Investing Japanese Real Estate Market, May 16. 2013

It’s amazing how many people in Mongolia think ‘Well in the long term, residential prices always go up, don’t they?’ Alas this is just wrong.

Residential property prices don’t always go up. In fact over the very long term property tends to appreciate in line with inflation – no more, no less. This is shown by long-term studies of property values such as the famous index, which recorded house sales and purchases on Amsterdam’s Herengrach canal from 1628 to 1973. The price increase over 350 years was indistinguishable from zero, after inflation. The same has been shown for US long-term residential property values. Property prices tend to cycle around a long-term mean.


Yet,residential property can in fact be a great investment, protecting against inflation, paying good rent. And if you buy wisely, it will make you a nice capital gain. However, if you look at real estate market in Mongolia, the price has gone up 3-4 times in the last 4-5 years.And, inflation is lower than used to be.So, itmay not be a good ideato buyproperties in Mongoliaat thismoment. Also, manyrichMongolians have already investedin real estate.

In that case, how aboutinvestingto someother countriesto diversifyrisk? Yes, that can be a good idea. If children go overseas to study, you may want to buy a condo there. However, they are very expensive in most cases. Now, are there any market where prices and valuation are cheaper and easy to rent to somebody else when you do not use it?We believe Japanese real estate market could offer very good return forthose Mongoliansand other foreigners.Below are to explain why investing in real estate market in Japanis attractive.

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