Unlike The Chinese, Japanese Investors Favor Domestic Equities Over Overseas Real Estate

Japanese high net worth investors’ most preferred asset class is domestic equities and unlike their Chinese counterparts, many aren’t keen on overseas real estate investments, according to an online survey by the National Australia Bank National Australia Bank (NAB), which canvassed more than 500 wealthy individuals in Japan.

The lure of Japanese equities is unsurprising. Thanks to Abenomics, dividend payouts by Japanese corporates have moved to near all-time highs. While global dividends have surged 11.7% to a record $426.8 billion in the second quarter, the growth was mainly driven by companies in developed markets, in particular Japan and Europe, Henderson Global Investors says in a note. Dividend growth in Japan climbed 18.5% to reach $25.5 billion in the three months to June. In the U.S., dividend growth was 13.8%, while in Europe, the increase was 18.2%.

The next most popular asset class for Japanese HNWIs is foreign currency deposits. Four in ten have foreign currency deposits in their portfolios, according to the survey.

Overseas real estate did not rank in the top four investments for HNWIs in Japan, says the NAB survey published this month. However, one in ten investors with global portfolios express a desire to invest in overseas property, it says. The survey also showed that investors with global portfolios have a more positive outlook on their returns, compared to those holding only domestic investments.

Source: Henderson Global Dividend Index.

Source: Henderson Global Dividend Index.

“Whilst it is not surprising that high-net-worth Japanese investors with global portfolios are happier with their investment returns, it is surprising that relatively few of them choose to invest in overseas real estate assets,” says Kohei Tsushima, the general manager at the bank’s Tokyo branch. The trend is in contrast to “Chinese high-net-worth investors, who have been very active investing in real estate in every major market in the world.”

While China’s wealthy individuals have varied reasons for investing overseas, one of the motivations is a slowing domestic market, where the real estate sector is weighed down by issues including tight financing and high inventories.

The latest figures from Jones Lang Laselle (JLL) showed that overall Chinese outbound real estate investment for the first half of 2014 reached $5.4 billion, 17% higher than over the same period in 2013.

Chinese investors were active buyers in overseas commercial real estate, investing almost $4 billion in the sector, however the growth has predominantly come from residential investments, which is 84% higher than last year at $1.5 billion. London was the most popular destination, attracting an investment amount of $2.3 billion from Chinese buyers. San Francisco and Chicago followed with $548 million and $365 million, respectively.

“Given the continued rise in Chinese outbound investment over the first half of the year and the pipeline of groups looking to invest outside of China, then full year 2014 outbound investment should easily eclipse the 2013 level of $11 billion,” says David Green-Morgan, global capital markets research director at JLL.

Source Article from http://www.forbes.com/sites/beelinang/2014/09/04/unlike-the-chinese-japanese-investors-favor-domestic-equities-over-overseas-real-estate/
Unlike The Chinese, Japanese Investors Favor Domestic Equities Over Overseas Real Estate
Japanese Class – Yahoo News Search Results
Japanese Class – Yahoo News Search Results

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