00.000-08:00

I get the sense that Japan is looking at another substantive shift in its political game; though nothing transformational to be sure, at least not at this point. Some 9 members of the Democratic Party of Japan (DPJ) have resigned as a result of the party's decision to increase the GST (consumption tax) to 10%.

I totally agree with their position. There is no question that the Japanese government needs to raise taxes to pay off its 'internal' debts, but taxing consumption is not the way to proceed. It ought to be taxing assets - most particularly land. Probably the best approach would be to totally cut off funding for the provincial governments and allow them to raise local government rates. This would offer some form of competitive pressure, as well as make these governments independently accountable.

It looks like we might be looking at a 'no confidence' motion in the Japanese PM, and thus a new election...unless a new political leader emerges. I'd say we might be looking at a return to the alternate party.

It must however be acknowledged that this could be considered 'posturing' by local party members trying to save face in their local electorates. i.e. Essentially such posturing entails playing musical chairs or erecting Chinese walls, where you resign from one party, set up another, and pretty well function as an pseudo-independent faction. How long can this go on? Well, musical chairs can go on for a long time if you keep changing political candidates at every election. Good luck with that game!

See the latest news at Japan Times.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Japan public finances still bad

2011-12-25T12:39:00.001-08:00

This article in the Japan Times highlights the treacherous state of public finances - in this case in Japan. Whilst on the face of it, Japan's budget deficit might look worse than Europe's, Japan is in a far better position because:

1. Japan has greater income earning capacity

2. Japan's debt is owed to Japanese citizens and corporations, which can taxed at higher rates, i.e. The government retains the power.

The positive news is that the Japanese government has actually managed to stabilise spending. The negative of course is that economic activity is not growing either. Expect Japanese interest rates to remain low for a long time. The flipside is that the Japan's government is between a rock and a hard place; they will soon have to do something about:

1. Raising taxes

2. Cutting spending

The disparity between local and international costs of capital preclude borrowing abroad.

Buying property in the USA

2011-10-01T15:55:00.000-07:00

Comment by Bring the pain:

"There are plenty of countries offering 8% - do some research. Rest of the world in a bear market - obviously you are a Sepo and think the whole world (America) is in a bear market. American property is in a bear market because you have a retarded financial and banking system flow on effects include high unemployment, low GDP and unsustainable housing market due to dodgy loans. Bear markets are the best time to buy in a business cycle you moron. Having an asset depreciate in value means you lose money benny boy; get a grip on your economics. Again, the quality of housing in Japan is shocking. Who wants to live in a rabbit cage made out of plasterboard. Good luck getting 12% for a 1dk piece of rubish, good luck keeping the piece of rubish standing for more than 2 years. Rather buy a house in Swedan, houses made out of brick, stable banking system, and no earthquakes. If you want to lose money in Japan buy an investment property".

This is not a response to anything I wrote - but its worth answering. It is true that there are countries offering more than 8% yield. Unfortunately, they are outside of my area of interest because it does not make sense as an individual to have property in too many countries because I'd need to employ staff to manage them.

It is a gross generalisation to say that the US market is 'over-priced', as there are many areas in the USA where the affordability index is 2-3, compared to cities where it can be as high as 10x annual income. The trick then is to find those areas which offer a reasonable balance between lifestyle values and affordability, or reliable rental income and adequate yield, if that is important. Good online marketing can make the difference as well.

It is true that Japanese properties do depreciate rapidly; but that's why you buy property which is old, say 10-12 years old, thus 60% depreciated, and its more than offset by a 12-13% yield. This is most particularly the case in Japan where you can get a local loan and the ability to leverage your investment. The reality is that many people want to live in Japan, and for good reason. Personally, I did not by there for the yield, I bought for the lifestyle. But I was happy to help my ex-Japanese GF get a property from which she gets a 13% yield - its paid off now.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Why buy property in Japan?

2011-10-01T15:47:00.000-07:00

Comment by The real expert:

Why would I invest in something that has no capital appreciation? Instead of property investing with an unrealistic target of a 12% yield (never heard of a 5 million unit in north Tokyo), why wouldn't I put that cash into a fixed 8% term deposit? No risk and a guaranteed 8% return on investment, no maintenance headaches, no government red tape headaches, no flood headaches, no housing bubble headaches etc etc. Investing in the Tokyo real estate market would have to be the worst investment decision ever. If you buy a house in Western countries you will get appreciation on your investment, i.e the value of your house will go up unlike Japan where prices go down. Erik your article is total rubish and people should never buy houses in Japan for investment purposes.

The reason is because capital appreciate is just one issue - rent expense substitution or rental yield, depending on your perspective is the other issue. There is typically an inverse relationship between the two, i.e High capital appreciation or high yield. That is why Japanese yields are high. If you can find some structural distortion being corrected then you can get both, i.e. Say the Philippines today because it has 8% yield and good capital appreciation. i.e. There is the realisation that Asian labour is rising in cost, so even low-productivity Filipinos start looking appealing as a source of labour; most particularly because they make satisfactory call centre agents. This market does not rely upon the low-productivity ports in the Philippines. These issues will gradually be resolved, and the Philippines will be more broadly an appealing property market.

Japan only makes sense if you are buying a rural lifestyle property, an inner city land rental purchase of house, or suburban house for rent substitution; and even this might only make sense if you are earning Japanese income and planning to live there over 4 years. Since people love Japan, and 'hope' to live there, this can make a lot of sense.

The other issue is inflation and currency depreciation, which I have alluded to above. Bonds paying 8% in Japan? Unlikely - more likely 1% and paid is debased Japanese yen. The USD is also being debased, so need an bond indexed to inflation.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Living and working abroad

2011-10-01T15:06:00.000-07:00

There are obstacles to living abroad. But you know, its not as hard as you might think to live and work abroad if you are able to develop relationships in these countries or find forms of work that suit you. In my 'wonderings' I have come across people who find work abroad by doing different things. Consider the following:

1. Selling: I write books about buying property. Such book publishing allow me to live anywhere in the world because my store front is online.

2. Consulting is another activity that allows you to work anywhere in the world if you deal with your clients online.

3. Strategic career opportunities: There are certain jobs like doctors, nurses and teachers who are in strong demand around the world if you have decent qualifications.

4. Service jobs like teaching English, builders, trades jobs and tattoo artistry are also jobs that you can find if you travel. Generally though in these cases you need to tap into the informal economy, but consider this: In a large city like Tokyo, you can be sure there is a need for computer support services for all the English expatriates living there, because there are thousands there looking for a good deal who are getting ripped off because they don't speak Japanese, or have support. In such cases, forums offer support for most, but forums only offer limited support.

Different countries have different rules for staying in the country. i.e. Consider that the Philippines probably has the most liberal immigration laws. You can stay there 18 months before having to leave the country, but you pay around $30/month to extend your visa. Other than that, they care less what you do. In Japan, its a 90-day tourist visa, and hard otherwise to get a business or working visa unless you are sponsored. Having said that, you can fly to China or Korea every 90 days (3mths) if that suits you, or you can commute from another place and just stay the 90 days in gaijin houses (i.e. Short stay accommodation).

The intention of this strategy is to buy accommodation in different countries at the low-end of the market so that I can live a flexible and interesting life as a tourist. This is why a $28,000 dormitory in Japan appeals, with a $300/year rates bill, a $US55,000 house in a depopulating NZ regional city, rates a little pricey at $1700/year, or you can go a house in much of the USA for $80-120K. We also have a place and land in the Philippines.

This is truly a period of great flexibility thanks to technology. I would not equate this however with freedom. No country recognises your personal sovereignty, and no government functions on the basis of rationality as the standard of value. Under democratic tyranny of the 'populist' majority, we spread our assets widely. This is why grasslands are so prevalent. Their spores are basically blowing around the world. We like to travel light in a world of arbitrary government. Yes, that might sound a little tragic, but living a life of slavery to some over-priced, statutorily or artificially priced house is crazy. I don't own a house in Australia, my home country because with the average house costing 11.6x the average income in Sydney, I think I should be living in Japan, NZ or USA, where I can live in a decent place for 2-3 times earnings. Personally, I wish people would think so we can end this tyranny, but since we have a system of wealth extortion based on 'universal ignorance and passivity', I prefer to travel. If you are wondering where this ends up, it is either:

1. A life of repression - Japan is the model we are drifting towards - where you are all zombies entertained by mindless concrete, frivolities like alcohol, sex, etc.

2. A intellectual life - A form of meritocracy which does not yet exist, where economies grow at 16% per annum because they are not constrained by centralised government; which are not overtly materialistic because the people's intellectual sovereignty has been oppressed. In a world where ideas matter because there is a free market for them, as opposed to the statutorily regulated 'parliament' which has political parties act as gatekeepers. But you go on pretending you live in free countries because you are given some pretense of it. More on this matter at our politics blog.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Japan - why rent property when you could buy?

2011-10-01T15:04:00.000-07:00

Just a recommendation for anyone who thinks they will be living a long time in Japan; whether because:

1. They have a good job

2. They love the place

3. They are married to, or intend to marry a Japanese partner

You might want to consider saving yourself a great deal of rent expense by buying a home. Google 'buying foreclosed property in Japan" for more info, but some basic advice:

1. The Japanese prefectural law courts are tendering the sale of discounted properties way below market prices

2. The yields on Japanese property can be so high that renting is crazy. For instance, I paid just Y2.8mil for a 5br dormitory on 400m2 of land at Hanno, west of Tokyo. Its just 1hour from Ikebukuro, and I always get a seat on the train (Y420). There are better properties for less in depopulated rural areas.

3. Buy a house & land in suburbs to avoid apartment management fees, which are usually a rip-off.

4. Buy an old house with land lease if you insist upon living in the central city areas because the land rent can be extraordinarily low.

5. If you intend to stay more than 4 years in Japan, it would make more sense to buy there; particularly if you are earning yen, as all the major currencies are being debased.

The appeal of foreclosed property is that its a huge market; the Japanese investor is generally ignorant and risk-averse. The educated elite in Japan are more interested in office and residential complexes, not in managing houses, so you are really competing against real estate agents and home handymen who have limited resources.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The morality of buying foreclosed property

2011-09-26T20:34:00.000-07:00

Question: "I'm interested in buying foreclosed property, but isn't it making money out of someone else's misfortune".

I don't regard buying foreclosed property as making money from others misfortune; that is what governments do. They create the recessions and structural imbalances through their monopoly over the use of coercion. A power they use to distort rather than to protect. It is not the responsibility of a buyer to protect the interests of the seller. If the seller thought they were going to get a better price, they would not sell. If they subjugated their rights to sell their property in case of default, then they made inadequate provisions to protect themselves, nor to understand the market into which they bought. If you buy property from a distressed seller, and encounter some angst from them, it would be nice to be able to communicate your empathy to them. Aside from that, you can only regale them of the hazard of government arbitrary power. They should direct their anger towards their nearest federal government. Market participants merely act within the law, the problem is 'arbitrary law' created by governments which distort markets and in the process place participants in a position of unnecessary vulnerability.

If you want to know more on the flaws of government; we do a great deal of writing on that issue on our politics blog. Nope, I'm not a conservative or a liberal; though I understand your confusion. That's how people lose money on property.

It is true that the Japanese system of selling favours the buyer in several respect, but again that is because of government, or silly Japanese suspicions about yakuza. The reality is that many foreclosed properties sell close to market price in the inner city areas. In the rural areas, they sell at huge discounts because of embarrassment and depopulation. Should buyers stop buying in these areas? No, that would reduce the dollar price recovered, and the banks would probably benefit anyway. In any case, its a market, which entails buyers and sellers taking advantage, or so they think, at the expense of others. There is a greater issue of responsibility here.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Tourism in Japan

2011-09-23T21:20:00.000-07:00

Local and international tourists flock Japan countryside to explore the rich culture of the Japanese people.
I absolutely recommend that you visit Japan. It is, in a very positive sense, a DIFFERENT experience.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Trade deals likely to boost Philippines property market

2011-09-05T04:43:00.000-07:00

The prospects for Philippines property look very good, and are getting better, after the Aquino government negotiates a $60 billion trade deal with China, after similar agreements with Korea and Japan. This is of course all very positive for the Philippines because this country is on the doorstep to these very large markets. Japan, Korea of course already have high cost labour, and in a decade, the Chinese labour cost, at least on the coast, is going to look a little scary. So the Philippines can expect to benefit from trade, tourism and investment. I expect a lot of these Asians to retire in the Philippines as the nation's standard of living improves. The Philippines has one of the most generous visa conditions in the world. I routinely go there for up to 18 months without having to leave the country. Learn more about the Philippines property market and these trade deals.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Noda emerges as likely Kan successor | The Japan Times Online

2011-06-09T20:02:00.000-07:00

Noda emerges as likely Kan successor | The Japan Times Online
This could be good news for Japanese property investors. We will watch the news or background about this prospective new PM in coming weeks, to see if we can get some idea of his impact.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Updated Japan Foreclosed Property report

2011-05-09T22:20:00.001-07:00

Hi all, I have just completed the 4th edition (2011-12 fiscal year) update of our Japan Foreclosed Property Report. We had already written a great deal about the earthquake risks in different parts of Japan, and in light of the recent safety issues related to the tsunami and nuclear reactors, I have also included details on those issues.

I used to be an energy/mining analyst, and I studied geology, so I am happy to include those subjects to allay any concerns about living in Japan. The death of thousands of people might discourage people as to the safety of living in Japan....but then Japan adapted to living with earthquakes years ago, and it will now recognise the need to adapt to tsunamis. In any respect Japanese beaches are the least appealing aspect of life in Japan, so its a false economy to buy close to the beach. Mostly they are rocky and depressingly grey. Japan's charm is in the cities and mountains.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

House for rent in Shimomaruko, Ota-ku, Tokyo

2011-04-17T14:00:00.000-07:00

This place is currently not available....currently rented.

I am doing a favour for a guy who purchased my Japan Foreclosed Property report. He has purchased a foreclosed property and wants to rent it out for Y115,000 per month. It is a 2-storey, 2br house in Shimomaruko, Ota-ku, Tokyo. It is partly furnished, with a living room, kitchen, laundry space, bathroom, 2 restrooms and a big balcony facing south. There is a white leather couch, a bed, chairs, chests, a high-end fridge, washing mashine and dryer. The house is located between Shimomaruko Station and the Tamagawa river. Along the nearby rivers, you can engage readily in relaxation and exercise, i.e. running, cycling or play tennis.

The house is close to various stations:

1. Five minutes walk to Shimomaruko Station

2. Sibuya Sta. in 21 minutes

3. Shinagawa Sta. in 21 minutes

4. Tokyo Sta. in 31 minutes

The house is currently under a minor reform, but will surely will be ready by May 2011.

Pets are OK. If you are interested in renting this house in Tokyo you can contact me through my website and I will refer you to the landlord. Anyone interested in buying foreclosed property in Tokyo might be particularly interested in this opportunity for two reasons:

1. This is a foreclosed property so you can get a sense of the commercial returns on renting foreclosed property

2. This landlord would probably be happy to give you advice (aside from the book I am selling) on how to buy foreclosed property in Japan...since he is the embodiment of the opportunities available.

3. Some buyers who have not lived in Japan might want to avail of this opportunity to rent before you buy. The house is well-located close to central Tokyo.

View Larger Map

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Feedback on our Japan Foreclosed Property ebook

2011-03-23T14:46:00.000-07:00

Here is some feedback on our Japan Foreclosed Property eBook which I did not list sooner...

“I would be more than happy to help you out for your marketing. I just recently got start in the real estate investment business focused primarily in the USA and one of the question that I routinely ask myself is where do I want to own property? After spending 8 weeks this winter in Okinawa, Japan and absolutely loving it, I felt that a few justifiable business trips to Okinawa a year would be a great perk. So I have start the research process of starting a profitable real estate investment business in Japan, focusing initially in Okinawa”.
“I found your ebook being discussed and bashed on jref.com site which I stumbled upon through a Google search. Being familiar with some people just not understanding a good opportunity when they see it, I dismissed the naysayers and sought to purchase your book. I felt that it would be better to get the information in an organized format that trying to piece it together myself. If you have any information specific to keibai bukken in Okinawa I would love to hear it. Thank you and best of luck in all your endeavours”.

James Boydston

Boydston Enterprises

Okinawa is of course a long way from the Fuchushima nuclear reactor, but it does not escape the perils of tsunamis. This is where is better to be on the West Coast, or in the mountains. The mountains are less susceptible to earthquake damage.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Chinese interest in Tokyo/Japan property

2011-03-11T20:07:00.001-08:00

Today's Japan Times documents increasing interest in Japanese property buy Mainland and Taiwanese Chinese buyers. The Chinese property market is fully-valued at the moment, so it is unsurprising that they should show interest. Interestingly, there is little sign that Chinese buyers are very discerning in their acquisitions, as most are inclined to buy high-priced Azubu apartments or ski resort accommodation in Hokkaido.

Many of the investors are buying for diversification, some so their students can study in Japan, and others for business or lifestyle purposes. Irrespective of their motives, clearly there is a growing demand for foreign property from Chinese buyers, and countries like Japan, the USA and the Philippines will feature highly. I would however draw their attention to foreclosed property, which trades at a significant discount to the private property market.

See the Japan Times article here.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Equity markets and property opportunities in Japan

2011-02-22T13:34:00.000-08:00

The Japanese equity market is offering a lot of promise according to the NY Times. See this article. Japan is a little more dependent on imported oil than other countries. Not a good thing when these is the prospect of a political crisis in the Middle East; and yet Japan's oil consumption per capita is far less than other Western nations, so overall this is not so significant.

Any chance of reform in Japan? Well, its looking less likely, but the market is still cheap. I think the property market looks far better because the government regulation is actually making opportunities, and its an otherwise less regulated market. The yields are high too. One of my favourite old stocks was KDDI. There was another setting up a Wimax network, but I think its since been acquired by KDDI.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Business opportunity for foreclosed properties

2011-02-16T19:03:00.000-08:00

Many of you living in Japan might be looking for opportunities to stay there, development a business or build an investment portfolio. We have a suggestion for how you might do this. In the main cities of Japan there are a great many 'gaijin houses', i.e. Houses converted into share accommodation. Foreclosed properties subject to lease are perfect for this purpose because you buy the house, renegotiate the lease agreement, and you renovate the house, so its suitable for short term rentals.

Now, the appeal of this suggestion is that I can help you develop a website very cheaply using Filipino programmers who work for my partner. She managed 50 staff at a US call centre in the Philippines, and she is a great project manager. Her team have a range of skills for doing this; sadly no Japanese-speaking skills if you wanted to target this market. You could of course provide the content. The opportunity exists for a person to develop their own string of rental properties, or for some of you to team up. Either way, we are only interested in facilitating the opportunity. We are not business brokers or property agents. Here are examples of the quality of her work - my website and another for no more than $1000. She can set up online payment systems, databases, etc.

Gaijin properties rent on a weekly or monthly basis. Some have a better reputation than others. Clearly land leased foreclosed property are great properties for upgrade to rental properties for these purposes because:

1. They are down-market rentals

2. They are well-located properties

3. They are low-cost property entries - both in capital and (land) rental terms

4. They offer surprisingly good protection for renters. You might want to get free legal advise from your local prefectural office to ensure that the protections applying to tenants apply to business operators of land leases. I have no experience with those issues.

I was planning to do this years ago but I broke off from my Japanese GF, so those plans collapsed. If you are interested in sharing a website with multiple property owners, we can set up a website 'brand' for all concerned, and just collect a fee. Either way, we are interested in helping people get into business, make great investment decisions.

Land leased houses can be bought for as little as $10,000. The question is whether your property has sufficient appeal to foreigners to rent on a medium term basis. Clearly foreigners love cheap accommodation in nice places, even if it is rural, and if its in a depopulation zone, it matters little for Japanese people who cannot find work there. So this is a good opportunity if you find the right property, in the right 'depopulation' zone, which foreigners can use their Japan (East) Rail Pass to visit. That is the packaging you can do. I think the Japanese hinterland has a lot of promise for tourism, whether its specialist tour groups like hikers, skiers, kayakers, etc. You can offer greater appeal of course if you lease out such sports equipment. It might be as easy as finding second hand bikes at a recycling depot. That is what I did. Damned good bike too.

We offer such suggestions in our Japan Foreclosed Guide. It is a very big market.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Renovating a foreclosed home in Kyoto, Japan

2011-01-24T15:59:00.000-08:00

It seems there are a few buyers of the Japan Foreclosed Report who are prepared to come out and describe how they are doing it. Understandably not everyone wants to speak. Having said that, the market is huge. We need to remember that Japan did not have an unemployment problem until fairly recently, so unemployment is a potential source of 'fairly new' foreclosures. I think asset deflation would have been a bigger concern for the banks years ago as they sought to clean up their balance sheets. I see in the latest employment statistics that only 65% of new university graduates secured jobs last year - the lowest uptake in decades. We need also to remember the depopulation of rural Japan has resulted in the vacating of properties in those areas. With no tenants, they lie vacant, and are the first assets to be sold off by stressed buyers, who might have ‘over-encumbered’ themselves buying a more expensive 2nd home. i.e. Westerners are accustomed to renovating homes. Japanese people simply tend to build new ones. I don't know why. The old ones are probably not as structural sound, but they work ok by my estimate. It is not the land of financial literacy, so don't expect any of that.

The latest person to give us a description of his experiences buying foreclosed property is a New Zealander married to a Japanese national. He bought a foreclosed house & lot in Kyoto at auction last year. He spent 5 weeks renovating it, presumably whilst holidaying in Japan, since he lives in Auckland. He has placed the property up for auction. He has offered to provide more information, so I look forward to that. Meanwhile, some of his feedback on the Japan Foreclosed Guide ebook:

“The information you supplied was a good indicator of what to expect”.
“I plan to repeat this process this year and purchase a second property”.
"I agree with your opinion that there is great potential in this market which is more than I can say for NZ".

If you are interested in John’s experiences renovating his property, I suggest going to his Japan blog. I also describe my renovation insights in the book, but his were more extensive.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Strategy for profiting from leased property

2011-01-18T01:59:00.001-08:00

In my last post I described the experiences of a Japanese and foreign national who bought a property on the southern edge of Tokyo. This was a particularly interesting transaction for several reasons:

1. It was a very cheap inner city property

2. It involved the purchase of a 2-storey home on land leasehold

There are a number of reasons why you ought to consider such a proposition. Normally, I would not be particularly interested in leasing land, but this is different...the terms are very good. There are a number of appealing elements:

1. If you are buying a new apartment, you are buying alot of building value, which is destined to depreciate a great deal over coming years. In the case of these buyers, they were paying a nominal Y500,000 (USD5,000) for the 3br house, which if they spent a little money might rent for Y125,000 a month, given its proximity to Tokyo City.

2. They are not paying a huge about for land. Now, owning land in Tokyo might be considered an appealing idea because whilst Japan's population is falling, Tokyo's is increasing, and some areas more than others. The problem as I see it is that those new residences are moving into new high rise apartments, and there is plenty of room for more. Future buildings might even be cheaper to build due to the development of new high strength TiV-based steels. This could greatly reduce the materials needed to construct a home. The old homes will not have the features of the new homes, however given the steep discount in the price of the older homes, its worth considering the 'low-cost' property option. Its a different issue of course if money is no object. You can expect those new 'high priced' homes to depreciate significantly in value.

3. Saving money on capital allows you to place the bulk of your capital in better performing asset classes like gold stocks - and if you are an Australian or New Zealander, than there are few better places than my recommended explorers. ASX gold stocks with upside. Canada, the USA and Britain of course have similar opportunities. Some years ago I projected a gold price of $2400/oz. We are still some way off based on a DowJones/gold ratio of 5.

One of course has to remember that its good to use others money...but remember that does not always hold. Its been good for the last 15 years because of low interest rates. A pertinent issue is your capacity to access those low-interest loans in Japan. This might not be as easy for foreigners. Nevertheless, I would caution against the appeal of these loans because Japan will need to finance its deficits in future, so they are looking at a higher interest rate environment as their savings rate falls and their debts rise.

Today Japan has a public debt of 200% of GDP, requiring a combination of taxation, national income growth (immigration???) and monetary debasement to repay it. That is going to cause a rush into tangible assets like property or a shift of money offshore. I would suggest Japanese accustomed to foreign markets will buy assets in places like Australia, NZ, Thailand and the Philippines. I am surrounded by Japanese retirees as I speak in this apartment complex in Queenstown, NZ.

For most people however, they will more realistically stay in Japan to be close to family. Most will buy property given the high yields. But they have to buy the right property. Apartments are not going to appreciate in value....least of all the over-priced premium property off-the-plan. You are buying a box in the sky. If you are getting a box, better an old box on ground floor, and 30minutes from the city centre. Why?

You might pay as little as Y3,000 for a land lease, having paid just Y6mil for the house. Even if you have to pay Y5,000 per month under a new lease, its a far better deal than sinking money into a high priced modern apartment which can only depreciate. Given the prospects of inflation in coming years, and I think Japan will be as bad, if not worse than the USA and Europe, you will want to hold property. The reason is that Japanese property is not over-valued. It is very cheap, so higher interest rates are not going to compel people to sell. In fact cash savings will be rush into property. What are they waiting for? I have no idea.

The problem is Japanese are buying the wrong type of property. They ought to be buying fringe properties in lifestyle locations, or leaseholds in the inner city. There are issues to consider:

1. The lease term - you want to negotiate with the owner before you buy at foreclosed property tender. Nice to do before....but in fact buyers have rights. Since there is leasehold owing, and the property rights of leasees is solid, there is a good chance to extend the lease....albeit at higher rates. Short of a revolution, this situation is unlikely to be resolved by legislation I think. In any case, the terms are pretty sound.

2. The cheapness of the lease payments - it is staggering that they are as little as Y5,000 and fixed for 20 years. After 20 years of inflation without adjustment (remember they might not expect inflation after 15 years with none), that is quite a financial benefit

3. Your use of the property - What do you do with a leased property if you decide to move to the USA? You have several options: (a) You can sell the land, which might be difficult as people like to own the underlying land in Japan (b) You can rent it out, but that might be more difficult if the house is 46-55 years old. (c) You can negotiate to sell back the lease...the owner might ask you to pay reparations, i.e. money for cancelling the agreement, or more likely to demolish the old house that no one wants to live in. (d) You can turn the place into a 'gaijin house' for people who care little about the quality of the place where they live. This at least requires a strategic long term plan.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Experiences of Tokyo foreclosed property with a land lease)

2011-01-12T20:55:00.000-08:00

If you happen to buy a property report from us, we are pleased. What we love even more is when customers take the time to send us some feedback on their success or failures. One of my customers bought our Philippines report, so I was pleased to have the opportunity to ask him about his progress buying a foreclosed property in Japan.

They bought an old house near Oota station, in Tokyo-ward. He bought this house 18 months ago (Jun 2009) for Y6 million ($US60,000); Y5.5 million being the nominal value of the land lease and Y0.5 million for the old house. The house is 75m2 in floor area, on two floors, and occupying 40m2 of land. This close to the city residential lots are significantly smaller because land values are far higher. They bought the property with a 20-year land lease due to expire in just 5 years at a fixed lease fee of Y3,000 per month. They were able to extend the lease for a further 20 years at a fixed lease rate of Y4800/month. i.e. Just 5% of the rental cost for such a property. This is a good deal for 2 reasons:

1. The lease rate looks like a significant mark-up but it was fixed for the last 20 years

2. The new lease rate of Y4800/month is fixed for 20 years, which is very attractive when you consider the prospects of inflation in Japan. People are so accustomed to low inflation, they have forgotten how savage inflation can be.

3. Rather than absorb a Y200-300,000 lease renegotiation/contracting fee, they agreed to incorporate the fee in the monthly lease rate.

Buyer: "We would have preferred to own the land, of course, but houses (including land) are rare in this location and expensive in the foreclosed market. The Japanese consider land ownership as very important. So competing for house and land packages in good areas is not an appealing deal".

"The lease rates [for land] are cheap and the rights of the the leasee are very strong. We could destroy and rebuild, and rent the house without asking for permission".

The auction required a minimum bid of Y5.5 million, and they won with a bid of Y6.0mil. They were the only bidder. They believe they would be able to rent the house for Y125,000/month, at a nominal yield of 25%. The place did need some minor improvements, like fixing the drains and repairing wallpaper. Some of the floor boards are not properly leveled, and there is a ventilation problem as a result of a neighbour's extension to their house. These issues would cost Y1.2 million to fix. This would reduce the effective yield to 20.8%, however they are happy to live there in the interim. In the West, properties so close to the city will sell with a yield of 2-5%, and yet in Japan, they were able to buy a place with a yield of 20.8%. This will mean rental income (or 'rent replacement') will pay the house off in 4-5 years. The house is 46 years old, and was valued at just Y0.5 million ($5,000) in the auction documentation. Of course many Japanese are prepared to pay Y30-35 million ($350,000) to build/buy a new home. Such is the premium paid for new homes with land. Of course they offer a nicer, modern ambiance, but many people spend their day outside, so they might question this price premium given its value depreciates. Some would prefer to pay just $5,000 for a house. The issue is whether the house is livable for not just the five years (until to pay off the house cost), but for the lease period, as the owner could require you to destroy the house (Y2mil perhaps in the city) at the end of the lease period. The lease period is therefore very important. These buyers were able to extend for 20 years at the new lease rate. You need to decide whether you are there for the long term. Does the lease term justify building a new house? Or will you be stuck in the short term potentially with a house you don't want to live in, that is too old to rent or which you cannot afford or justify fixing up. The lease period and your capital are the critical issues, however your relationship/visa status and language skills might also be issues. Professional people are much more likely to speak English. I met a Building Project Engineer who spoke English in my local pub.

They are 4.3km from Tamagawa Station, which is a 25 minute train ride from Shinjuku Station in central Tokyo. Their house is just 400m from a smaller train station, as well as a small supermarket, and 100m from a convenience store. They have a large open area along the river several blocks away, suitable for riding a bike or jogging. There are also tennis courts and baseball facilities there. This buyer seems very happy with his purchase and is now looking at the Philippines.

The house does not come with any car space, however they can be leased if required close to home. Many Japanese living in the inner city go without cars for this reason.

Small old houses on small lots offer economy buying. They looked at buying house and land for a nominal price of Y10mil, but after bidding it sold for Y28 million because of the competition. The moral of this story is that in Japan, its sensible to simply do something different from everyone else. There are many Japanese people who are prepared to pay too much because they are not commercially astute.

Buyer: "Japanese people are stuck to what they think is the proper normal lifestyle; graduating university, finding a girl, buying a new home. They don't consider alternatives. So its easy for people who have a different view of things".

And his feedback on the Japan Foreclosed Property report:

"I highly respect and appreciate your [the author's] lifestyle. I am impressed by the amount and accuracy of your research about real estate and foreclosed property".

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Is it a good time to buy property in Japan?

2010-12-29T01:25:00.000-08:00

Another writer, Chris Dillon, Dillon Communications, has advanced the value of investing in foreclosed property in Japan, so I wanted to assess some of his logic for recommending such an investment. Firstly, buying property in Japan for me is not simply about making money, as I am sure some of you are not out primarily to make money. Japan is a nice place to live or stay, so you would like a 'base station' in order to partake in some foreign experiences, whether its bars, bird watching or touring around, or simply retiring.

I agree with him that if you are looking for capital growth its hard not to look outside the cities. I think there are certain areas outside which appeal for lifestyle reasons, i.e. Holiday houses in the west of Tokyo and Saitama, which make excellent weekend 'get-a-ways'.

He likes old apartments because they offer great yields. I would be inclined to steer away from such old places because you are paying out too much in property management fees, over which you have no control. Why buy an apartment on good yields when you can buy a house on good yields, and pay only low taxes.

In a sense I agree with him about the bad news about Japan. All the bad news has effectively been priced into the market. What else can go wrong? Well, on the basis of his argument, I would have to say the currency. He says the 'yen's strength is not a major issue'. Indeed, because it is not strong, so much as "relatively strong" against other very weak major currencies, namely the Euro and USD. They are hardly a good standard if you are looking at currency diversification. If you were looking at strong or 'hard' currencies, you would be looking at the AUD. Incidentally, Australia has recorded the strongest property market over the last year. Another good property market is the Philippines, with its 7% GDP growth, 2% population growth and strong property price growth and still reasonable yields. It is also a relatively strong currency. More importantly, Japan has a public sector debt of 200% of GDP. There is every reason to believe a fair slug of that will be repaid by debasing the currency in the next decade, as the US and Euro zones do likewise.

He does make a good point:

"One of the biggest is in the preference for new property. In Japan, used homes represent about 13% of total sales, compared to 78% in the United States and 89% in Britain. That is changing, as the Japanese government encourages the construction of long-life homes, but many people still see homes as consumable items".

The significance of this is that a steep discount applies to old housing, such that you can buy an old house for essentially less than zero in the foreclosed market. People do not want old housing, particularly due to the lack of insulation, but also shoddy building practices, lesser durability.

He makes a good point about buying rural property. The population rate is expected to collapse in rural areas, so the closer you can live to major cities the better. The flipside is that wasteful use of infrastructure might result in either tax incentives for rural areas, or eventually stronger migration. The cheaper that rural property becomes the more attractive it becomes for other purposes, whether lifestyle activities or other activities. It must be acknowledged that people have a far higher level of mobility than in the past, so we do have to question old paradigms.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Yamanashi foreclosed properties, Japan

2010-12-17T02:12:00.000-08:00

There is a 2LDK apartment in Kofu, Yamanashi Prefecture for a nominal Y1.008 million. The apartment is on the 3rd floor, and its 51m2 in area. You can secure the apartment for just Y252,000. The building is 22 years old, and is located 2.16km north of Kokubo Station. See the http://bit.sikkou.jp website for more details.

This is the only cheap property I could find in Kofu. Mind you, I would not buy an apartment. Better to buy house & land.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

How to search for Japanese foreclosed properties

2010-12-17T01:33:00.000-08:00

There are seven steps to finding foreclosed properties in Japan. You will probably need the images in order to follow this process. Just email me if you would like a copy of this 'Bit-sikkou-search-file'.

1. Go to the Bit-Sikkou website - See http://bit.sikkou.jp/

2. Select a region which interests you. I selected the Kanto region.

3. Select a prefecture within the region = I selected the Ibaraki region
4. Select a search mode. We can search by city, rail line/station or court branch. This screen shot shows the basic format, however specific details will of course vary by prefecture.

5. Narrow your search. I selected all forms of property, I selected properties between Yen 1-7million, and properties in all areas. Remember, you can use Google to translate this page, so you are not searching blind. Type the station name into Google Maps to find the location if you are unsure. i.e. www.google.com/maps or www.google.co.jp/maps (street locations & Japanese kanji).
6. Select bidding period. The continuation of the last page requires us to select the bidding period. Avoid selecting the ‘farmland’ option because these lands are assigned or restricted to farmers.
7. Foreclosed property listings. This page shows a list of the properties matching your criteria. Translate to English (right click screen, then ‘translate’). Normally, having established its house & land, I will look at the basic parameters (age, size of house, price), then go straight to the specific listing (in blue) and download the PDF to look at the house photos. The next issue is finding the location on Google Maps.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Listings of foreclosed properties in Ibaraki Prefecture

2010-12-16T23:58:00.001-08:00

There are any number of places to buy foreclosed property in Japan. Away from the larger cities, you can find very cheap houses for less than $25,000. I am doing a random search here to give people an idea of the types of property available. My focus in this post is Ibaraki Prefecture, just north of Tokyo. Probably not my favourite place, but its fairly close to Narita (Tokyo) Airport, so good international connections for those looking for a holiday house.

This particular house I found listed on the http://bit.sikkou.jp website. When I searched for the address of this house, I came up with another foreclosed search website you might prefer. The minimum purchase price for this property is Y1.76 million ($US20,000), and a deposit of Y440,000 is required. You can download the specifications from either website as a PDF file.

The land area is 499m2, the house is 27 years old, and its 127m2 in floor area. The location of the property is here.

The address of this property in Japanese is:

日本茨城県神栖市太田３８５−２１

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Outlook for Australia property

2010-12-16T11:37:00.000-08:00

In a number of blogs, we have argued that the Australian property market is not going to collapse. The IMF has come out with the same prognosis. We must remember that the Australian economy has a number of advantages:

1. Currency flexibility - weaker commodity prices or volumes drive exchange rates, and with commodities priced in USD, currency movements provide the perfect hedge.

2. Immigration - The Australian government has the capacity to change the number of immigrants to stimulate domestic demand

3. Future fund - The Australian government has a $200 billion future fund, which could be used to build a high speed, train service around the SE-East coasts of Australia.

4. Business investment - Irrespective of any weakness in China, there will still be a desire to increase commodity supply capacity from Australia, whether coal, iron ore, coal seam gas, etc.

5. Gold mining - Australia can expect a gold mining boom. Australian companies are one of the biggest investors in mining around the world.

6. Government debt - The Australian govt has a significant capacity to sustain spending over 5-10 years. It is probable that this will involve capacity-building, e.g. ports and railways to facilitate future mining, mostly in Qld, NSW, Victoria, NT. I think public sector debt is around 50% of GDP if memory serves me. It could go to 120% without much complaint given the positive outlook.

7. Zoning laws - The government will persist in controlling the release of land, which will assist with sustaining high land prices.

8. Global political revolution - One might also expect a global revolution in terms of the way government is administered.

These parameters will ensure that property holders sustain their property investment value, and that Australia even needs more home construction in coming years. There is no over-supply.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The benefits of having a holiday house in Japan

2010-11-25T12:31:00.000-08:00

I just wrote a blog article about the benefits of living and travelling to Japan. It also can make sense to have a holiday house there given the VERY low cost of foreclosed property. The cost can range from as low as $10,000 in the depopulating rural areas to Y3mil just 1 hour from Tokyo. I paid Y2.8mil ($US30,000) for my place that far from Tokyo. It costs me just $300/yr to maintain, but more of course if I need to use utilities when living there. I bought here because I could either:

1. I could get into the city for just $3.50 train and $2.50 bus (or bike for free). I like to ride the bike when I'm pissed.

2. I can elect to stay in the city all night and get the first train home.

3. I have good services like restaurants, izakayas and department stores a bicycle ride away.

4. I have wonderful mountain valley hinterland to explore on my bike. Anyone been up the Naguri valley. A recommended bike ride. I have also canoed down the Naguri river, as well as the neighbouring river as far as Ome.

I connect the electricity before I arrive and disconnect it when I leave by email with Tokyo Electric. Very easy. If I want to travel around Japan on my Japan Rail Pass, I get an early train to Shinbuya, so boarding a 6:30AM Shinkansen to say Fukushima, then a local train into the mountains. Lunch near a Buddhist temple, maybe staying in a business hotel in Niigata, or capsule hotel in Fukuoka (if travelling south), allowing me to explore a new area, or I can return home that night. I just have to leave by 8pm to give myself enough time. That is a lot of time.

Want to learn more about Japan? Want to buy property in Japan? Japan Foreclosed Guide.

I plan to be in Japan in May-June 2010. Busy until then. I don't mind catching up with interested persons.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Mini-housing demand in Tokyo growing

2010-11-14T20:17:00.000-08:00

The demand for mini-housing in Japan has drawn the attention of CNN.com. See this CNN report on the increasing popularity of ultra-small houses. This house was built for $500,000 on a former car space...building up instead of laterally. There are similar opportunities to fitout ultra-small apartments. Specially designed furniture can make those 20m2 apartment units relatively spacious.

The appeal of course of these cramped apartments is the opportunity to live in nice communities. Maybe that means spending more time outdoors. Where you might ask? Well, some areas are more spacious than you think. I previously lived in Sumiyoshi, in east Tokyo. One of the benefits was the ability to spend time in the outdoors. Japanese rivers provide one of the most spacious environments in Japanese cities. There are pathways right stretching km's up rivers. For example, the Arakawa River.

I question the logic of this house. Does he foresee a trend of more Japanese mothers having incestuous relationships with their fully-grown sons. Japan is indeed weird. I meant all types in Japan...some with experiences stranger than fiction.

Question? What does he do with his mother when he wants to bring a GF home? Only in Japan.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Where to Place Your Money

2010-11-13T16:32:00.001-08:00

The EU, Japan and the US are struggling to keep their economies going, and are resorting to 'quantitative easing' in order to support economic demand. The Fed is sure to engage in further currency debasement in order to keep employment under the psychologically important 10% level. The private sector added 65,000 jobs, however this was offset by a more bearish loss of 160,000 jobs from the public sector, for a net loss of 95,000 in the last reporting month.

Expect the Eurozone and Japan to debase their currencies by even more in order to prop up their currencies. People are talking about a new currency system. This is a side-show to the real issue. A new style of governance. The gross mal-administration of government - clearly depicted in spades, hearts, clubs and diamonds - shows how pathetic politicians are. They did not earn their way into these jobs. There is no credible reason why you would give a politician who has administered a household budget control of 3-50% of your local economy, depending on if you are European or liberal Western.

The reality is that we are living in a period of pseudo-liberty. You never really had any freedom. Governments gave you political rights because they had you by the balls. Every time they needed money...they squeezed your testicles. If you had more money, then they came in the back door. So, the question is....how to protect your money.

Clearly gold and other precious metals are the order of the day. Historically, gold has always risen to a peak value which relates to a Dow Jones Index value / Gold price of 4-5x. That ratio, at the current Dow Index of 11,100 points, equates to a peak value of $2775/oz. Of course if the Fed engages in more quantitative easing, then the Dow could well go higher, and then gold could go higher. Of course you don't want to place all your money in gold.

Another appealing area is the commodity and emerging markets. Australia and NZ are safe, strong economies, but their property markets are priced high. Unless you are looking at cheap rural properties, you are better off investing in emerging Asian markets like the Philippines. It offers the best yields in Asia after Indonesia, except that there is far less prospect of Muslim extremism (Muslims are largely confined to the southern island, and extremist activism has declined). In addition, visa restrictions and language barriers in Indonesia makes the Philippines far more attractive. We already bought property in Lipa City, a satellite city between Manila and Batangas with 3 shopping malls and a particularly cool climate.

It is a personal decision - where to place your money. Personally, I like to spread it around for lifestyle reasons, even if that means having 3 mountain bikes, 3 washing machines. I might mention that you can buy white goods for a third of the cost as Australia in the Philippines, and its the same for comparable furniture. I like the low cost, beauty, high yields and culture of Japan. I like the easy of living, the relatively good 8% yields and fun of the Philippines, and I like the cool temperate climate of Australia/NZ. All of these places are good for reasons. In Australia, I'd buy gold stocks, mainly explorers in Africa and PNG. See my Specs blog.

I bought a home base in Japan for $US28000 (just 1hr from Tokyo), an investment property offering 13% yield for $US38,000. In rural areas, they are as little as $10,000. i.e. $10,000 outside Nagano City, which is an international airport and ski resort area. In the Philippines we bought foreclosed land lots in a failed subdivision in Lipa City, strategically located close to a planned school, opposite a community garden destined to become a high-class residential precinct, close to the main highway. In NZ, we bought a summer house in a rural area because the currency was only 0.50-0.55 to the USD, so it was a lifestyle decision and currency play. NZ is not growing much, however in 10-15 years it will have an energy boom. When a 4 million person economy finds oil & gas, it makes a big impact. So NZ will not always be the poor Western cousin of the OECD. In this commodities/energy boom, people will start finding energy resources.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Foreclosed property opportunities in the USA

2010-10-19T13:48:00.000-07:00

It is getting to the point where Australians and NZ'ers, indeed Canadians and South Africans, Chileans and Brazilians, indeed the people's from all commodity-producing countries might want to consider buying foreclosed property in the United States.

The reasons are clear in this article “Bank of America lifts foreclosure freeze in 23 states” by Charles Riley, staff reporter, Yahoo News, website, 19th Oct 2010:

"All told, 1.8 million loans are in foreclosure in the 23 so-called judicial states, while 1.3 million are pending elsewhere in the country, according to a Morgan Stanley analyst report".

The implication of this article is that there is a great deal of property in the United States, principally California, Florida, Nevada and Wisconsin from my understanding, which is offered at very low prices, at a time when the USD is very cheap. I believe the USD has bottomed against the Yen, so buying property makes even more sense for Japanese and European buyers, as I believe it will be the Europeans and Japanese which are going to see the greatest currency debasement moving forward. It is of course all good news for 'hard currency' commodity producers.

The other appealing market for foreclosed property is Japan. In fact, this market is more appealing because the yields on property are 13% now, whereas the US market will never be so attractive. One might wonder however....does one want to invest in debasing currencies? That need not concern you so long as you hold real assets like property. The question you need to ask is whether there will be an eventual market for your property, so this depends on questions like:

1. Is it imminent that Japan will open up to immigration?

2. Will US population (or immigration) growth absorb all the new property?

3. What is the base value of US property? Japan I would suggest has already bottomed.

4. How long will it take for the USA foreclosed properties to clear?

The other question is - do you want to invest, or is this purely a lifestyle property. I bought one of each in Japan...a dormitory 1hr from Tokyo, and a more distant investment property in a tourist area offering 13% yield. You can buy a house in rural Japan for as little as $US10,000. In the USA, you will pay from $US30,000. It is hard to imagine a place in Japan which would pose a threat. I don't even both insuring my property in Japan. Its so safe. Some properties are cheaper than land value if they burned down. In Japan, only foreigners with generous holidays can utilise these properties because the Japan Rail Pass is such a 'bonus' for foreign tourists. Japanese people pay $300 to go from Tokyo to Fukuoka...foreigners can travel in Japan for up to a week for that cost.....unlimited travel on Japan Rail lines...including the Shinkansen. A great country to holiday and visit. If you have not travelled up these remote river valleys by train, you have indeed missed an experience. I have acquired several JR Passes for this purpose...always returning to my Tokyo base most nights. i.e. I would board a JR Shinjuku train at 6AM to say Niiagata, then I would get there at 8AM, so I was free to explore the countryside in local trains for the day, before returning on the 'bullet train' at 4-5PM, so I'd be back in Tokyo for dinner.

There I would enjoy some jazz or blues in Nerima basement restaurant, or a beer in a izakaya, or the Hub English pub chain. I particularly like a bar in Nerima which serves Hoegarden beer on tap...its my favourite beer...aside from Londonite (India)....a place I'd never go back to enjoy it.

Yep... I love Japan. I'm going back this May 2011. Love it!

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Japanese residents for Philippines property?

2010-10-10T02:35:00.000-07:00

Anyone in Japan interested in taking advantage in the forthcoming weakness in the Yen. The Philippines just might be the place to buy an investment property. See my forex report, but consider that Philippine banks in Japan are offering loans to buy property in the Philippines. I'm not sure if this is just for expat Filipinos, but I see no reason why there would be such a restriction. Anyway, you can ask yourself. The Philippine banks in Japan are BPI, BDO, Metrobank, Union and Philippines National Bank (PNB). I note that PNB has an office in Tokyo - see here for details. They offer loans to Filipinos and foreigners, whether or not you are married to a Filipino.

I would be interested if lenders can avail of those low-interest Japanese funds in order to buy property abroad? Worth finding out. Actually the rates are on their website. I believe you can get rates of 10% in the Philippines for a 5 year term, compared to just 6.5% in Japan for loans on Philippine property. See here.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Australian dollar forex trade with property twist

2010-10-10T02:14:00.000-07:00

I just noticed an increase in orders for my Japan Foreclosed Property Report. Interestingly I was just looking at the currency markets when an order came in...maybe some of you were struck by the same thought. I have made several posts about the impending realignment in currencies. The big news is that we about to see a collapsing Yen and a corresponding high Australian dollar. i.e. The Yen carry trade is about to have a 2nd breath of life. If you jump on this trade, you will be set to buy a foreclosed property in Japan at the end of it. Check out the chart on my forex blog.

My thoughts are that you could buy AUD:JPY as a CFD contract with a group like CMC Markets in Australia, then at the end of the trade, you liquidate and buy a property in Japan. See www.cmcmarkets.com.au.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The cost of living and property overseas

2010-10-09T15:04:00.001-07:00

For those interested in buying (foreclosed) property in the Asia-Pacific region, we think value-wise, Japan and the Philippines make a lot of sense. Of course value is absolute as well as relative, and one needs to consider these values from your perspective of value. This I have done, and it has culminated in reports on the Philippines, New Zealand and Japan. If you like the Philippines, you might also like Thailand. Japan has a great appeal to many young and old because of its rich cultural experience, great services and infrastructure. Mind you a great many Westerners these days go to the Philippines for medical treatment on the cheap. I have used one of the private hospitals and they do have experiences, Western-educated doctors. Anyway, the property reports aside, if you are interested in the countries, then I have blogs pertaining to these countries where I explore more of the issues living in these countries.

1. Living in NZ - In this blog I also talk a lot about Australia - my home country - as they have similarities, and people interested in NZ are usually interested in Australia.

2. Living in Japan

3. Living in the Philippines

There are of course other countries where you can live and even buy property, however I find these countries the least restrictive in the Asia-Pacific. i.e. You can stay in the Philippines by extending your tourist visa for 18 months before you have to leave. But they don't mind if you come right back. Its just a question of paying around P1500 per month. You can stay in Japan for 3 months. They will let you extend, or you can leave & re-enter, in which case they will ask questions, unless you have a girlfriend who will sponsor you. I did, and was able to stay there over 2 years. I also worked these on another occasion. Teaching English is a great way to get sponsored to live in Japan...if you have a BSc/BA degree. NZ allows you to stay 3 months, but you can extend for 6 months (which is the mnimum property lease period), and its easy enough to go to Australia for another 6 months if you want to stick around the region. Many young and elderly people live from campervans in these countries.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The humble chopstick - money making miracle

2010-10-09T14:28:00.000-07:00

Today I would like to pay homage to the chopstick. After purchasing a property several years ago I greatly profited from the humble chop stick. Far from being simply a eating implement, it is also a versatile cleaning tool. Upon purchasing a property in Japan, some of you will simply contract a local cleaner to clean your home. I did it myself and to good effect thanks to the chopstick. It is particularly useful for cleaning the grime around the bathroom and window frames. You simply break the sticks into 'edged' implements and you get considerable value from what is otherwise a free give-away from your local take-away store.

The other treasure when you are buying a home is the Cainz Home Hardware chain. If or when I buy my next foreclosed property, I will be sure to buy near a Cainz Home store because they simply make renovation very easy. Their products are very reasonably priced, and with so many staff, you are bound to find someone with some level of English skill. They are so helpful I was even able to work things out with sign language, as I have limited Japanese. Check out their website for a location guide to their stores.

Another treasure for me is the Hoka Hoka-tei take-away chain store. I swear you do not want to be located too far away from one of these chain stores. They offer a great array of healthy take away meals for very reasonable prices. I used to always get a salmon and rice dish for Y380 ($US5). Very good meals. Make sure you live near one of those...they are everywhere. You will find them overseas these days, but its not the same menu as in Japan. eg. I have seen them in Australia, the Philippines, but that is a Westernised menu, with a far smaller range of choices.

In Japan they have over 2,000 franchise outlets. Sadly their store locator is only in Japanese, and the Google translator will not work with the Flash software. However, if you click on any 'graphical' 'prefectural button on the map, you will have the option of a scroll-selection in English if you remain in Google Translator, so you can find your nearest store.

The implication is that buying, renovating and living in Japan can be VERY CHEAP. Yes, contrary to popular belief life in Japan is not always the rip-off you might have believed. Food is expensive, but you can eat at izakayas very reasonably. The cost of drinking these days is also very reasonable. I often go to The Hub as a drinking venue in Tokyo and other cities because they attract a lot of foreigners, or Japanese people who want to meet foreigners.

I don't drink much now but the roof-top bars are also good value in you like summer drinking on top of shopping malls. The utilities and eating out in Japan are still expensive, but there are work arounds....some of which are not available in other countries. I can keep my electricity connected for months on a basic monthly service fee in I email them. You can also get pre-paid internet services which make a lot of sense. House insurance is very cheap, as is local government rates. Public transport in Japan is very expensive for inter-city travel, but if you get a few Japan Rail Passes before you go....its exceptionally cheap.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Australian property - is it overpriced?

2010-10-07T15:17:00.000-07:00

There is no question that Australian property is over-valued. But we need to acknowledge that it is for structural reasons, and just as the Chinese govt is keeping its currency artificially low, the Australian govt is keeping its property prices artificially high. The Chinese govt using currency regulation; and the Australian govt uses land use regulation. So much for the communist-democratic dichotomy. Near-perfect synergy if you ask me....so we will meet somewhere in the middle, but since we will end up selling our individualistic souls in the process...engaging in moral relativism or moral scepticism if you prefer...we will end up with global collectivism...with govts working in synergy to control your lives. This is probably reason enough to have property or other assets dispersed all around the world. You know about having a diversified asset portfolio...well this is reason enough to spread your exposure. Governments are playing lottery with your money...and lives. The reason they hardly persecute anyone anymore is because you are drowned out by PC-compliant media and organisations, and because they have your money. Is there a conspiracy...its not centralised....and certainly not so conceptually well-planned. Its an alignment of economically and politically compatible interests. They don’t even realise what they are doing to their national values.

So back to the Australian property market. The IMF says the Australian property market is overvalued....Duh! It has been for a decade. The issue is whether its going to fall. The answer is no...at least not nationwide. They might do a few ‘strategically’ placed land releases to the poor, but expect the Australian govt to control prices. You might think they cannot do this. They can so long as they control interest rates (and they do) and the China has a requirement for our commodities. This will be the case for 20 years so no problem. We cannot therefore expect huge increases in Australian property, but you can reasonably expect good growth. Probably bubble? Not likely...at least not for the next 10 years. Strong commodity prices are going to demand interest rate increases. Expect a strong currency too as property prices rise. The AUD is going to break parity with the USD, and do even better. Yep we are probably looking at 1.15. Why? Paradoxically because of high property debt which will give Australians some sensitivity towards excessive consumption. The problem of course is greater import penetration. In a weak global market foreign enterprises will be targeting Australia. So in the long term, we might expect import penetration to balance out those currency gains. Govt spending will also have an impact. The high prices can be expected to remain in the cities because of strong population growth and employment.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Dealing with overlapping foreclosed property boundaries

2010-10-06T12:38:00.000-07:00

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

A person has asked me a question about foreclosed property. From the outset can I say, I love to help people. The problem is that I have the power to help a great many people through books and the internet, and would like to do so in the interests of the greatest number. I also have a personal interest:

1. Your best interests. I put a lot of thought into the book. Asking me questions on the fly is going to waste my time, and offer you a less than satisfying answer. If this person purchased the book, that is fine, but I believe I dealt with this question in the book. In any respect, the purpose of this website is to apply the principles of critical thinking to investment - that is 'your critical thinking'...not mine. Its ok to make a mistake, so long as you self-reflect, learn and improve. I cannot provide self-assurance through every real estate transaction, I can only offer a minimal service. Real estate agents charge huge fees for a customised service. Partly I want to offer a reply to this because he might have received bad advice...depending on his circumstances...only he should decide.

2. Sustaining myself. This is not a non-profit exercise. The less money I make from books, the more time I have to invest and trade stocks. The two do not go together very well, because there is a huge compulsion for me to watch the equity markets, which means researching stocks. This can involve researching entire industries. For this reason, in the long term writing has to be profitable.

I do answer questions when asked on most occasions, however I would hope you would just buy the book because that is why I wrote it, and I really want to finish other books....and of course I need to watch my gold stocks. :)

Now - problems with houses overlapping property boundaries

The writer asks....[I summarise for the sake of privacy]....

I have saved up about US$10,000, so I am aiming for a cheap rural property to start off with. I am looking at a place in a rural area with a minimum bid of about $8,000, the agent I am dealing with has told me to let it go and wait for another property because as it seems, part of the house (literally not even a foot of the corner) is technically on the neighbours property. The house is huge, with enough room for a garden in the back and is in a good location for what I need, so I really don't want to pass up a house in my price range just because the neighbours might try to muscle some cash from me.
I just thought maybe you could give me an opinion on what I should do because you actually know what you are talking about.I was thinking I should bid anyway, and hopefully get it for $9,000-10,000. Then try meeting the neighbours, explaining my situation, befriending them and hopefully they won't mind that a foot of my house goes into their massive block of land. If they were hostile, I could always just renovate the house, as the actual part that is on their property isn't part of the main house and I could either knock it down or hire someone in to renovate the corner off and keep the house within my limits. Or a third option, I thought I could offer the neighbours some cash for the 1-2m strip of land that borders our two properties. Those are just some thoughts I had to get around this obstacle, as I have definitely fallen for this property and really don't want to lose this chance.

My response is that if the property is perfect than you should buy it...but is it perfect. Identifying such 'hot opportunities' is what investment is all about. Japanese people don't like to deal with conflict. If you are a Westerner dealing with a foreigner, they might have contempt for you. Some are very friendly and accommodating though, so it can do either way. There is good news...they cannot demand that you destroy your home, and they cannot destroy it under some vexing threat. They could take you to court, but Japanese tend not to do that. In most cases a person will negotiate to swap some land, i.e. I had a house like that, and the counterpart gave me extra land, and I gave him extra carspace. Some might not want more land in this economy, and might want more money....and they might want excessive money, and treat you with disrespect, so this is the risk, and this is partly why the property is cheap...but its also cheap because its rural. For this reason, I think you could have a gem. Congrats on finding it! But don't jump yet...Why take risks you don't need to. Why not talk to the neighbour and get an agreement before you buy. There is of course the risk he might bid as well. Hmmm...Difficult issue...but not a lot of money to waste. The issue is I think awareness of costs. It might cost you Y50,000 for a surveyor to resurvey the land, and then you need to have the title transferred. I can't recall what I paid for that....maybe another Y50,000. Hopefully you will not have to pay for land, if you can swap. If he is extortive in buying off the 'offending land', it is his concern because you are using it rent free. He can only take you to court....but the issue is...he can make you pay 'psychologically', so you might need to have a stronger 'stoic' personality...and thus like stress. If its a rural person, they can get the community against you. I personally think its far easier if you have a Japanese wife to help negotiate a settlement. Foreigners smell like roses if there is a Japanese person involved. I would suggest that you try get an easement for the land, as well as the mere property boundaries...and I would suggest you ought to give him the better land in any swap, and pay for any surveying. So I think its a good deal for you..as its incremental expenditure....and it could go really well.
I also think a 'corner' of a property is easy for the neighbour to excise, but it will depend on the specifics...but its probably true he does not benefit from any of your land. This is a common problem in Japan. If you have a problem, maybe you can get a public notary, a local govt legal advisor or a person they respect to adjudicate. Or any children they have if they speak your language. Most Japanese children hate their parents, so you might have a real ally. :) joke lan.
I think you should not wait....and I'd just take the risk because if its so cheap, you are merely scaring the neighbour into buying it themselves, as they might not want to live near a foreigner....particularly as its so cheap. Even if they have no money, they may badger their kids in the city to buy it for them. I think its a prize - grab it if its a decent place to live...there are plenty of such houses in depopulating Japan.

Anyway, here is my answer! Bargain, but as a lifestyle block...hard to sell because of depopulation, and it might be hard to rent to Japanese, so try foreigners, as it sounds like you will be close to international airport. Personally, you might find the agent is your competition. Don't deal with agents...or maybe he is just not a critical thinker. I find asking uncritical thinkers can only cloud your good judgement. Be strong! Japanese are overtly 'too safe' so they don't work through problems readily if they can pay more to go around them.

Thank you for confirming 'independently' that there are real bargains in Japan....and so close to an international airport....for foreign buyers. Well done! Glad you asked the question. :) Frankly, you had me at hello! lol

The AUD will continue to diverge from the NZD

2010-09-29T12:10:00.000-07:00

We can see from the following chart that the NZD is in a long term decline against the AUD. We might ask why, and what prospects are there that this trend could turn around. The NZD:AUD decline since 2005 marks the start of huge capital investments in Australia, which has resulted in Australia's national income and savings surging whilst NZ's has gone backwards. This of course mostly arises due to mining and energy investment in Australia. See chart in Google Finance.

The significant rallies in the NZD that you see in that period relate to rises in NZ interest rates, and the NZ Treasuries efforts to quash NZ domestic spending....which was mostly on the rural batch, as well as the ancillary jet ski, motor bike, fishing boat and jacuzzi which went with it. Today the batch is perceived as a waste of money, courtesy of a change in government policy, which has ceased to reward such lifestyle decisions. Now, a great many NZ'ers are selling their 'sections' they use for trout fishing, or their holiday house by the sea. The market will probably resume however, and the strong Australian dollar might just be the impetus.

Australians have to be asking themselves whether anything is going to change. The answer is Yes, but not for probably another 5-10 years. Why do I say that? Well, NZ has to absorb a great deal of housing debt, so there is not going to be any significant spike in interest rates yet. Australia has even more debt, but far better prospects for paying it off. There will also be a stronger Aust economy, with the prospect of stronger interest rates making it even easier for the AUD to outpace the NZD.

It might not be so evident yet, but I see NZ having its own resource boom in a few years. Why? Well, NZ is a relatively small, unmineralised country. Its rocks simply have not been around long enough, and the mineralised core from the current mountain building will not be exposed for another 10 million years. The country does however have large tracts of maritime territory. In fact its the size of the EC. This maritime territory is known to possess vast resources of methane hydrates. In addition, these offshore sedimentary basins may contain vast oil & gas resources. They have not been significantly tested. Even NZ's sole producing basin - the on & offshore Taranaki Basin has hardly been explored, particularly at depth.

It was only last year that the country commissioned a relatively small oil & gas field called the Tui field. The impact of the field on NZ's terms of trade were significant, despite its small size. The Chinese, Indians and others are going to be looking for cheap energy inventories in future years. With access to such resources tied up by major oil & gas producers, extorting high prices for their products and resources, its probable that places like NZ are going to attract a greater share of the exploration dollars, and some of this will lead to success. A significant find is probable, and for a 4.3mil population, its probable that it will make a big difference, not only in pushing up the currency, but by stimulating interest in NZ's offshore basins, which will attract even more interest.

This will take 10-20 years to unfold of course. The implication however might be significant if you perceive NZ as a nice place to retire, or to buy a holiday house. In the short term, the NZD is certain to continue its fall, but it might be a good idea to consider these factors when considering retirement in NZ. In the short term however:

1. NZ immigration is mostly outwards to Australia - that is - Australia's is growing faster

2. Australian export volumes and prices are fairing better - even though NZ milk and timber is doing well

3. Australian business investment is phenomenable, NZ lacklustre

4. Australian savings are far higher

5. AUD will out-perform the NZD for the next 5-10 years, so expect the NZD and AUD gap to continue its divergence

6. Thereafter (say 15-20years off) you might expect the NZD to recover, and do rather well based on my expectations for the recovery of methane hydrates and conventional oil & gas offshore, as well as the mining of coastal titanomagnetite (titanium-rich iron ore), which will by that time be far more strategically important. Currently Ti-Fe is hard to separate and use, and the appeal of high strength steel alloys is only just starting to take off. NZ deposits are relatively remote, so early mining will be of Chinese, PNG and Russian deposits.

The other important factor when you make these Aust-NZ comparisons is to consider the extent to which NZ will benefit from integration with Australia. The issue of course is that NZ is a lovely place, but nothing happens here. If we want to look at what difference greater integration is going to make, then we only need look at South Australia. Does it benefit from being part of Australia? Not significantly, because like NZ, its a small population remote from the rest of Australia. And NZ is split into two islands, so its like two Sth Australia's. Australia is very much concentrated on NSW, Victoria, Queensland and WA. The other states are really mere appendages to the demand created by these states, whether its in existing population or population growth-related demand.

The appeal of NZ integrating further with Australia is mixed. It will make a marginal difference to NZ's competitiveness, but at the same time it will make it easier for NZ'ers to go overseas to capture some of that income disparity. Of course they can always come back to NZ in around 12 years time (to retire) when the currency bottoms against the AUD. The big difference for NZ will come from access to Australia's capital markets. Already the countries are talking about integrating their respective legal systems. This will make it easier for the countries to jointly regulate and administer business. This will make it easier for Australians to buy property in NZ, and it will make it easier for NZ'ers to invest in Australia, giving them access to a broader variety of investment opportunities. The appealing aspect of this is access to mining investment opportunities, and probably technology investments, as well as helping NZ technologists to finance their developments given the lack of savings in this country. This will of course aid NZ financial literacy....which has already been favourably impacted in Australia by compulsory superannuation, and most particularly a plethora of privatisations there. In NZ, the bulk of the funding for privatised assets was offshore.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Political transformation could aid property in Japan

2010-09-16T19:26:00.000-07:00

The spectre of a political revolution in Japan might occur sooner than you think. Political crises have always been a strong factor driving reform. Most often change occurs because of crises. Things get to a point when something has to give. Maybe it was the national debt – currently in excess of 200% of GDP. Yes, I know, its owed to Japanese people, but it either has to be paid by taxation, immigrants or currency debasement.

In recent times, we have also pointed to the prospect of political change driving political reform. We see evidence that this is already happening.

Osaka Governor Toru Hashimoto has established a new party One Osaka comprising 82 candidates, among them 40 former LDP members, who will contest the local elections next spring 2011. The Japan Times is comparing the development with the “Meiji Restoration's abolition of the feudal clan system and the establishment of the prefectural system”, and rightly so. It conveys a mass realignment of political interests.

The Osaka LDP chapter has taken steps to expel the 40 LDP members from the party in a bid to stem the tide of party defections. The reality is that any sign of popularity for this party is going to result in even more defections. We might ask however – is Hashimoto such an inspiring leader? What can he do if he becomes PM, given that his supporters might comprise the old members of the LDP? Isn’t it just the same? Perhaps the difference will be the amalgamation of all pro-reform members in the parliament. So what will unite them other than rhetoric? Is there any basis for consensus? It’s hard to say. But change can’t hurt. We will have to watch to see whether there are further defections on a national-scale. Already there is talk of a coalition between Hashimoto’s One Osaka Party and Your Party, which holds 10 seats in the Upper House and shares a number of policies. Expanding the coalition prior to next spring's local elections and the 2013 Lower House election is likely envisaged.

Hashimoto established One Osaka to unite support for his fiscal and bureaucratic reform plans to integrate Osaka City with Osaka Prefecture to form a ‘united’ Kansai state. Unfortunately the party’s plans seem to focus upon public works projects in order to facilitate more trade. This policy platform strikes one as more of the same.

The question is whether these former LDP members will form a national government in the future with the LDP, or will they end up forming a coalition with the DPJ? Probably the former with new, hopefully inspiring leadership, but I see no evidence of that. It looks like change for change's sake.

Of course these developments are important because they could give support for Japanese property investments.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Earthquakes - Lessons for property buyers

2010-09-11T01:01:00.000-07:00

In our latest Japanese foreclosed property report we have added a great deal of information to assist you to avoid the damages caused by earthquakes. Japan is amongst the most unstable or active in the world, alongside places like Papua New Guinea and Indonesia. We also have a NZ property report, and since there was a recent serious earthquake in NZ, we thought we would offer some general public information to assist property buyers. I have some understanding on this issue since I studied geology and geophysics at university in Sydney.

There are some basic issues to understand:

1. Earthquake risks are not always understood because fault lines are not always know. This is because modern human records cover a far shorter period of time than geological processes. Active or previously 'inactive' fault zones can be concealed by recent sediment cover. This is true of the Kanto plain, as well as the Canterbury Plains of NZ.

2. Earthquakes can be zones of weakness, and perhaps not just a single plane of weakness. It might be better to consider them 'crimple zones'. They comprise jagged lines of weakness with zones of intense distortion as well as zones of dilation, where stresses vary from weak to intense depending on the competency of the rocks involved.

3. Earthquake risks are not equal for different regions. Competent basement or foundation rock provides greater security than loosely consolidated sediments. For this reason, thick piles of sediment pose greater risk

4. Unconsolidated sediments pose particular concerns where they are water-saturated, i.e. In areas of high rainfall or low-lying areas. In these cases, sentiments in the 'crimple zones' can undergo liquefaction, in which case they lose all strength and behave like a liquid. This can result in the foundations of your house sinking into the soil in the earthquake zone.

5. An earthquake zone can be a broadly-defined, as is required to relieve the stress. i.e. It is common for a transform fault like in NZ to involve multiple faults, with the outer faults defining the fault zone.

6. Those regions which were historically active for earthquakes might not adequately define zones of future vulnerability. For the reasons already mentioned, old zones of faulting might be concealed by extensive flood plains, as was the case with the Christchurch earthquakes in Sept 2010.

7. A serious earthquake can result in a large number of houses being heaved off their foundations, which are contorted by the ground movement. The houses can sink into the soil, and its common for any brittle structures to crack and fall into the house, i.e. In Christchurch, most brick houses in the fault zone were destroyed as they crack up. Chimneys made of brick often toppled into the structure, posing a risk to residents. Most of these houses need to be demolished and newly built, even if they look fine from the outside. The door hinges might not work properly because of the distortion, just as your car hinges can be poorly aligned after a car crash.

8. Different countries have differing levels of preparedness for coping with earthquakes. Japan is far better in this respect than NZ. Avoid brick homes in NZ, even though they have increased in popularity. The old weatherboard and modern galvanised sheet homes probably make the most sense. Houses on concrete pilings (i.e. posts) rather than concrete slabs make the most sense, though that ultimately depends on the thickness of the foundation, the size of the slab, the competency of the host rock, and the saturation of any unconsolidated sediments. Avoid low-lying areas with unconsolidated sediment foundation.

In the Japan report, I offer a map showing regions of vulnerability to earthquakes based on the Japanese governments analysis. For NZ, there is a transform fault going up the centre of the South Island, and up through Wellington to Hawkes Bay on the North Island. The Taupo Volcanic Zone has not historically been an area of intense earthquake activity, though it is active as well, since that zone is spreading apart at 10cm per year. There is a fault going down to Wanganui City (population 40,000). This region experienced a 5.1 earthquake in Aug 2010.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

Author Andrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Table of contents for 2010 property reports

2010-09-11T00:55:00.000-07:00

For interested persons, we have moved our table of contents for our 3 latest eBooks pertaining to:

1. Japanese foreclosed properties - looking at the court-administered foreclosed market primarily as this is where the big opportunities can be found at huge discounts to private sales.

2. Philippines property - foreclosed and more typical counterparty deals

3. New Zealand Property - normal industry trade sales. Foreclosed properties are handled through the normal market mechanisms.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Advice for Japanese savers

2010-09-08T02:48:00.000-07:00

The Japanese Yen is close to a record high point. This is not likely to be sustained because of the need to maintain Japan's export competitiveness as well as the need for the Japanese government to finance its current domestic debt. I therefore advice Japanese investors to place some of the Japanese savings in foreign assets in order to protect themselves from a future currency debasement.

The question is where?

I would suggest several attractive destinations:

1. High yielding Philippine property. It offers yields of 8%, it is close enough to enjoy as a holiday house, its a booming economy with strong population growth. We have a report in English.

2. United State foreclosed property for future capital and yield growth, but also immediate currency protection, and the prospect of holidaying.

3. Mining stocks in the USA - such as gold and copper stocks. See gold price

Please excuse my Japanese (Google) translation:

日本の円は過去最高点に近いです。これは、必要が日本の輸出競争力を維持するためにのために持続する可能性はない。私はそのためのアドバイス日本の投資家は、将来の通貨変造から身を守るためにいくつかの外国資産の日本の貯蓄を配置する。

問題はどこですか

私はいくつか魅力的な目的地をお勧め：

1。高降伏フィリピンプロパティです。これは、8％の利回りを提供し、それは十分に近い別荘として楽しむためには、強力な人口増加との好景気。私たちは英語でレポートしています。

2。将来の資本と歩留まりの成長のための米国国家抵当流れプロパティだけでなく、即時通貨保護、および休暇の見通し。

3。アメリカの鉱業株 - 金と銅の株式など。See gold price

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Property investment - USA or Japan?

2010-09-08T02:13:00.000-07:00

Anyone noticed how the Japanese Yen is close to its previous highs. I am sure I have wrote about this before, however it kind of defeats the idea of foreigners who are non-residents investing in Japan. Anyway you can check out the price action on Google Finance. There are few currencies which are performing as well as the yen. In fact I could not find one. I was expecting the AUD to hold its own, but its about where it was 5 years ago.

The implication is that it only makes sense to buy property in Japan if you are planning to live here for a while, and you will otherwise be paying high rental yields. Even then, I think if I was a US citizen living in Japan, I would be sending my money to the USA and buying foreclosed properties or gold/copper/tantalum stocks, and perhaps a few other strategic metals. There are two reasons:

1. The very low USD compared to the yen

2. The depressed property market, which must be close to a bottom.

3. Metals are denominated in USD so benefit as the USD falls

4. The US will benefit from immigration and recover quickly, whereas Japan will be a slow process

5. The Yen is destined for the same debasement as the Euro and USD. Why? Because the govt has to repay a lot of debt to the people. It does not have the courage to raise taxes when demand is so weak, and for the same reason, it is not going to be cutting spending so much. It has no choice but to print money. That equals debasement given that the debt is 200% of GDP. Yes, I know its owed to Japanese. But last time I looked, Japanese investors expected interest, and they don't like to be taxed.

If you are looking for a protracted US recession of the type experienced in the 1930s, think again, it will not be as bad for a number of reasons:

1. There is no huge over-capacity in the world

2. The central banks back in the old days made a lot of mistakes, so the commercial banks lost a lot of credibility. There has consequently been no run on the banks like in decades past. Too soon to say? I don't think so. Most are adequately capitalised, and they are backed by paper money. Worthless? Yep, but so are all the paper currencies, and that is why I'd go for gold for protection against debasement.

3. The global story is not as bad as indicated for several reasons - (a) The trade liberalisation of China, India, Latin America, Africa has resulted in an escalation of commercial activity on an unprecedented level. This is reminiscent of the sugar, coffee, cotton booms of centuries past. We are having the same technological boom, but on so many levels, i.e. Miniaturisation of products, high strength steel alloys, outsourcing to Asia, the internet, voice over the internet (i.e. less travel), work from home. There is more coming in energy saving technologies and solar cells, new steel making technologies like HIsmelt.

If you must buy property in Japan, and we like to help, I'd confine myself to a lifestyle home in the countryside. You can avail of the Japan Rail Pass and travel around the country on a tourist visa from your new-found home base. That is what I do. A $300 gets me a week on Japan trains. I have the odd night out on the far-reaches of the country, but otherwise I return home. i.e. Get up early to get to Shibuya by 6AM. Shinkansen to Yokoyama, overland train to Tottori or such places, staying at some lodge, drinking in some small bar with weird people, then next overland train along some great canoeing/kayaking rivers. Its actually amazing how much forested wilderness Japan has.....if only the Japanese people could afford to see it. But you can with a Japan Rail Pass!

NZ Property Guide Philippine Real Estate GuideForeclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Talk of BOJ weakening the yen

2010-08-28T19:24:00.000-07:00

Almost on cue the Japanese government is calling on the Bank of Japan to ease monetary policy. Such pronouncements of course provide support for the Yen, but rest assured there will probably be a crisis of some form to get the yen to 81Y support.

See the full story at Japan Times.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Philippines property - contrarian investment

2010-08-28T16:29:00.000-07:00

Property investors beware. You are about to be introduced to one of the best opportunities to buy property you will ever have. The Philippines has long been the 'dislexic' tiger of Asia. It always had a lot of promise, but it could never overcome the legacy of corruption and inept administration. There is perhaps ever reason to think that a solution is not far off, but it will be another 6-8 year. In the meantime, there is every reason to think that the economy will perform ok.

There is good reason to think you will get a great opportunity to buy property there. The reasons are explained in this post I wrote about the current president Noy Noy Aquino. I believe there is very good reason to expect a 'Thai style' military coup. This is of course the time to research, to set up your bank account, and to be ready to transfer funds. During the last crisis - the Asian Currency Crisis - a large amount of money was made and lost.

The implications are that you will never get a better chance to buy property in the Philippines. Any such military-police takeover of government will result in the Philippine peso plummeting to new lows. Check out the currency here, whilst I have indicated support levels on the following chart.

This is the time to be a contrarian investor - both for foreigners and Filipino expatriates. The Philippines is a good long term story. The population is growing at 2% per annum, the economy benefits from a lot of remittances from expatriates abroad, it is the focal point for outsourcing of Western businesses professional services like call centres, etc. The benefits will not be confined to Manila. It is also just a 'stones throw' from China, so expect a lot of tourism, investment when China becomes overheated. The Philippines already has a large Chinese community.

We have written a Philippine Real Estate Guide (2 eBook set) which describes the opportunities in the Philippines property market.

Philippine Real Estate Guide

Foreclosed Japan Guide NZ Property Guide AuthorAndrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Premium NZ property anyone?

2010-08-24T22:12:00.000-07:00

Harcourts NZ, the local property brokers, have flown company representatives over to China and Hong Kong in order to sell a package of high-end NZ properties. NZ is of course an appealing market because of its idyllic natural environment, however given the small size of the local economy, during an economic squeeze like the current recession, it is often difficult to find buyers.

Prospective buyers will need to contend with the local foreign investment restrictions. Among the properties available for purchase are:

1. Private islands

2. Agricultural properties

3. High end residential apartments

Prospective buyers might be interested in our report on the NZ property market.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Should you buy property in Japan?

2010-08-22T16:02:00.000-07:00

Now is not a bad time for Australians or Canadians to buy property in Japan, but Americans ought to be sending their money the other way. Consider my latest blog post in my Forex blog. The USD is narrowing the gap with its lowest exchange rate for the yen ever. I don't expect the Yen to breach this level by much. There are 2 reasons:

1. The Japanese government has their own deficit to finance, as well as wanting to stabilise deflation in the country. For this reason I expect the Japanese government to resort to printing money in order to stimulate the economy. This might be performed by offering greater welfare. Certainly the Democratic Party of Japan is the party to implement such a policy. This will of course stimulate some domestic spending.

2. The other reason is the uncompetitiveness of Japanese exporters. This is not a desirable quality, though perhaps there is no hurry, since global demand is pretty weak.

The US presents a far better prospect for investment at this time, and the prospect of the USD falling to 81.86 yen over the next few weeks provides you with the best opportunity to shift your money. This is easily said if you hold Japanese equities, but a little harder if you are holding Japanese property.

Of course the fact remains that if you are living in Japan, you need to live somewhere, and if you are planning to spend a long time there, you may as well buy a place there. But I would only buy if you are planning to buy in the outer suburbs (with are cheaper). I would not be buying into any growth boom. But the very high yield of 12% does make buying more sensible than renting. Of course since is Japanese low interest rates you are using, there is some scope to leverage your investment in Japanese property. Rest assured that Japanese (and indeed international) interest rates are going to remain subdued.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Australian property - Morgan Stanley misguided

2010-08-17T13:52:00.000-07:00

I am going to weigh into the Australian property debate. The issue was sparked by an academic Steven Keen, who was unsurprisingly proven wrong with assertions of a dire collapse in Australian property prices. Its just not going to happen. Now there is a guy from Morgan Stanley saying there will be a slow decline in Australian property prices. I care to differ. The reasons are the following:

1. Interest rates in Australia will not rise, the Australia dollar will go up. Is that a concern? No, because I think commodity prices will be buoyant, and the govt would prefer commodity producers to suffer rather than homeowners.

Sydney, CBD, 2009

2. There is a raft of huge energy, iron ore, coal, coal seam gas projects to be developed in Australia, each spelling a huge amount of investment in the country

3. There will be a raft of Chinese and Indian investment in these projects over the next 2-3 decades, and that will free up Australian equity to fund all manner of investments and consumption, not to mention tax receipts.

4. There is still strong (i.e. bent up) demand for first homes and home upgrades, and that will continue

5. Neither government is going to allow land releases to severely undermine urban land prices. I see utterly no discussion on land zoning.

6. Mineral exports will increase over this period because of strong demand from China and India. China is not going to stop spending. It is finding even more reasons to invest. It now has to produce a lot of its own iron ore because Australia, Brazil and India are playing hard ball. So they will need new steel mills, new power stations, new railways, etc.

Mosman - Lower North Shore, Sydney, NSW

We are in the midst of an economic era which will never be seen again. There is really no historical precedent for the period we are currently passing through, and it will not be repeated again on this scale. You have half the world's population undergoing liberalisation, at a time when population growth rates can only fall, so the stimulus is never going to be greater from population growth. Even if governments ceased to be centrally controlled, and reason was the standard of value, it is doubtful that the current wealth production would be achieved because of the reliance on consumption by politicians (i.e. Because they undermine productivity through their very existence).

For this reason, I don't see a collapse in Australian property prices, or even a slow leak. I see a government which will be looking to achieve a sideways movement in property prices in order to allow household debt levels to come down. If they spark a property bubble by preventing interest rate increases, they will leave voters with no one to blame in an uncertain international climate. They will be able to do this because employment, immigration and capital inflows will sustain economic activity and per capita incomes.

There are however some caveats to this:

1. If the Liberals win government, they plan to cut immigration so this can be expected to reduce demand for property. I don't think this will have too much difference.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Buying foreclosed property in Japan

2010-08-13T14:57:00.000-07:00

It has been a while since we described the opportunities to buy foreclosed property in Japan. The lowest priced properties are of course in the rural areas. For example, in order to impress upon you the opportunities, I did a random search of properties on the http://bit.sikkou.jp website.

You will need to use a translating tool like Google because the website is in Japanese. Court documents are in Japanese as well. I am used to dealing with these documents because they are in a standard format. Maybe you can find a Japanese student if you need help. Pictures convey a thousand words, and the court gives you 10-20 photos. They are very fair minded, with an attention to detail.

I chose one of the cheaper rural areas on the more populated East Coast, close to Osaka City. The region is Wakayama. It is a Y2.1mil ($US22,000) two-storey house, basically $10K for the house, $10K for the land. Some houses have been trashed. This place is untidy, has some 'collateral damage' from the alcoholic who is currently residing in it. How do I know? Well there are crates of alcoholic bottles sitting outside the premises, and at the time the house was photographed, there was still someone living there. If you visit you can find out if he is still living there. Talk to the neighbours. The property detail inside also suggests atypical damage and regard for the property, but really such issues are cosmetic given the price you would be paying. Structurally, the building is probably find. You will likely go there to confirm. You have a period of time during which the courts will help you evict the previous owner. That is of course assuming its a problem. Most leave of their own free accord. If they don't most people simply pay them off rather than go to court. There is a process whereby you can pay the court to store their possessions, but since the evictee needs money rather than a court drama, most simply leave with your cash incentive. Better not to deal with drunks with a chip on their shoulder. How do you know? Talk to the neighbours, establish if they have moved out already. Fortunately, the courts photos give you a great deal of info on the tenants/owners, and they are very fair in their property description. Remember, in Japan you are dealing with the court system, not some agent with a vested interest. This $US21,000 house is 102m2, so its typical Japanese/European size. The land size is going to be small, but if its a holiday house, I think most of us would be happy with a 'crap hole' if you are only paying $21K. Land rates on this property are probably $300 per year, given the location and age of the house, and given the small investment, you would not even bother insuring it.

These types of places are great if you are free to work from home and travel, like being a programmer or graphic designer. In Japan you can get pre-paid internet modems, and no place is too far from the shops. A scooter is another great accessory to get around, or because of great infrastructure, even a bicycle is enough. What more do you need? You need to look at more properties. I use the hyperdia.com tool to find train stations to locate a property, then the map provided to find the specific address. I use Google Maps to look around the vicinity of the property, both the street and satellite view. Train lines are important. Make sure you are buying land, as opposed to buying a house with a lease of land.

All the best with your search!

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Australian property market - election implications

2010-08-10T23:47:00.000-07:00

The appeal of the Australian property market might take a hit next year for two reasons:

1. If Labor is elected mining investment will be hit. The response might take a few years to be felt because most advanced project investments are committed.

2. If the Liberals win they plan to reduce immigration to 170,000 from 300,000 currently. The implication is that housing demand will be weaker, and thus property prices more subdued than they otherwise would be in the cities.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Comparing NZ and Australian property markets

2010-08-09T13:46:00.000-07:00

St Arnaud Lake, South Island, New Zealand

Here are 10 good reasons why not to buy property in NZ by Bernard Hickey at the NZ Herald. I might add a few more if it pleases you, as well as some good aspects:

More bad news

1. Food prices will perform well in future, though I think Australia will do better with food, minerals and heaps more minerals. Australia kind of has a global monopoly on coal & iron ore development. I can probably identify 60 projects in Australia which have the capacity to last 30 years. There is just so much ore. Even the crappy 30%Fe can be processes simply for 55%Fe. Its not to far from the coast, and there is good infrastructure, and foreign buyers of the stuff prepared to spend money to develop it. There is going to be a lot of money going into Australia. Meanwhile, the Chinese are trying to buy into NZ farming, and voters are strongly against it. So don't expect much foreign investment in NZ.

2. NZ just doesn't have much of a selling point to attract investment. Unless you are a niche medical technology developer, a graphic design or web-based business, you are likely to struggle getting business on the international stage. Its expensive and time-consuming to get to NZ. So is NZ destined to be just a 'retirement hub' where people come to die? I think so.

3. The government finally looks to be doing something about welfare dependence. There are 386,000 NZ'ers on welfare benefits receiving a total of $6.5 billion a year. The biggest rout seems to be single parenting. There 100,000 single mothers who have 180,000 kids among them. No doubt most of them care less about working, and most are going to be terrible role models, embedding an 'inter-generational' culture of welfare expectancies or dependence. The problem is that NZ really has to create jobs for these people.

4. The government is actually making NZ less attractive for retirement by increasing the GST to 15% to fund tax cuts. Having said that most retirees are living on foreign income, and that translates well into low-priced NZ dollars.

by Andrew Sheldon

Some good news

1. There is actually the prospect of some low-income Australians retiring in NZ in coming years in order to benefit from cheap housing and falling airfares. This will also have a benefit for Australians travelling here for tourism, and buying holiday houses. In NZ you can buy a holiday house for $NZ80,000 ($A65,000) near the beach, in Australia they start at $A350,000.

2. Some of those NZ'ers working in Australia's mining industry are going to come home to NZ. Particularly if they are working in the mines in WA, where they are less likely to meet girls and settle in the country. They might thus be more inclined to save and return to NZ with a nest egg.

3. The Australian population is growing so much faster than NZ, 2% compared to 0.5%. There is a flipside however. Australian property is highly regulated. You have 21 million people sharing a continent slightly smaller than China, and it restricts urban land releases, which keeps prices artificially high. Subdivision is very difficult in Australia, even in rural towns. This is because local & state governments don't want to fund infrastructure, whilst also allowing 'tax creep' based on property prices. In NZ you can buy property or 'sections' in rural areas, in town for as little as $30-60K, and you can stick an old relocatable home on it for $50K (including expenses), or build a new one for $120,000 plus. In Australia, to benefit from those dynamics, you will need to live over the Great Dividing Range on the Western Plains, some 1000km away from Sydney, and maybe 60km from a large town, in something resembling a 'ghost town' which has lost all its services. You will be pleased when it rains, because that will be the most exciting thing that happens.

Northing else I can think to add. I think it was a good article. Basically I conclude:

1. If you have money or want to make it, you live in Australia

2. If you have money and want to leave it in your home country, you live in NZ

3. If you have no money and no desire to make it, no one wants you.

------------------------------------

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

The upside in Japanese property

2010-08-07T21:09:00.000-07:00

A student of Japanese history cannot help but be impressed by how this country has turned itself around in the past. These periods of growth tend to be proceeded by protracted periods of stagnation, whether because of war or economic malaise. These situations include the post-WWII recovery and the Meiji Era expansion. One might be inclined to ask - if Japan has a hope of recovery - where can be expect such a recovery to come from. Clearly if such circumstances are to prevail it will be because of a 'cultural revolution'. Not the false promise of a collectivist revolution as in China, but a capitalist revolution. It is easy to conjure up explanations as to how that might happen. For example:

1. Women's liberation: Japan has yet to really feel the impact of the women's liberation movement that struck the West. In the West it was radical women who drove it, and the government who pragmatically recognised the benefits of taxing more household members. Today most women are proud to call themselves housewives. We might however see different values taught in schools and on TV educational programs in coming years.

2. Immigration: Most Western governments who have abused their debt-financing capacity (NB: I think all of them now since Australia and China pragmatically joined the club) have recognised the power of immigration to boost internal demand during periods of recession. We have all seen the levels of consumption in developing countries like Vietnam. Take one of those destitute Asians however and put them in the West, and suddenly you have a booming economy. In the last 3 years, Australian immigration numbers have jumped from 140,000 to 300,000 per annum. Rest assured that other countries are doing the same way, because its easy stimulus for the government, and who would not want more taxpayers to fund unsustainable debts. Might we expect the same in Japan? This would require change in Japanese values or 'tolerances to change'.

3. Central administration: Revolution anyone? I will be writing a lot more about this in future, but another basis for change is likely to be political transformation. Personally, I don't expect Japan to be a leader in political theory, but they do make great followers when they see how things can work. If any country shifted from a centrally-administered political administration, i.e. national & local assemblies referred as 'democracy', we would see a huge increase in productivity. For some of you, you will jump to the 'false dichotomy' of totalitarianism as the only alternative. But in fact there are other approaches to government. This is beyond the scope of this topic, but the impact would be significant.

4. Parenting & values: Advances in parenting and general personal values could also have a profound impact on Japanese people, particularly the youth. Such changes could also herald a huge improvement in the innovativeness of Japanese people.

5. Population growth: You might wonder if women might be encouraged to have more children. I think any such campaign is less likely to be effective without a deep-seated change in values.

Japan is already a hardworking nation of people, so I do not see much progress possible in terms of effort, but rather values which could culminate in favorable changes to how those people work. There are huge advances to to be made if people recognise and understand the opportunities. So do they? I don't it. Like I say...it will start somewhere else. Maybe the USA? And how long before Japan realises the personal relevance?

So long as Japan remains a collectivist country, the challenge of change is likely to depend upon external factors. We might expect this to be:

1. Debt crisis

2. Political stagnation

3. Charismatic leader

The fact is that the Japanese have not suffered enough that they are willing to change. That will change over the next two decades as power shifts to younger people. There will come a time when an appealing politician eventually emerges.

This is likely I think to result a dictatorial regime, though it is unlikely to embrace militaristic ambitions or persecution of foreigners. Yet few nationalistic regimes do when they start out. I actually don't expect a regime which needs to rely upon external markets for trade and 'population growth' to entertain such persecution of minorities. More probable is radical reform. In the context of Japan it is going to be concrete, sweeping and probably economically-focused.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Where to get good info & support in Japan

2010-08-07T15:57:00.000-07:00

News on latest book. Even if you are too tight to buy a book on Japanese foreclosed property, Japan is a fascinating place. One of the best places to learn about it, and how to live there is through the internet. A lot of forums have lost their patronage because of 'losers' posting nonsense content on them. JREF.com is one of the better ones. This is a post I made there on Japanese foreclosed property, so you can follow the discussion. When you first arrive in Japan you can get great advice on how to live there. e.g. The best phone to buy, where to buy duty free, where to get your computer fixed, etc.

Question by JonnyAndDeeDee:667952:

"Lots of good information here! Thanks to all contributors..
I plan to buy foreclosed property in japan soon, and as this thread was first started a couple of years ago, I was wondering if somebody could tell me if the market is better or worse than it was 2 years ago. I know that the GFC has meant that property prices fell, but how are things now?
I plan to invest about 15million yen in several properties in and around the outskirts of Tokyo. Perhaps a ski lodge in Nagano or hakuba aswell. Do you think this is enough to get started in the business? I plan to research all properties properly, and I am skilled in all construction/maintenance work.
I have not yet purchased the ebook, but I plan to in the near future. Anybody willing to give a book review? Thanks for any replies in advance".

My reply:

Good for you. I think you will find the general property market is inclined recover from here because of inflationary pressures, i.e. In nominal terms, so that does not necessarily make it is a good investment. The yields do remain very attractive, so it makes sense to buy a place if you are living there a few years to avoid paying the high yield as rent. It does depend on where you buy. More important than location is the availability of property. I did not waste any time to buy because I was worried about the courts running out of stock. Its been 20 years since the property bubble broke, so I'd want to buy as soon as possible. You do have to ask yourself whether buyers 10-15yo who paid too much however are losing their jobs, will also be in financial trouble if the lose their job. From this point I think however banks are likely to recognise that the property market is going sideways, so they are less likely to rein in non-performing loans. Japan households are not over-leveraged, they are cashed up.
The Japanese govt is still weak, so still no sign of a reform agenda. The prospect of a 2-house majority was just missed, so unless we see LDP MPs crossing the floor, we are probably not going to see change. I do not think you will see higher interest rates in Japan because of high public debt. More likely:
1. Inflation from printing money
2. Increase in GST - looks likely
3. Tax on property - my expectation

Disclosure: I wrote the report to which you are referring. Any review of my book might be outdated as I keep adding new sections. Reviews are little good anyway because they presume certain reader knowledge. Property is the most important asset you will buy in your life, so its not a good idea to be cheap on advise. It only takes one idea to save you heaps. In this last 3rd edition, I added a section on where to buy to avoid earthquakes, discussion of land leases, more on risk management, and I updated the economics section, as per usual. A few nagging grammatical/spelling mistakes too.
Most people who buy are Westerners with money, partner, investment bankers, investors and of course Westerners working in Japan, +/- Japanese partner. Some know Japanese, some don't. So pretty small market.

There are a number of good forums like JREF, Gaijinpot.com and Japan Forum. Japan Times is the best English newspaper, and there are a number of English free magazines like Metropolism which you can pick up in bars patronised by Westerners.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Interesting property markets

2010-08-02T14:53:00.001-07:00

New Zealand (North Island, countryside)

There are several appealing markets in which to buy property. Among the markets we cover, we consider the best buying to be the Philippines for capital growth, as well as satisfactory yield. Japan offers compelling yields, however there is less prospect of much capital growth in the medium term. Mind you, since the government will likely resort to printing money in order to pay off the public sector deficit, expect some nominal price increase in property and equity assets, but of course that will be inflation-based. They might however be offset by higher property taxes and a GST increase. I see no new taxes in the Philippines, just higher compliance measures. Despite high nominal taxes, people in the Philippines pay amongst the lowest taxes in the world, i.e. 16% of GDP. Its a good deal if you can scam it. Don't be a proud taxpayer....most of your taxes goes to corrupt people, or serves inefficient purposes. You are the best custodian of your money. No one respects it as much as the person who earned it. That which was well-spent you would have been happy to finance if you had a choice. Don't believe you had a choice when you voted in the last election. You have no real or effective choice.

The NZ property market is less appealing at the moment. The currency is consolidating around 0.70 USD and there is the prospect of rising interest rates constraining price growth. Equally problematic is the exodus of NZ'ers to Australia. NZ population growth is just 0.5%, with the exodus of NZ'ers balanced by Asian and other immigrants.

Some commentators are expecting a collapse in Australian property prices. Frankly, I don't see it when the economy is supported by a lot of commodity projects and immigration. Expect business investment in the mining & energy sectors to remain strong. The Resource Rent Tax interestingly will hurt, particularly if they talk about it, then decide to defer it, or not do it. It will leave investors in limbo.

Another positive is the tight housing supply. There is no doubt this is due to the hefty increase in immigration. Immigration to Australia has risen from 100,000 in 2004 to almost 300,000 today. It was doubled from 2007. Clearly the government saw immigration as a means of avoiding recession. It looks like the govt wants to use immigration and mining taxes to finance the retirement of babyboomers.....as opposed to doing what it ought to do....removing the cap on private sector activity. By cap I mean the excessive involvement of government in the economy...stupid arbitrary statutory law, subsidies, welfare transfer payments, etc. Sound idealistic? Well, you would be surprised how counterproductive these measures are at remedying problems. Government solutions are the problem.

1. Housing affordability a dream? Blame the arbitrary restrictions of government zoning which prevent land lot availability.

2. Can't get a job? Blame government cumbersome planning approvals, and most particularly public infrastructure funding and minimum wage limits.

3. Can't make money in a volatile investment climate? Blame government for distorting 'free' markets to ensure they get elected. They don't care if they channel billions into wasteful, unproductive investment, just as long as they get elected.

4. Can't find good workers? Blame the public education system which offers a low-standard for the private sector schools, which fake it, and sell their reputation.

5. Can't even make good friends? Blame a political culture which sets the standard in self-delusion, political correctness and subjective value judgements. Same for forging lifetime relationships. Divorce rates manifestly come from the same problem.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Japan's debt - is it a crisis?

2010-08-02T03:52:00.000-07:00

Japan periodically attracts a lot of attention for all the wrong reasons. There is no question that Japan has a large debt. The question though is just how serious the 'crisis' is. I would suggest the problem is serious, by there are authors who envisage a dire crisis. Such authors conjure up a dire scenario where Japan is left with the sole inevitable need to raise interest rates, and that this will of course force up interest rates around the world. Think again.

Almost all of Japanese indebtedness is to the Japanese people. The implications are several:

1. Japan can simply raise taxes to reduce debt. This is not attractive when you are trying to encourage spending, but its not impossible when you have little choice. The GST seems to be the most popular choice, but I would not be surprises to see a land tax.

2. Japan can reduce public spending to reduce its debt obligations. This is not easy for a social democratic party, however its an option, particularly if its an efficiency drive.

3. Japan can print money to repay debts. This is easy because all the debt is Japanese, so no forex implications.

4. Japan can boost immigration. This is not a popular policy, but in some point in the future, people might accept it. I doubt it, but it remains an option. The reason is because, unlike the rest of the world which accepts immigration as an easy way to artificially stimulate domestic economic activity, Japan does it the 'real way'. Don't give the Australian govt kudos for strong economic growth when the population is growing at 2% because they doubled immigration numbers.

5. Japan can keep working harder. I really don't believe Japanese employment numbers. In any respect, a great many people in the economy are under-employed, or under-utilised. This is particularly the case with women, who remain boxed in glass ceilings, if not padded cells. There is however a huge challenges retaining these people to make them productive. I think mothering is perhaps the most likely option. :) Some of them seem pretty useless. Its hard to believe the 'real workers' can work longer hours, so I guess its more outsourcing low-value labour to China and working more efficiently. Less drinking for them, which means more for me. Sorry I'm not there!

Personally, I suspect they will do all of these to some extent.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Experiences buying property in Japan

2010-07-17T14:43:00.001-07:00

Follow this link to some people who have bought properties in Japan. All of these cases represent people who have bought property through the traditional broker market. The problem is they paid maximum price, when they bought of secured property more cheaply through the foreclosed market. There are however benefits to going the private route. When price is no object, or you want a customised property, the private route offers more choice. The foreclosed market however is surprisingly large, and don't under-estimate the opportunity to refurbish the frame of an old home. i.e. We might my place at less than land value. The house was essentially a gift 1 hour from Tokyo. We could have stripped this two story house like our neighbour who paid full (market) time for the same dormitory next door. The previous owner bought that property for just Y2.23 million. I know because I missed out by $1000. :) It was my intention to set up a school to teach investment and English to Japanese kids, as there is a private school next door. I have just one neighbour - the 'distressed' person who sold me the property by default. He is a lovely guy though. Learn more about people who have bought properties in Japan here. The other attraction of foreclosed property is that you can actually buy cheap properties without needing a loan. I just paid Y2.3 million in cash for the 1st property, and we paid Y3.8mil for a second property which was ready for occupancy/rental at Y60,000/month. A lovely place too.

It took me about a week to clean that house up in outer Saitama. Really enjoyed the mountain biking in the mountains around that town. Some of the best trails I've done.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Election implications for Philippines property

2010-07-13T17:59:00.001-07:00

I was actually in the Philippines immediately after the election result. Just for 6 weeks mind you, but long enough to observe some of the political play, as well as time for a holiday. I visited Camiguin Island and Puerto Galera. Camiguin Island was recommended to me years ago by a resort developer there. Having been there, it has some attractions, but its way too under-developed. I will publish a separate post on the place, as well as Puerto Galera for property buyers interested in those places.

El Nido, Palawan, Philippines

My assessment of the election is that the economic spending will fall a bit after Arroyo's unsustainable 'spend' on roads. I am suspicious of the new president Aquino's anti-corruption credentials based on some statements, but his appointments look credible. He has conveyed that his economic policy is the same as Arroyo by appointing her finance minister. The Philippines GDP grew 7.1% last quarter....as anticipated by us 18 months ago. The fundamentals for the Philippines are very good. A lot of construction going on, remittances continue, call centre business grows. Expect the poor Aussies and Kiwis, etc to come over for their dental services next, and Americans for their 'uninsured' medical. Out-sourcing continues.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide AuthorAndrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Election implications for Japanese property

2010-07-13T17:53:00.000-07:00

The upper house elections in Japan did not deliver the desired two-house majority for the Democrat Party of Japan. Who is to know whether they will be able to get a reform agenda going. One might hold out for the prospect of defections from the LDP if they prove to be obstructionist. There is a lot of discontent in this country...so reform will come eventually. I think the Democrats are still trying to develop policy. Anyway, yields are ok in Japan. One of my readers tells me they recently bought a high rise building in Osaka offering a 12% yield. No other data that that sorry!

The reason for the decline in support for the Kan-led DPJ administration is talk of an increase in the consumption tax. Clearly people want to see support for consumption or domestic demand to support jobs. Really, however the nation needs to cut costs and raise money from wealthy land-owners who will not be spending anyway. I am not a supporter of taxation, lest not welfare states, however the budget does need to be balanced, and assets ought to be taxed not income in these times. I would not be surprised to see a property tax increase in Japan in order to address the budget deficit. Japan's taxation as a % of GDP is on par with the USA, at 27-28%. I suggest in these times it ought to be taxing assets not private spending, since there is a critical need for it to cut government spending. Taxing assets will place pressure upon asset holders to increase the return on those assets, or dispose of them, such that others might.

Japan has long suffered from a lack of leadership. Kan is accused of speaking idealistically when he mooted the idea of a consumption tax. The problem is not his honesty (i.e. revealing a tax prior to an election), but rather his lack of a comprehensive plan. The problem with Japan is that it lacks 'Western-style' or 'inspired leadership. I don't mean Obama of course.... I mean ME! ME!

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide Author Andrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Camiguin Island, Philippines

2010-07-06T19:10:00.000-07:00


Visiting Mantigue Island, Camiguin - Mindanao, Philippines

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide Author Andrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Forthcoming Upper House elections

2010-06-03T20:53:00.000-07:00

Six months ago we highlighted the importance of the forthcoming July Upper House elections.

No factor offers greater prospects for reform than a two-house majority by the DPJ. There is no question that a long period in opposition will help to preserve this coalition together, as well as increasing their zeal for reform. A greater deal of voter support I think can also be expected, particularly given the frustrations with the LDP.

During this period PM Hatoyama needed to convince the electorate of his leadership skills in order to secure a majority of the Upper House. This would have given him control of both houses, which would have allowed him to achieve substantive reform in Japan.

Critics will argue that Hatoyama was a 'lame duck' PM. If I allow myself to be generous, I suspect that he tried to be uncontroversial in these first 6 months in the hope that he would win popular support by avoiding controversy. This strategy has clearly failed him. On the 2nd June 2010 Hatoyama resigned as PM.

His failings were that he allowed seemingly uncontroversial issues like the relocation of Futenma air base, as well as party funding anomalies to define his administration. I think this created the perception that he lacked depth. He was trying 'safely' to secure both houses of parliament. Yet, I think it was the most honest Japanese political administration in a long time. If we reflect on what he did achieve - they were:

1. Child allowance

2. Abolition of public school fees

Clearly these policies were for the liberals in Japan. I suspect though that once a two-house majority had been secured, we might have seen significant reform.

Both Hatoyama courted controversy by receiving large sums of money from his mother without paying gift taxes. Hardly a huge breach of ethics given that it was for a public purpose, and in most countries political donations are tax-deductible.

The resignation of Hatoyama and Ichiro Ozawa allow for a fresh stand before the Upper House elections. The question is whether the new PM can achieve the community support he needs to win the Upper House. This is a big ask just a month out from an election. The leader will need to do a lot of campaigning. Any politician does start out with good ratings, though they also start with some history.

The most likely new PM is Naoto Kan, who served as DPJ president in the past, has been deemed by some as the top contender to lead the nation.

Another option is Foreign Minister Katsuya Okada.

Kan, a former health minister who rose to fame for exposing in 1996 the ministry's responsibility for the spread of tainted blood, has kept his distance from the contentious Futenma air base relocation issue (unlike Okada and land minister Seiji Maehara).

It will be interesting to see if the Social Democratic Party rejoin the ruling coalition, as the DPJ currently have a slim majority in the Upper House. In the DPJ's favour is that the LDP has also experienced its own form of controversy with a series of defections and internal bickering. The new leader will need to win over the hearts and wins of swinging voters dismayed by both sides of politics. Cabinet's approval rating has fallen from over 70% after the election to just 20% today.

So what would Kan do for the party. He has indicated little change in the direction of the party, which is a positive. He remains committed to the US alliance, and his focus will be job creation in daycare services for children and the elderly. This party is attempting to be the voice of the young, trying to achieve generational change.

Tarutoko, also vying for the PM role, has pledged to reduce the number of Lower House legislators by 80. Transport minister Seiji Maehara intends to support Kan. Senior Vice Finance Minister Yoshihiko Noda, leader of an important faction critical of Ozawa, is also supporting Kan.

The new PM will be established by 11 a.m. Friday to be voted in as prime minister, so a new cabinet will be announced soon after. The DPJ holds a strong majority in the Lower House. The fact that Kan will have so little time, will not aid his cause, but he at least over other candidates, has a lot of parliamentary and leadership history to be judged upon, and not so controversial. Kan has signalled that he will increase taxes to reduce the growing public debt. Kan will also be one of the few PM's not to come from a political dynasty, i.e. The last since LDP lawmaker Yoshiro Mori in 2000.

Given that Kan has signalled higher taxes, and these were always expected, it will be interesting to see where the increased tax burden will fall.

NZ Property Guide Philippine Real Estate GuideForeclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

The appeal of Japan

2010-04-18T13:51:00.000-07:00

I have met few people who have visited Japan and not been blown away by the experience. The experience I think is enough to convert the most ardent nationalist, racist to concede some ground. I say that because I've seen it happen. It usually takes a week or two. Japan is particularly special because it is so DIFFERENT from the West, and of course it has the appeal of being a large population, clean, organised, friendly, safe and always interesting. Everything on the surface is where it should be. You can buy a home there, pay as little as $US300 a year in taxes, not even have to worry about insurance.

Westerners are allowed to stay in Japan for 90 days, and its easy to fly to Korea for a weekend for an extension. I have a better way. Get a Japan Rail Pass, or several of them, and travel to Fukuoka and get a RETURN ferry to Pusan (South Korea). There are some great capsule hotels in Fukuoka you need to check out as well.

In my 20s, when I first arrived in Japan, I was fascinated by the people, loved the modern architecture (with its emphasis on function over style), the food and the girls. I've since lost interest in the girls. Very polite, fun to be with, but not very ambitious or interesting for me. I know there are exceptions. All the smart ones I met seem to have hang ups. But if I was in my 20s again, I'd be spending more time there. Maybe even my 30s. :) I think Japan is an experience that all Western people need to have. Not because they need to learn a better way of living, but because they might reflect on their own culture with a different perspective.

What would I want them to learn?

1. How China/Japan are not becoming more Westernised, the West is becoming more collectivist.

2. The importance of good organisation. That kids going to 'cram school' are not necessarily repressed, they might actually enjoy the experience of being with friends.

3. Food ought to be bought for quality, not super-sized on volume

4. The person with the biggest house in the street is not the most successful

5. The cost of collectivism is the mindlessness evident in Japan - they are just better organised

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Searching for Japanese foreclosed property

2010-04-18T12:59:00.000-07:00

One of the best ways to search for foreclosed property in Japan is to use the online database of provided by Bit-Sikkou. In recent times their website has been overhauled. Until the 18th May 2010 you can still access the old format, however I would advise you to become accustomed to the new version before the old format dies.

The question then is - how do you access the new service? The problem of course is that Google Translate will only do a partial translation because many of the buttons are linked graphics rather than hypertext. This obstacle is easily overcome because each of the links is readily translated. For your convenience however I have am providing a translation. Once you know where you want to go, the process is pretty seamless, because you will likely be searching the same areas, and the Translation tool is seamlessly integrated by Google.

Provided below are two screen captures for the graphic links on the Bit-Sikkou website. One of the screen images shows a 'Glossary of terms'. Aside from using this to find definition of terms, you can also use it as a means of finding the kanji equivalent term if you need to converse with any non-English speaking Japanese court office staff, or otherwise you can refer Japanese friends, etc assisting you.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Japan's climate and travel tips

2010-04-18T01:20:00.001-07:00

One of the appealing aspects about Japan is its distinctive climate. I personally have not lived in a place before where the climate extremes are as wide as Japan. Of course the extremes are even greater inland. In winter you can freeze your ears off. I remember walking 2km to a shopping mall and having that problem. I was not accustomed to that level of cold in Narita City, particularly as it was April already.

The opposite is true in the summer. Humid days create a stark contrast. This weather is great for the whitewater kayaking I like to do in Japan, since I live between two canoeing rivers just 1 hour from Tokyo. Japan is of course a surprisingly long country, though tilted on a NE-SW axis. I would however suggest that the NE (i.e. Hokkaido) is far colder, and the SE far warmer. This is both because of latitude considerations and the influence of ocean currents.

For more climate details for Japan, check out Wikipedia. The great news is that Japan is appealing at any time of year. There are great ski packages. You can be based in Tokyo, and jump on a shinkansen (i.e. Very Fast Train) to say Nozawa, just on the other side of the range, in Niigata prefecture. In summer, the same region offers canyoning, MTB and rafting activities.

Most people go to Toyko, however I am very fond of some of the larger cities like Hiroshima, Fukuoka and Nagoya. I do however suggest getting a Japan Rail Pass which offers a huge concession for holiday-makers, and travelling to some of the smaller, more remote areas. I particular was keen to take all the train routes that followed the river valleys. They are often slow trains stopping at all stops. I have a collection of GPS coordinates for all the train stations I have been to. Thought it might come in handy for future canoeing/kayaking. i.e. So I know when to get out of a river and walk to the station with my inflatable canoe. The landscapes are pretty special. The culture is not simply in the cities.

There are some pretty unique people around. Some worthy of mention:

1. Small bar in Matsue offers some of your obscure alternative rock bands from home, well in my case Australia & NZ. Anyone for Straightjacket Fits, The Chills or Ned's Atomic Dustbin. I didn't get everything I wanted. The guy has a collection of over 6,000 CDs.

Sorry, its a short list, as all of my other experiences were in bars, and I can't remember them, but you get the idea.

NZ Property Guide

Philippine Real Estate Guide

Foreclosed Japan Guide

Author

Andrew Sheldon

Applied Critical Thinking | www.SheldonThinks.com

Regional property market outlook

2010-04-14T22:37:00.000-07:00

For those of you interested in property in the Asia-Pacific region, consider the following news with respect to each of the markets we cover.

1. The Philippines property market prices appears to have bottomed according to Global Property Guide. This company relies on a number of indices produced by Colliers International. You can view their quarterly market report at Colliers. Based on other posts I have made about the Philippines, I have a lot of confidence in the nation's fundamentals. This is of course evident from the latest edition of our report.

2. Japan Property Market has never really recovered so if you are looking for a turnaround story then Japan might be a place to consider. The prospect of reform-minded government is looking less likely given the controversies which have put the alternate government (i.e. Democratic Party of Japan) on the back foot. The country does however remain a great place to live and work, and the foreclosed property offerings at huge discounts make it an appealing option. The fundamentals are deteriorating, though the foreclosed market is still trading at huge discounts for anyone happy for property more than 1 hour from the largest cities.

3. New Zealand Property Market is still to find a base in the cities though you can find cheap property in some rural areas. The exchange rate for NZ and a number of commodity based countries makes this market less appealing, except for the committed retiree who can loan funds locally. In any respect this is not the time to transfer assets to NZ, or to buy property generally.

NZ Property Guide

Philippine Real Estate Guide

Foreclosed Japan Guide

Author

Andrew Sheldon

Applied Critical Thinking | www.SheldonThinks.com

Customer Feedback

2010-04-14T22:13:00.000-07:00

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NZ Property Guide

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Foreclosed Japan Guide

Author

Andrew Sheldon

Applied Critical Thinking | www.SheldonThinks.com

Australian property buyers set for retirement

2010-03-29T00:04:00.000-07:00

On many occasions I have spoken of the huge amount of investment which is set to provide a huge amount of stimulus for the Australian economy over the next few decades. In the 1960s and 1970s we saw a rush of Japanese investment into Australian resources. Well in the next 20 years I would not be surprised to see $300-350 billion of mining investment in the industry, encompassing mostly offshore gas, iron ore, coal, coal seam gas, gold, base metals and alumina. Am I missing anything? Probably. The Chinese population is 10x Japan's and I have not even considered the other billion in India, which will also need a large amount of resources. India and China are not exactly mineral-poor economies, but mining in them is relatively disruptive compared to mining in Australia. There resource quality is not as good either. eg. India's coal is dirty, particularly its coking coal. China lacks coking coal, so these are good areas for investment.

The implication however is that Australia is going to have a strong market, so I would not be expecting property prices to fall. They will go sideways at worst, if the government opens up land releases. The reason to keep property prices hard is that it makes you work harder, you pay more taxes, and it ultimately makes you compliant with our fascist punitive government.
Sovereign risk is a problem in any country, and its easier than ever to shift funds and buy assets abroad. There are other reasons as well....foreign exchange benefits.

There is no question you will benefit from having assets in Australia. The AUD will be strong, though when our terms of trade is so strong usually Australians spend a lot on consumption. This is just one for reason to have assets overseas. The AUD is one of the most volatile currencies in the world. If you have the flexibility to be transferring funds at opportune times, you can save a great deal. For instance, we bought a house in NZ at USD0.50-0.53, its now 70c to the USD. The implication is the same for Australia.

Of course we want to be buying in markets with good fundamentals, or perhaps simply lifestyle benefits. My partner and I have property in NZ, Japan and the Philippines. We like these markets. I believe 84yen was a low for the Yen. That has not been my position for the last 2 years. That target was essentially reached. There will be a stronger currency looking ahead because of higher interest rates. Eventually the property market will recover, so you might want to look at foreclosed property. Of course if you can't borrow money in these markets its a bit more difficult, as you have to time your investment well. So you need to watch the charts. Of course we have provided guidance before through this site.

Japan is very cheap if you want a rural lifestyle place for just $USD20-50,000; its more in the city, but you don't need to live right in the city and pay $500,000 plus. Japan is a great place to be a tourist. The Philippines is not a lifestyle place for everyone, however it does have appeal as an investment destination as well.

From a currency perspective there is no need to rush your dollars out of Australia because the AUD is strong, and any interest rate increase to slow the economy will only aid the currency. The greater issue is timing. Key dates to consider are the elections coming up in the Philippines and Japan, plus I would not wait too long in the USA, as the surplus property will be soaked up. High apartment vacancy rates in places like Miami will be absorbed.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Korean population and tourism rising in the Philippines

2010-03-25T17:36:00.000-07:00

This article highlights the growing popularity of the Philippines, both as a tourist destination and a place to live. You will not see accurate statistics on inbound tourism since the rules for entering the country have become increasingly liberal. The Bureau of Immigration cites a 51% increase in the number of Koreans entering the Philippines between 2003 to 2006.
It is not just Koreans either - the number of Chinese are also rising strongly, as well as Westerners and Japanese. Each nation seems to have its particular precincts or focal areas. The Koreans are keen on Cebu as a holiday destination, however a great number of Korean families are living in the Philippines for the benefit of their children. The appeal is that they can live in the Philippines cheaper and ensure their children obtain an English education. This strategy also allows them to trade up to a nicer house, as well as have a maid. All the things they would never have conceived of in Korea.
For English most families stay in Manila, or choose the larger cities like Baguio. In some cases the father remains in Korea to work. I know cases of Korean families who have attempted to establish Korean food restaurants in the Philippines, and not been able to attract the customers to justify the business. The reason I suggest is the unsophisticated pallet of the Filipino who are not accustomed to Korean food, and for all but the upper class, eating out is a luxury, and they prefer sweat fatty foods, rather than spicy Korean.

A number of Westerners are taking of the opportunity to develop English schools in the Philippines for these people. Consider that many Westerners working in English schools in Japan or Korea are able to move to the Philippines can poach customers from their traditional home market. The logic is simply to save money and give the child the best possible chance to learn English. The strategy is typically:
1. Buy or rent an apartment for mom and child to live in for a few years
2. Buy a business with the intent to migrate
3. Buy or rent an apartment for university age student to study English

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Properties in NZ for Australian retirees

2010-03-21T00:38:00.000-07:00

The cheapest places to buy property in NZ are probably the places you would least likely want to live. For example, driving through Murupara, NZ, I have sympathy for the people trying to sell a house there. Not so much that I wouldn't discourage you. The south too is isolated and colder, which might scare off buyers. The far east coast of Gisborne is a little remote.
The cheapest places you might consider are Wanganui and Taumaranui on the North Island and Oamaru on the South Island. I would be inclined to research the level of crime for Taumaranui, however Oamaru and Wanganui have a lot of appeal and decent priced houses. These places offer good buying because they have experienced depopulation. This might scare off investors, but for retirees, they offer attractive entries into the market.
In fact the opportunities to buy will only get better. We watch the number of properties for sale in Wanganui and the numbers just keep growing. There are several reasons:
1. Property prices are falling in real terms in some areas, or otherwise consolidating in growth areas as rents rise
2. Investment properties are being talked down by the government intent on taxing them
3. Depopulation is rife - not aided by a weak NZD relative to a strong AUD
4. Strong mining investment in Australia, which keeps taking New Zealanders offshore

This of course makes NZ good buying for Australians, though there are few places like Wanganui where I would rush in. I would suggest taking advantage of the strong AUD in coming years. Here are some pointers to the local value. It will only get better.
1. www.trademe.co.nz/link.aspx?i=12121&id=276780398
2. www.trademe.co.nz/link.aspx?i=12121&id=268402395
3. www.trademe.co.nz/link.aspx?i=12121&id=276591749
4. www.trademe.co.nz/link.aspx?i=12121&id=278200693

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Tools for researching property in NZ

2010-03-16T03:10:00.000-07:00

If you are interested in researching property in NZ, there are several useful online tools you can use. The best tools are:

1. Online Statistics NZ interactive database - see their online portal. The attraction of this page is that it allows you to scan the income levels of each district and sub-region, and to focus in upon specific areas. The attached diagrams provide examples of the detail. You highlight an area to get basic statistics, and then click on the 'Quickstats' hyperlink to see a more detailed breakdown of information on the district's proportion of education qualifications, incomes, age, employment, housing, etc.
2. Google Maps - This is a useful tool which provides more research about the house you are about to buy. Consider the power to search into people's backyards. In NZ, this feature is useful for identifying bad neighbourhoods. ie. If you see a lot of cars in a backyard, they are probably wrecks. If you see several caravans, they are unregistered, unemployed people. Of course in the right neighbourhood they can attest to a car with several cars and recreational time (usually retiree minded).
3. REINZ Housing Price Index - see the REINZ website for further information.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Australian property is hot, NZ is not (yet)

2010-03-14T13:16:00.000-07:00

Property prices are likely to come under pressure in rural areas of NZ as a result of depopulation. The weakness of the NZD relative to the Australian dollar is likely to give encouragement to more New Zealanders to move to Australia. There is some $300 billion of mining projects to be developed in Australia over the next 20 years, and this will underpin a very strong economy thanks to the commodity demand of 2.5 billion people living in China and India. Property for this reason looks very good in Australia. Those areas likely to benefit most are Perth and Darwin (because of their role as a service centres to mining & oil industries), plus anywhere from along the Queensland coast.
The argument will be made that Australian property is overpriced. That is true, but the strength in the economy and restrictions on urban development mean that those characteristics are going to be retained. Regional coastal areas however look more attractive. The influx of people from NZ will help, but I would suggest to you that the movement might just go both ways. i.e. The weak NZD relative to the AUD will attract NZ'ers to Australia to earn income, but it will also draw poorer Australians to NZ for retirement or holiday (houses). Deregulation of the airline industry between Australia and NZ is likely to aid that process.

In the short term, I would keep an eye on the number of homes for sale in rural places. i.e. Watch online listings in each rural city. The main cities tend to have more growth, so they are still expensive, and will not offer the attractive discounts, however rural areas like Wanganui, which suffer depopulation are likely to turn around at some point. This has already happened in the Southland area, an area that has good access from Queenstown. Wanganui is similarly well located between Auckland-Rotorua-Wellington, and is perhaps the nicest town in NZ, offering full services to retirees. Its weather is reasonable, though it is a little windier compared to other places. It has reasonable sunshine hours. There is less wind on the Bay of Plenty and East Coasts.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Are OFWs really buying property?

2010-03-08T12:07:00.000-08:00

The Philippines Inquirer "Property sales to OFWs are rising" (7th Mar 2010) seems to suggest inconclusively that Overseas Foreign Workers (OFWs) are buying more property in the Philippines. This strikes me more of biased reporting by interests aligned to the property developers. Certainly remittances are rising - up some 16% if I remember correctly. Though I would suggest increases in interest rates, new property sales, non-property-related remittances and long 20-year loan commitments could readily account for those increases, not to mention uncertainty about the US market, the talk of weakness in the USD, concerns for family during recession, volatility or uncertainty in investment markets.
I suggest instead that the ratio of OFW buying has increased as a proportion of total sales because local property buying has declined significantly. The increase in domestic tourism might suggest that Filipinos are spending more on recreation rather than capital investments. I think if there was more to this story, they would have provided more detail on absolute sales numbers. This is not an easy number to determine because some OFWs are inclined to buy in the names of local family. My experience tells me to be suspicious of this argument. Property developers will benefit from prior commitments to incomplete properties. They should thus record reasonable sales for this year, though I suggest it probably does not look so good for 2011.
You can read the article on the Philippines Inquirer website.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Australian opportunity in NZ property

2010-03-04T12:20:00.000-08:00

The latest news is that the NZ dollar (NZD) has fallen to a 9-year low against the Australian dollar (AUD). This is good news for Australians and New Zealanders who can take advantage of the disparity in currency values. Consider the following:

1. It makes sense for Australians to buy property if they think their is an opportunity to transfer funds at an opportune low interest rate.
2. It makes sense for Australians to buy property if they think the NZD will recoup its current losses against the AUD.
3. It makes sense for Australians with a house in Australia to buy a place in NZ, and use the rent from their Australian property to pay the interest on their NZ property. They will earn more rent off their (generally) more expensive Australian home, and they will benefit from the cross-rate when they transfer those AUD to NZD. They will have a nice income whilst the cross rate favours AUD. They do need however to anticipate a peaking of the resources boom in Australia to best transfer their wealth. I suggest that will occur price to the peak in metal prices. It will have more to do with consumption levels. The Australian government will be raising interest rates to prevent that, which will also help the AUD:NZD.

Irrespective of your outlook, there is the opportunity to stagger your currency transfers across the period of your loan. Clearly if Australians want to retire in NZ then they need to think about buying property now rather than when it reaches those lows, as they will need to set up a bank account. It need only be a NZD account in Australia if your bank offers that. My guess is that ANZ would. The opportunity is similarly attractive for those NZ'ers working in Australia, to send their money home. I would suggest however that it is premature to send money back to NZ.

There are two factors working for the AUD - strong business investment in mining & energy, strong commodity prices, and the need to raise interest rates to reduce inflationary pressures. Looking at the chart above it is apparent that there are two lines of support for the NZD - the 0.70 and 0.75 levels. I would suggest the NZD is eventually going to get to 70c, so I would suggest people target 0.71 for a reasonable entry into the NZD, as its difficult to pick the bottom. I call this chart pattern an 'accretionary wedge'. We are already seeing this pattern unfolding, as the NZD is already at a 9-year low. The trick is to be prepared to profit from it.

If you want to know more about the NZ property market, i.e. Where to buy, etc, you might want to look at our property guide - see link below.
NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Philippines attractive to Europeans

2010-03-02T17:40:00.000-08:00

A gentleman the other bought my report from Spain. It was my first customer from Spain, so I was surprised; however I quickly made a connection with the current banking and currency crisis in Europe. I am aware that wealthy Greeks, Portuguese and Spanish investors are pulling their money out of Euro. This is understandable given the possibility of these countries being ejected from the EU. I actually think this is a desirable occurrence. These 3 countries and a number of Eastern European countries would be better served by their own currency.
I can nevertheless see the interest of this particular customer in the Philippines because of the historical Spanish influence in the Philippines, the similar values, the property fundamentals, the economic fundamentals. The Euro is not faring great against the peso, but even still the trading band is relatively narrow, so no great loss in making transfers now. Over the last 5 years the Euro has traded between PHP60-70, so not much variation.
The Philippines is some of the best exposure you will get to Asia. Its about as Western exposure as you can get to Asia without paying a premium for the currency; as you will do buying property or other asset classes in Australia, Canada or NZ.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Philippines property report - reform minded economy

2010-03-02T17:07:00.000-08:00

We have just finished our latest report - the 2nd edition of the Philippines Property report. This report is updates the 1st edition, which was already a very comprehensive 2 volume report. The latest report is 345 pages. Some people would prefer a shorter report, however everyone has different knowledge on each country we look at, so we attempt to consider all pertinent material. For those wanting specific information, there is a detailed table of contents included, which can be downloaded from this site.

Some of the pertinent facts which might interest readers is the opportunity for people to buy rural banks in the Philippines. For those of you with a reasonable about of money, a micro-finance business might appeal to you; particularly as you could play a part in the improving standards of micro-finance or banking in the Philippines. These banks have higher rates of non-performing (foreclosures) loans than the main banks. Some rural banking reforms are currently under consideration including foreign investment (up to 40%) and the ability to offer insurance products.

Another big development in the Philippines is the growth of tourism. The Bicol area has recorded a 163% increase in domestic tourism in the first nine months to Sept 2009, including an increase of over 20% in foreign tourists. The Dept of Tourism has been spending a lot of money on tourism. I have noted the difference on my last tour around the Bicol region and Mountain Province. The Bohol area is another popular place, both for local and international tourists. This is of course important for resort developers. Resort developers are looking further afield than places like Boracay and Cebu, which appeal mostly to the Koreans and Chinese.

Property yields in the Philippines are still pretty reasonable at 9%. I would expect these to rise again from the middle of the year as a result of inflation; though I suggest they will rise in lock-step with higher property prices. Buyers are still interested in the residential market, with the commercial market taking the brunt of the recessional doldrums. The fact remains that remittances to the Philippines are strong, Business Process Outsourcing (BPO) is strong, tourism is up 16% and commodity prices are strong as well. By all measures, the Philippines is ready for business and investment.

We considered in the report the appeal of other markets. Thailand is one country which ranks highly, and others might consider property in Indonesia, which offers higher yields. However Indonesia has very tight visa conditions, and does not demonstrate the same level of fiscal reform. I have for the last 2 years been impressed by the progress of reform in the Philippines. More progress is needed in areas like productivity, reform of the ports, the efficiency and fairness of tax collection, reduction in corruption. Aside from corruption I can see some progress in these areas, but a lot more needs to be done. Thailand's yields are not as attractive at this point.

The improvement of infrastructure will mean a great deal for the country. A few years ago we bought some land in Lipa for P750, and already we are fielding interest at P2,000 per m2.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Japan's political reform in doubt

2010-02-21T19:53:00.000-08:00

The latest news from Japan suggests that the chances of reform under the current PM Yukio Hatoyama are quickly deteriorating. The Democratic Party of Japan lost a local election in Nagasaki. I consider that less important considering that their candidate was a bureaucrat, and he was beaten by the Vice Governor. The more important issue is opinion polls, which are being shaped by the financial scandals. They have a few months to turn those fears around, otherwise we are looking at a 'hung parliament', which is not the best basis for reform. See the full story here. Ideally I would like to see the DPJ given a majority in both houses in the June 2010 elections.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Philippines property ranks highly on yields and forex rates

2010-02-17T19:02:00.000-08:00

I'm in the process of updating my Philippines Property Report. This will be the 2nd edition. A part of this report is helping prospective retirees, investors and expats to find investment opportunities in the Philippines. We do this for our own benefit as well as yours. The focus of this blog is exchange rates. The Philippines peso has tended to suffer along with the USD, though it has generally fared better. Click on the charts to the left and it will be apparent that foreign or Filipino investors holding Australian dollars, Canadian dollars or US dollars are in a pretty good position to invest in the Philippines. The same is true for expatriates or Japanese people holding Yen. The Yen is also trading a favourable exchange rate to the Philippines. The attraction of investing in the Philippines is particularly attractive given the better than average yields - 2nd only to Indonesia in East Asia at 9% per annum according to Global Property Guide. Investing in the Philippines makes less sense for Europeans given the weaker Euro, but having said that, its far easier for foreigners to raise finance in the Philippines than other countries. Some people take out loans in their partners names. Its even easier if you are buying foreclosed assets because some of the banks will not require proof of income. The implication is that even Germans, French, Dutch and other investors can buy property in the Philippines with the expectation of paying off the loan when the currency is optimal.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Buying foreclosed property in Guam

2010-02-17T15:07:00.000-08:00

I don't offer any particular information about buying foreclosed property in Guam, but in the process of researching for my 2nd edition Philippines property report, I note that the PNB-Allied Bank of the Philippines have a listing of foreclosed property in two locations in Guam.
I thought this property might interest people because I've previously met an Australian military retiree who was moving to Guam to live with his Filipino girlfriend. He had been in the military for 10 or 20 years, thereafter apparently they get a lifetime pension. Seems like a good deal for someone who saw no military action. Anyway, for anyone interested the details are here. I have not been to Guam, but it might appeal to American servicemen as well. The idea of being stuck on an island might appeal to others. I don't imagine the flight connections are very good either.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Cheap tickets NZ to Japan

2010-02-17T11:54:00.000-08:00

Are you a New Zealander interested in investigating foreclosed properties in Japan? Well there has never been a better opportunity to fly to Japan. Air NZ is offering discounted tickets:
1. Two tickets from Auckland to Osaka - see TradeMe
2. Two tickets from Christchurch to Tokyo - see TradeMe

The bids on these tickets are currently around $420 for two tickets. You could be reading my book on the plane. :) Any option is a good deal. Have a look at the other flights on offer. Of course you have to depart from NZ.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Best buying in Japanese foreclosed property

2010-02-12T12:08:00.000-08:00

We have just released our Japan Foreclosed Property eBook (3rd edition). For those of you not aware, this is probably going to be the best 2 year period for buying foreclosed property. There are three compelling reasons:
1. The Japanese elections in mid-2010 could result in the Democratic Party of Japan holding a two house majority in which to make substantial reforms.
2. The Japanese public debt has reached a point (200% of GDP) at which it is going to struggle to raise money. It has been forced into a corner. Going to the international market would mean much higher interest rates. It has to reform and slash costs. The DPJ is waiting for that election. It needs a majority in both houses.
3. The high public sector debt essentially places a ceiling over Japanese interest rates for the next 5 years, if not longer.

The implication is that you are going to have low interest rates looking forward, and you are going to see reform which boosts real incomes. These rises in income will flow through to asset prices like property and equities. Want to know more about the Japanese foreclosed property market.... all is explained in the following Japan foreclosed property report. Why rent in Japan when high yields favour owning property. You can buy a house for as little as 1-3x your annual income.... if you buy in the suburbs like Sakado (less than 1 hour from Tokyo).

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide

Would I recommend retiring in Japan?

2009-12-10T16:43:00.000-08:00

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/

Cost of property in Japan

2009-12-10T16:20:00.000-08:00

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/

Type of foreclosed property to buy

2009-12-10T15:30:00.000-08:00

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.

What is foreclosed property?

2009-12-10T15:25:00.000-08:00

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.

Signs of life in Japanese government policy

2009-11-15T00:22:00.000-08:00

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

Outlook for Japan

2009-11-11T02:15:00.000-08:00

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/

Recommended Property Markets in Asia-Pacific

2009-09-26T02:48:00.000-07:00

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

Regional growth in the Philippines

2009-09-22T02:14:00.001-07:00

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
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New political stage should underpin Japanese reform

2009-09-06T00:36:00.000-07:00

The problem in Japan is that a large group of old men associated with the Liberal Democratic Party (LDP) have traditionally run the country. These men are often the descendants of former PMs. One need only reflect on the last 3 PMs of Japan – all of them were the descendants of previous leaders.
1. Shinzo Abe, the grandson of a former prime minister.
2. Yasuo Fukuda, the son of a former prime minister
3. Taro Aso, the grandson of a former prime minister.

Japanese people of course like to elect outspoken and ‘weird’ people whom they hope will break with the past. This has yet to occur. Yet on 30th August 2009 the Democratic Party of Japan (DPJ) ousted the 54-year reign of the LDP which has ruled Japan since its formation in 1955 (aside from a 11-month hiatus in 1993). Under Japan's constitution, the DPJ leader Yukio Hatoyama is assured to be the next Prime Minister of Japan. He will be formally appointed on 16th September 2009.

Many people will be hoping that new party leadership will mean change for Japan. That outcome seems improbable without good leadership. So what about Yukio Hatoyama - the leader of the DPJ? Well, he is unsurprisingly the grandson of a prime minister, who incidentally defeated Aso’s grandfather. Hatoyama might be considered a ‘pedigree politician’ with powerful family figures. His family is compared to the Kennedy’s in the USA. Hatoyama’s mother, Yasuko Hatoyama, is a daughter of Shojiro Ishibashi, the founder of Bridgestone Corporation. She was a big financial supporter when her sons established the Democratic Party of Japan (DPJ) in 1996.

Given their links to Japanese business it will be interesting to see whether ‘new’ money can out-manoeuvre the old zaibatsu conglomerates of the pre-WWII industrial era. Traditionally these corporations have had a strong influence on Japan, having a long association with the LDP. Another influential group is the civil service, though given their ‘safe’ positions, it seems probable that they will not disrupt reform if there is an agenda to do so, and that agenda has support.

The last time the DPJ had power was briefly in 1993. On that occasion, in the wake of the economic collapse, the fragile coalition of opposition parties were undermined and discredited by the LDP. That seems less likely on this occasion given the strength of the leader and the election result.

The DPJ's policies include plans to restructure the bureaucracy (expected to result in layoffs and pay-cuts); a monthly allowance for families with children, a reduction in petrol taxes; income support for farmers; free tuition for high school students; banning temporary work contracts in manufacturing; an increase in the minimum wage to Y1000; and no increase in the VAT sales tax until 2013.

The strength of the coalition seems assured for now since the other coalition parties won just 3 seats each compared to DPJ’s 221 seats. The People's New Party (PNP) comprises LDP members who opposed Koizumi’s autocratic style and post office privatisation, whilst the Social Democratic Party (SDP) is a socialist party which has witnessed a decline in support because of its support for North Korea. It can therefore be expected to be a weak party partner.

One might wonder whether the DPJ is the party to deliver economic prosperity to Japan given that it is considered the ‘Left of centre’ party in Japan. There is good reason to think that it will carry a reform agenda because the party was originally founded as a ‘centrist’ party. The move to the left prompted Yukio Hatoyama’s brother Kunio to leave the party. Yukio stayed with the party through several mergers with other opposition parties in 1998. He was DPJ Party Chairman and leader of the opposition (1999-2002), and DPJ Secretary-General before succeeding Ozawa as party leader on 16th May 2009. He was selected by fellow party members by a winning margin of 124 to 219 votes, defeating rival Katsuya Okada. Hatoyama has indicated that his wife Miyuki Hatoyama will play a prominent role as First Lady during his administration. This might suggest that he will attempt to gain broad-based people support as a means of driving political reform.

Katsuya Okada is another potential leader of the DPJ should Hatoyama fall from grace, as many Japanese leaders seem to do. He is the former president and current Secretary General of the DPJ, who will serve as Foreign Minister. He also has strong ties to business, being the second son of Takuya Okada, the founder of the Japanese retail giant AEON Group. He is a graduate of the University of Tokyo (law) and Harvard University. His political roots lie with the Takeshita faction LDP, though in 1993 he followed LDP faction leaders Tsutomu Hata and Ichirō Ozawa to join the Japan Renewal Party. Eventually they amalgamated with the DPJ and Minseito in 1998. He became president of the DPJ on 18th May 2004.
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Andrew Sheldon www.sheldonthinks.com

What happened to the Japanese property boom?

2009-09-05T19:35:00.001-07:00

Where has the Japanese property market bull gone? This was the forecast 2 years ago by a Money Week writer. Well, markets are understandably hard to forecast. However the collapse in global financial markets was not hard to fathom given the legacy of fiscal and monetary stimulus over the last decade. The Japanese market was already in the midst of a recovery. It was merely curtailed by the current recession. The prospects for a property boom in Japan remain good, however the question is one of 'when' rather than 'if' I believe. There are a number of ducks which have to line up before we are likely to see a recovery in Japan's property market:
1. Reform-minded government able to deliver on productivity gains. This will likely take a charismatic leader since parliament is full of dead wood. The question of who is a plausible leader will be the subject of a later blog post.
2. Expansionist policy: Productivity gains will deliver the increases in real incomes which will stimulate spending and increases in property prices (as a demand response). In most cases governments are not satisfied with 'real income' gains, and are so inclined to artificially stimulate money supply through debt facilitation. Just as banks have been called upon for the last decade to curtail debt financing, in future they will be called upon to increase debt issuance.
3. Global recovery: A global recovery will result in a recovery in Japanese exports. Japan is well positioned to profit from exports to the USA, but also the Asian tigers and China.
4. Weaker Yen: Japan's national savings rate is gradually falling because of the legacy of decadence in wealthier Japanese youth, and also because of falling real incomes and reduced job opportunities. I am actually uncertain about whether the yen will depreciate. With interest rates so low, there is really only one way the Yen can go - UP! But relative yield is more important that absolute shifts, and loyal Japanese investors are reluctant to send savings abroad anyway. Low interest rates has the favourable benefit of discouraging Japan as a savings repository. Why hold yen given the low return on Japanese bonds? The only people silly enough to hold Yen are the Japanese savers - usually in the form of Japanese bonds. It is silly to hold bonds paying a 1% yield when you can buy foreclosed property in Japan and make 13% yield, and that is before you even consider debt financing for added leverage. If Japan can attract savings at 1%, clearly it does not need to rise much to attract savings. The reality however is that Japanese savers continue to be motivated by fear and nationalism rather than investment logic. The implication is that when foreign interest rates are increasing, Japan might not need to raise its rates as much. Afterall its intent has only been to subdue the currency. Is there a reason to change this policy? The time will come when the Japanese government does that. I think that policy is a decade off. What is worse - Japanese savers holding Japanese bonds yielding 1% or depreciating US bonds? I'd prefer to be a Chinaman saving an appreciating Yuan and a factory pumping out product. For this reason I am inclined to expect a weaker Yen for the next few years, though perhaps stability against the USD given its perturbed standing. I actually expect a rally in the USD in future because of rising interest rates. The US is down, but not out.
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Andrew Sheldon www.sheldonthinks.com

Big boost for NZ property market!

2009-08-16T17:11:00.000-07:00

There are some important developments occurring in the OCEANIA region. It looks like Australia and NZ are moving inextricably closer together thanks to a desire by the PM's of these countries to boost economic activity. I guess they need to look busy during a recession, and no doubt they will welcome the opportunity to make some landmark decision during their 'reign'. Certainly the decision makes economic sense, particularly for NZ, but in absolute terms for both countries. I have written up a blog on the finer points, but importantly one can expect these developments to be a boost for NZ property prices. See my NZ blog.
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Andrew Sheldon www.sheldonthinks.com

Outlook for Japan could be promising

2009-07-30T05:26:00.000-07:00

Reading the following article, you might want to consider the merits of buying property in Japan. Property markets in Japan have been overheated for some time. Japan in contrast is relatively undervalued. The question is how long will it remain in this condition. An election is due for March 2010. The question Japanese people will be asking after an annualised 15% contraction in the economy in the Mar-09 quarter, is whether they should continue their support for the Liberal Democratic Party (LDP). The LDP have enjoyed the support of the people for 5 decades - with the exception of a brief hiatus of 9 months. Most of this period corresponded to the Cold War alliance with the US.

With the Japanese economy locked in a 20 year slump, and the export slump in 2008, might the people consider a change? History suggests they are unlikely to change parties. However the long standing bear market suggests the problem is linked to the LDP and not to any particular administration.
The positives side is that the Japanese investors hold "$15 trillion in financial assets", mostly bonds and bank deposits, and "only 3.5% of it in the stockmarket". The positive is that Japanese investors have been sheltered from the economic collapse to a larger extent. The bad news is that they have had 20 years of poor returns, and their equity has shrunk significantly as a proportion of global assets, and more importantly, relative to the number of taxpayers, due to an aging population and zero population growth.
With the Japanese being the most patient slaves in the world to political mismanagement, you might ask how tolerant are they expected to be. The recovery will create a phenomenal investment opportunity because those bank deposits will find their way into the stockmarket. Clearly fund managers are waiting for a sign of political change. Unfortunately the shift in assets itself is likely to delay any shift since markets tend to over-expect prompting politicians to under-deliver.
Interestingly in the Mar-09 quarter, Japanese investors were net buyers of stocks for the first time since 1991. Already the Japanese trade surplus has collapsed. It is only a matter of time before the Japanese yen collapses as well for the following reasons:
1. The savers are not getting any younger - the percentage of retirees is increasing
2. Any recovery is likely to boost spending as well as exports. In the past only the export sector was strong. In the 'future' the domestic economy will need to be reformed, which will result in the broader based economic recovery we have not seen since the 1980s.

You might then wonder what are the implications for investors in Japan, with a falling yen on the horizon, and greater economic rigor. The problem of course is that this is a leap of faith. Japan may not recover for some time. Generally it takes an economic emergency to drive reform. In the case of Japan it might take a charismatic leader who can unit LDP party factions. There is little sign of a voter defection. Instead we are seeing a defection by LDP members into external groups. Surely this will lead to some less entrenched factional outcomes. Herein lies the potential for surprise.

A collapse in the currency is of course not good for investors, though I would expect such a collapse to be quick because broad based consumption and foreign investment (China, etc) will be more important than export surpluses. Clearly the country will need to address its lack of population growth, and such a change could be an important element of reform and recovery, and clearly good for the property market. I would however expect an increase in property taxes since the huge debt needs to be funded. The other question remains the outlook for interest rates. They will most certainly increase, but will they match the foreign increases as we look forward towards higher inflation.

Clearly Japanese stocks make a lot of sense as well. A weaker yen will provide greater stimulus to exporters. These exporters will benefit from retained earnings from offshore assets, as well as greater profitability from retained Japanese plant. Some Japanese stocks also offer excellent exposure to China.

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Andrew Sheldon www.sheldonthinks.com

The attraction of buying Philippines property

2009-07-25T18:20:00.000-07:00

We encourage people to buy property over the next few years in the Philippines. There are a number of reasons for this we have described in our eBook, both market related and also regulatory. There is the 2% population growth that few countries can match. There is the even higher rates of growth in satellite cities as people migrate to get jobs. There is the changes to the regulation of land use, which make it harder for people to develop land, and developers to build condos. These factors are just some of the factors which are going to increase property demand and reduce supply. These ideas and many others we explore in our eBook on "Buying Philippines Property". The Philippines is the only property market which has yet to experience a property boom. Its on the doorstep to China, its regional airports are already receiving direct flights from China, and the Philippines is already a Chinese-affiliated country.
The Dept of Tourism in recent years has also upgrades national tourist infrastructure. All the trends are good.....its just a matter of time. The Philippines offers more generous visa conditions than any other country. You can stay on a tourist visa in the Philippines for 18 months before you are obliged to leave. Hardly an obstacle since flights to Japan, China, Singapore and other places are only $US100+taxes, and most people have reasons for a change. The country is of-course English-speaking. Buy the report now!
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Andrew Sheldon www.sheldonthinks.com