* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
General Edition Sunday, October 21, 2007 Issue No. 442
- What's new
- Candidate roundup/Vacancies
- Upcoming events
- News credits
SUBSCRIBE to, UNSUBSCRIBE from Terrie's Take at:
-------- Last Call for Low-cost US Life Insurance ---------
Bargain Prices Expire for Foreign Nationals in Japan.
If you are a foreign national living in Japan, you will no
longer have the option to obtain American life insurance
coverage after October 2007. Japanese life insurance is
considerably more expensive than a similar policy from an
American company. This option for foreign nationals is
possible only until October 31, 2007.
After this date, Transamerica Occidental Life will not
accept any new applications from expatriates in Japan.
A sample monthly premium for a 35-year old male for
US$1 million is just US$35.88. The same coverage for a
45-year old male is US$61.25, and for a 55-year old male is
E-mail today for a full, personalized illustration of the
policy's costs and benefits.
For more details: Response@pacificbridge.net
+++ WHAT'S NEW
Walking around the inner suburbs of Tokyo, those inside and
near to the Yamanote line, you can see more and more
evidence of the impact that REITs and real estate firms are
having on central city land prices. Within 1-2 blocks in
any direction in a residential area, you'll see vacant
land, coin parking lots (i.e., vacant land paying its own
taxes), and cleared construction sites -- all waiting for
the "go" sign from top management to start building
The problem is, the condo market isn't doing as well as the
REIT's stock prices might indicate, and indeed it seems
like the overall market is cooling off at a worrying pace.
The Nikkei says that although builders throughout Japan in
the April-September quarter limited the number of new
condos released to the market to just over 30,000 units,
the lowest number built since 1998, the number actually
sold has fallen even faster.
Apparently the first quarter sell-thru of new condos
nationwide was 71.1%, down 8.2% over a year earlier
-- and certainly not good news for builders. The newspaper
says that 70% is considered the break-even point between
growth and recession in the condo industry. In Tokyo the
sell-thru rate is still a healthy 75.7%, but the further
you go out in to the suburbs, the story gets much worse. In
Saitama, the sell-thru is just 60.1%, about 13.5% off from
last year, and in Kanagawa it is 67.9%, off 16.1%.
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The Nikkei says that the slower sales are due to rising
prices -- not hard to imagine. In Saitama the average condo
is selling for JPY37.52m (US$323,000), while in Tokyo
it is JPY63.14m (US$544,000). Apparently the prices are
going up for two main reasons: firstly, the increase in land
prices, caused both by an improved economy and also
because supply is being choked off by over-eager building
companies and REITs, anticipating ever-higher prices.
Secondly the increase in building costs is being caused by
the tighter building laws. Readers will recall that after
the Aneha building scandal, where lax inspection processes
allowed more than 120 multi-story buildings around the
nation to be constructed with insufficient steel formwork,
the government said it would tighten up building
And it has... The result is that in Tokyo at least, the price
per square meter shot up last year by least 17.5%. It now
costs around JPY870,000/sq. m. to build an average 70
sq. m. m2 condo in Tokyo.
So is the residential market in a temporary pause, or have
we reached a major price plateau?
We think there is no question that house prices are already
at the top end of the scale for the average working stiff.
Most banks limit a person to 5-6 times their yearly salary
(the Debt-to-Income ratio) as the amount they can loan, and
further require at least some deposit. So, given the salary
of the average worker is just JPY4.64m, and that of the
average household is about JPY5m, the limit to buy new digs
for the average family is currently about JPY27m or so. As
we see it, this should not even be enough for a new small
condo in a Saitama bedtown.
But, clearly people are still buying, even if in smaller
numbers. How are they doing it? Well, for the average
salaryman there is vendor financing if they are buying a
condo in a large bed-town development. Then there are some
employers who provide home loan assistance to their
employees, as a retention measure. And of course there are
the grandparents, who are now allowed to gift some of their
assets tax-free to their children while they're still
In addition, there are also some 2m (our estimate) or so
people nationwide who fill senior management positions.
The Nikkei says that the annual base salary and bonuses
for these people can amount to up to 4.8 times that of the
average worker, thus allowing them to reach the
"sub-ichi-oku" (under one million dollars) loan level needed
for a nice condo or modest home outside the Yamanote
line in Tokyo.
Above that level, who is buying the lavish 1-oku apartments
that we're now seeing sprout up all over downtown Tokyo?
We're talking about the luxury apartments in Hiroo,
Marunouchi, Shinagawa, and Shibaura (Tokyo Bay), that
measure in excess of 150 sq. m. or more and which typically
sell off the plan for JPY120m-JPY180m each. Well, as we
reported in our Take last week, at least some of Japan's
working generation (at least 400,000 people) are getting
rich out of the current export boom, and they are trading
up. And of course there are the 6m soon-to-be-retired baby
boomers -- some of whom will be millionaires at least
So there is some capacity for further upwards movement in
high-end property. However, we predict that this trend will
be localized, servicing the elite, and dragging along the
average property prices in the process. The reality for
everyone else is that a new home in the major cities and
particularly in Tokyo is moving out of the reach of the
average person -- and the gap is getting bigger.
Thus, just as we said a few months back when we felt that
commercial property was peaking because the average
company wasn't making enough profit to pay the extra
rent, we are now also saying that the residential property
market is peaking -- for much the same reason. Quite
simply, apart from the niche luxury market, it's a simple
matter of economics. If the property is too expensive for
most people to afford, they either don't want to buy it, or
even if they did, Japan's conservative banks won't let
And in light of the subprime problems in the USA, that's
probably not such a bad thing...
Lastly, two interesting items later in the newsletter that
we would like to point out. 1) We have more on the
Immigration issue for re-entrants, in the FEEDBACK section
at the end of this newsletter. 2) If you have a bilingual
friend with some interest in sales and banking, there is a
unique opportunity in our CANDIDATES (Jobs) section to join
a major foreign bank as its junior sales manager for
foreign clients. Normally these types of entry positions
don't come up often, but we just happen to have one such
opening this week.
...The information janitors/
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- Lending squeeze pushes up bankruptcies...
- ...And METI feebly tries to give something back
- Tax situation is a mess
- Japanese riches more evenly spread
- Acom returns to profit
-> Lending squeeze pushes up bankruptcies...
We don't know why they did it, but recent government
legislation covering lending conditions for small and
medium-size (SME) companies is having a very negative
impact on them, increasing the rate of bankruptcies. The
new rules, which cover the various municipal guarantee
corporations which normally support a loan application of a
company to a bank (i.e., they serve as a guarantor) require
that the guarantee corporation will no longer carry the
entire risk for a company's loan. Instead, the banks will
have to carry up to 20% of the risk -- a factor that has
led to the nation's conservative banks reducing the amount
of loans. As a result, corporate bankruptcies for April thru
' September jumped 23.5%, to 5,503 cases, and are expected
to rise further in the next quarter. ***Ed: We think it's
crazy that institutions set up specifically to guarantee
loans for SMEs are now pulling back from that mission.
Japan's banks are notoriously risk-averse when it comes to
SMEs, and now with a higher risk impact, they are going to
be even more selective about who they loan to. One wonders
whether we even need the guarantor corporations if they
can't go all the way.** (Source: TT commentary both from
reader MM's feedback, and also from the nikkei.co.jp, Oct
-> ...And METI feebly tries to give something back
While the credit squeeze is on for the SMEs, METI has
thrown them a bone by offering to reduce the fees companies
have to pay to guarantee corporations after they are
approved, but before they get the actual bank loan. The
fees are currently 1.35% p.a. and will be reduced to 0.2%
for the whole period between the approval and the actual
loan coming through. The legislation hasn't been finalized
yet and will be passed in the Diet next year. ***Ed: METI
is making a big thing out of getting these cost cuts
through, but the reality is that we're talking a few hundred
thousand yen, tops. A feeble response to the loan
guarantee law changes.** (Source: TT commentary from
nikkei.co.jp, Oct 9, 2007)
-> Tax situation is a mess
The Economy Minister has said that Japan will need new tax
revenues of JPY6.6trn (US$57bn) over the next four years,
in order to meet its annual target growth rate of 3%. In
addition, government will need to reduce spending by
JPY14.3trn (US$123bn) over the same period. The Minister's
comments came as the debate over an increase in consumption
tax has re-emerged. Right now, the government is suggesting
an increase from 5% to 7% in consumption tax. ***Ed: Well, at
least that's less than the 10% being punted around during
Koizumi's watch. The tax discussion is part of a larger debate
over the future funding of pensions. The question is whether
to increase taxes or drop benefits. We think it's inevitable
that the pension age will rise to 70, as it is in a number of
Western nations, consumption tax will also go up, AND, the
base pension amount will drop.** (Source: TT commentary
from allheadlinenews.com, Oct 19, 2007)
-> Japanese riches more evenly spread
A new Merrill Lynch/CapGemini survey has found that 43.7%
of Asia's 2.6m millionaires (now defined as those with more
than US$1m in net assets other than their primary
residence) are living in Japan, followed by 20.6% in China.
While it may not be surprising to find that the bulk of
wealth is still to be found in Japan, it is interesting to
note that the average millionaire in Japan has the region's
lowest net worth, at US$2.5m, while those in HK have
US$5.4m, in China US$5m, in Singapore US$4.9m, and in each
of Indonesia and India US$3.5m. (Source: TT commentary from
forbes.com, Oct 19, 2007)
-> Acom returns to profit
Despite GE's withdrawal from the consumer finance market,
we've said all along that the Japanese lenders are still in
good shape. Sure enough, now that the shakeout is just
about done, Acom, Japan's second-largest consumer finance
firm, says that it is making profits again. In response,
Acom shares soared 18% in the same day, while other
consumer finance firms, such as Takefuji, also saw their
stock have similar increases in value. Apparently the four
biggest lenders: Acom, Takefuji, Aiful, and Promise
combined suffered a record JPY1.8trn (US$15.5bn) loss last
year. ***Ed: It was on the cards that once the impact of
consumers exercising their rights to recover any excessive
interest charged on past loans was dealt with, then these
companies would naturally return to profit! Indeed, they have
a licence to print money -- receiving as they do a 17-%18%
margin over the cost of the money, with very little overheads
other than ATMs and call centers... Following on from the
Acom announcement, we expect that Shinsei and other foreign
lenders will start experiencing their own recoveries over the
next year.** (Source: TT commentary from bloomberg.com,
Oct 19, 2007)
NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.
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+++ CANDIDATE ROUND UP/VACANCIES
=> LINC Japan Ltd., an affiliate of the LINC Media group,
is actively marketing the following positions for market
entry customers setting up in Japan, as well as other
employers of bilinguals.
** HIGHLIGHTED POSITION
The Tokyo office of one of the world's largest banking and
financial services organizations is urgently looking for
an international-customer banking junior manager. The
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person should also have native-level Japanese skills.
Successful candidates will be highly motivated, possess
strong sales and business development ability, and have
proven customer service skills. Candidates with a
financial background are preferred, but people with a
general sales background will also be considered.
Remuneration will be JPY5-7M annually.
Candidates can contact email@example.com for
Contact firstname.lastname@example.org for more information.
* Operational Reporting and Analysis Manager - JPY11+m
* Sr. Inside Sales Manager, bilingual - 11-12m
* Enterprise software salesperson, bilingual -- JPY10-12m
* Oracle, open source SQL DBA, bilingual -- JPY6-10m
* Applications support engineer, SQL experience -- JPY6-8m
* Inside sales representative, bilingual -- JPY7-8m
* Jr. System Administrator, bilingual -- JPY6-8m
* Regional Account Manager - JPY6.5-7.5m
* IT software solution sales, bilingual -- JPY6-7m
* IT Administrative Officer, bilingual -- JPY6-7m
* Onsite Project Coordinator - JPY6-7m
Bilingual Japanese in his early 40's is seeking an
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+++ UPCOMING EVENTS/ANNOUNCEMENTS
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The Miss Universe Organization, National Director Japan
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next seminar to hear from Japan's very own 'Beauty Queen
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Date/Time: Tuesday, November 6, 7:00 pm
Location: Foreign Correspondents' Club of Japan
IT events announcements are priced at JPY50,000 per week.
For more information, contact sales at japaninc.com
In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to firstname.lastname@example.org.
-> In TT440, we provoked a storm of reaction on our news
item about the Immigration Bureau's plan to fingerprint
and eye-scan every foreigner arriving in Japan, including
* Our reader says: I have just read your article
"Fingerprinting foreigners" - and agree with every word you
However you do not mention the Automated Gate system to be
established to facilitate re-entry into Japan for those
resident foreigners who have pre-registered their biometric
data. Please see page 3 of attached file "Immigration
Control Act-240506.pdf". I have confirmed with Kobe
Immigration that the Automated Gate system is to be
established by November 20, 2007, but only at Narita!!
I am desperate to pre-register, but Kobe Immigration refuse
my written requests as they know there will be no Automated
Gate at KIX (for the foreseeable future anyway), the
Airport I use a Kobe resident. A friendly official at KIX
advised me October 17 on return from a business trip to
encourage as many foreigners as possible to complain, as
that would help to speed up the introduction of the
Automated Gate at all International Airports in Japan.
I have taken the man at his word - part of the reason I am
emailing you! So after 20 years living in Kobe I feel
doubly discriminated against and insulted. Kobe Ward Office
proudly told me they had long since destroyed my
fingerprints, and Kobe Police refused to take my prints
(for me to give to Kobe immigration) as I was a citizen of
good standing! Catch 22 all round !!
* We respond: The latest gossip we've heard is that
Immigration is being lobbied by various foreigner groups,
and in particular, the chambers of commerce, and will start
making details on the "Automatic Gate" for re-entrants
available soon. So far, our understanding is that you in
fact can't pre-register at Immigration, but instead, on exit
from the country you will get to leave your details then and
pick up a card to use on your re-entry.
No further info on how this will work though, since surely
making a pass-card will take time and has to be
sophisticated enough that it can't be scammed... right?
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SUBSCRIBERS: 12,235 as of October 21, 2007
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+++ ABOUT US
Written by: Terrie Lloyd (email@example.com)
HELP: E-mail Terriefirstname.lastname@example.org
with the word 'help' in the subject or body (don't include
the quotes), and you will get back a message with
Send letters (Feedback, Inquiries & Information) to the
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For more information on advertising in this newsletter,
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Copyright 2007 Japan Inc. Communications Inc.
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