Japan property market set to bubble again

REAL estate in Japan should never see another bubble. Having witnessed three in the last half a century, the second one a Godzilla-sized boom in the 1980s, investors would surely be wary and vigilant against another developing. And with commercial and residential land prices still four-fifths and two-thirds below their 1990 peak respectively, talk of another bubble may seem absurd.

However, as unlikely as it seems, a confluence of factors is contributing towards a nascent real estate bubble in the country once again. This new bubble's genesis was in 2013, when the award of the 2020 summer Olympics to Tokyo created a plausible scenario for rising real estate prices. Since then, growing tourist numbers and the prospect of more visitors has buoyed anyone in the business of offering accommodation. In addition, infrastructure investment - both large-scale by the government, and small-scale by individuals and corporates - is seen to be propelling the economy forward.

Adding to the Olympic-inspired enthusiasm is the recently agreed Trans-Pacific Partnership (TPP), one of the biggest trade deals of all time, involving Japan, the US and 10 other countries. The TPP will likely result in all real estate contracts being written in English, thereby encouraging foreign investment in the Japanese market.