The Blackstone Group, known as the “benchmark of real estate”, began to run into the market again, keeping an eye on Japan.
The last time it caused a sensation was last year when the yen fell to a 30-year historical low, and large overseas conglomerates headed by Blackstone rushed into Japan to “buy the bottom”.
So what did the giants smell this time?
According to a recent Bloomberg report, Blackstone, the world’s largest alternative asset management company, is stepping up its investment in Japan.
Daisuke Kitta, director of Japanese real estate at Blackstone Group, said in an interview: “Since this spring, the company is making more acquisitions (in Japan) and has issued multiple bids. Our investment scale has increased, and now there are several bids. Already out there, including hotels and data centers in the pipeline.”
But unlike before,
Whether the yen depreciates or not is no longer the core of Blackstone’s choice to take a heavy position in Japan. It is mainly because the “high interest rate storm” overseas has once again swept back.
In the past half a month or so, the yields of U.S.-led and multi-national government bonds have set a new high in more than ten years.
On the trading day last week, the 10-year U.S. bond yield rose to 4.33%, the highest level since 2007, and the 30-year U.S. bond yield broke through the high of 4%, reaching 4.42%, a 12-year high;
In Europe, the UK 10-year government bond yield soared to 4.805%, the highest since 2008, the German bond yield rose 7 basis points to 2.62%, and the Italian 10-year government bond yield reached 4.26%;
Bank of America even issued a warning to brace for a 5% era as yields moved higher.
However, behind the rise in the yields of national bonds in many countries, it is revealed that internal inflationary pressures are hard to dissipate and debt inflation has led to rising debt costs and squeezed financing space for various countries.
But only Japan is an exception.
Japanese assets, represented by real estate, are not only the cheapest asset prices in developed countries, but also have the lowest financing interest rates in the world, which presents a perfect arbitrage opportunity.
Usually, when overseas investment institutions purchase Japanese real estate, in order to improve investment efficiency, they will pay 50-70% of the total price of the subject matter through loans from financial institutions (banks);
When the annual rental income is divided by the purchase price, the greater the difference between the investment yield and the loan interest rate , the higher the return is expected for the investment institution.
in other words,
Under the trend of returning to the “high interest rate era” overseas, the maintenance of relatively low interest rates has made Japan a place where the income of a few assets in the world exceeds the cost of borrowing!
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If one year ago, the depreciation of the yen was the biggest benefit of “repurchase” Japanese real estate;
Today, one year later, low interest rates to leverage assets is the ultimate way to invest in Japanese real estate.
Capital is honest.
According to MSCI Real Assets, in the first half of 2023, Japan has become the most active commercial real estate investment market in Asia, with transaction volume reaching US$16.3 billion.
Blackstone, which continues to chase after the victory, also said that in the next five years, it may deploy 2 billion US dollars (about 291.8 billion yen) in Japan.
Among them, Japan’s low financing cost is one of the key factors. At the same time, the Japanese economy has recovered significantly, which is also an important indicator of investment.
After all, no matter how low the loan interest rate is and how easy the leverage is, the one who is willing to bet still depends on the fundamentals of the economy.
As we all know, the recent transcripts handed over by Japan can look like this:
In the second quarter of 2023, GDP will grow at an annual rate of 6%, the highest growth rate in three years;
In the same fiscal year, the net profit of listed companies increased by 46.4% year-on-year;
The number of visitors to Japan and the consumption amount have recovered to 80% and 95.1% of the pre-epidemic levels respectively;
The person in charge of Blackstone’s Japan region believes that Japan’s epidemic situation was released later than other countries, which means that the growth potential related to recovery has not been fully released, and there is room for further development.
And this will undoubtedly become the fuel for Japanese assets to enter the upward channel.
It is not difficult to see here that Japan is the only place where low interest rates are low, the economy is improving, and assets are appreciating. At present, these three points can be satisfied at the same time.
Well, for most ordinary investors, we always said in the past that we should pay attention to the movements of smart people and smart money, but in addition, we should actually learn their “playing methods”.
For example, whether it is the Blackstone Group or Mr. Buffett, it is nothing more than:
First rely on Japan’s dividends, and then use Japan’s interest rate differentials to leverage financial leverage and borrow Japanese money to guard and increase its own assets.
And this is exactly what ordinary investors can imitate.
I believe that friends who have continued to follow us should have learned that almost from the beginning of the year to the middle of the year, the most inquiries our Nuggets Japan team received were:
How to apply for a loan to buy a house in Japan?
As mentioned above, more and more domestic investors are beginning to realize that as long as the yield difference between the rent-to-sale ratio and the loan interest rate is greater, the effect of compound interest will be more impressive.
And this is exactly the advantage of our Japanese Nuggets team——
Confident and capable of obtaining the most ideal loan terms (leverage ratio) in the industry for customers.
Generally speaking, Japanese banks rarely lend to overseas buyers, and it is very difficult to obtain loans from Japanese banks. Even for banks that can provide loans for overseas buyers, the mortgage interest rates announced by banks are generally between 2.2% and 3%. However, as a company that has been deeply involved in Japanese real estate for 7 years, thanks to the deep partnership between Zhigu and banks, overseas buyers can obtain preferential interest rates through our bank loans: basically between 1.8% and 2%;
It is equivalent to increasing the “geographical arbitrage” of the assets of customers and friends .
At the moment when global real estate is ebb and flow, the “cake” called the real estate market is shrinking in some places and growing in some places, and Japan, which has been “depressed for 30 years”, is undoubtedly the latter.
So whether you want to share a piece of the action depends on everyone’s choice.
In 2023, Japan will become a global investment depression. Leveraging overseas leverage and guarding personal assets have become a new trend.