scott146

Can Japan's Newest Real Estate Boom Be Sustained?

Interesting information...perhaps in the short term there is room for gains in Japan's real estate markets, but when one looks at the demographic situation in Japan the long term outlook for Japan's real estate market is strongly negative. Some researchers are projecting a 21% decline in the population of Japan between 2006 and 2050. That means less need for housing, and less need for commercial real estate to contain businesses that serve the consumer market. I have posted a worst case scenario for Japan's economy through 2050 titled "Japan and the fertility trap-a worst case scenario?" here...

BoJ to Maintain Accommodative Policy; Watching Real Estate Prices

Any price gains in Japanese residential real estate will be short-term; as population projections through 2050 have Japan's population shrinking 23% due to an aging population and low birthrates.

The New "Salaryman" and Changing Demographics in Japan (EWJ)

My impression is that Japanese women are choosing to enter the workforce and skip having children.

With respect to the traditional Japanese system where grandparents would live in the same house with their grown children and the grandchildren, I have seen sociological research that shows that this was an exploitative system with respect to the wives, as typically grandparents would live with sons and the daughters-in-law were treated almost in a serf-like manner. I can't think of the book title because it has been too many years since college. My belief is that young Japanese women are postponing marriage and children to escape the serf-like existence that was common under the multigenerational system.

Merrill Lynch's Jesper Koll, "Japan is Back, For Real This Time"

Thanks for responding to my comments. That is refreshing to see in a blog.

As you pointed out, Japan is a world leader in robotics. I have been thinking that one way that the US could deal with the movement of manufacturing jobs overseas would be to invest in roboticizing manufacturing processses. This would produce jobs maintaining the manufacturing systems, which jobs couldn't easily be shipped overseas.

There are two areas that I think Japan would do well to invest in that would provide economic growth and improve the country's standing in the world. First, I think that Japan should build a military force of a size that would allow Japan to take responsibility for its own security. As I am sure you are aware, there are many Japanese who would like to see the US remove its military facilities. I think that Japan should bear a greater portion of the financial burden of its own national security. Increased spending in this area would yield economic growth.

Second, I think that Japan should pursue an accelerated space program. This would provide technological spinoffs and raise Japan's profile in the world.

Finally, a book that anyone interested in Japan is Karel van Wolferen's book "The Enigma of Japanese Power." Although it was published a few years ago, it provides good insight into how Japanese government and businesses function.

Merrill Lynch's Jesper Koll, "Japan is Back, For Real This Time"

I agree with Koll's forecast of an increase in economic growth for Japan, but I feel this will be due to increased spending on healthcare for the aging population.

I don't feel that Japanese corporations will be able to borrow at extreme low rates going forward. I feel that the Ministry of Finance is reaching its limit in being able to issue notes and bonds at the extreme low rates that we see now. The passage of post office reform will allow individual Japanese savers to shift their investments out of JGB's into higher yielding assets such as US treasuries and corporate debt.

The export industries that Japan has been heavily reliant on now have significant global overcapacity. Steel and consumer electronics are not growth industries for Japan in my view.

I don't see where a big jump in productivity is going to come from given the aging of the workforce.