4. Risks for Property Investment
The next question was about which risk factors were the top three influential concerns for the property investment market.
Foreign factors basically have indirect effects on the domestic property market, however, more respondents chose "Global economy" than "Domestic economy," and not a small number of respondents chose "Geopolitical risk" as well (Chart-6).
Economic growth in many emerging Asian countries has slowed down, affected by the stagnating Chinese demand. It is anticipated that office demand from global companies and shopping and hotel demand by inbound travelers will plateau. In addition, a negative effect is the concern over foreign capital entering the Japanese property investment market, which ballooned in 2014.
Terrorist attacks have expanded out of the Middle East into developed cities such as Paris and Asian cities such as Bangkok and Jakarta, suggesting even the Japanese property market can no longer ignore geopolitical risks.
On the other hand, "Domestic economy," the most influential factor on the domestic property market, was chosen by only 17.9% of the respondents, as the current economic conditions are still sound. In the same way, only a limited number of respondents chose "Interest rates," as the loosening monetary policy is expected to continue for the time being. The number of respondents who chose "Construction cost" was also limited with related prices recently leveling off after years of dramatic rise.