The activities of Japanese property developers here are hardly homogeneous, but there is one thing they all share - a positive outlook for continued investment in the Republic.
Singapore's residential market has been a mixed bag for Japanese developers, with some projects seeing emphatic success while others struggling to move sales.
All of the developers interviewed have partnered more established local developers in joint ventures (JVs) for their projects here, largely to tap their development knowledge and experience. Indeed, many attribute their success here to such a strategy.
But there has been no shortage of stumbling blocks. Government cooling measures in recent years, for one, have slowed home sales, confirmed the developers BT spoke to.
Some such as Mitsubishi Estate Asia were hit especially hard. Its first and only residential development here so far, the Sky Habitat condominium project in Bishan, has sold only 30 per cent, or 154, of its 509 units between its launch in April last year and late March this year.
"After so many cooling measures from the government, now the residential market is not so hot, and we understand that," Takashi Utagawa, managing director at Mitsubishi Estate Asia, acknowledged.
Kenta Konishi, managing director at Sekisui House Singapore, agreed. Included in its handful of developments here are Watertown and Q Bay Residences. Nothwithstanding sales of about 99 and 83 per cent of the units in the two projects, Mr Konishi remains cautious.
"We cannot be too optimistic about the impact (of the cooling measures) so we have to be very careful to the response of the market," he said.
Most of the developers, however, remained largely undeterred by the measures, and continue to plan for a future here.
Shinji Yamana, managing director at ORIX Investment and Management, which developed Nassim Park Residences with UOL back in 2008, felt the cooling measures would introduce stability and reduce short-term speculation, ultimately benefiting investors in the long run.
"As ORIX is planning to be here long term, I do not foresee these changes derailing our future plans here," he said.
Mitsubishi Estate remained optimistic as well, even beginning development on another condominium in Bishan, right next to Sky Habitat. It won the bid for the Bishan Street 14 site late last year in a JV with partner CapitaLand, and the project will yield around 700 units, even more than its neighbour.
Another potential obstruction for Japanese developers looking outside their domestic market is the continued depreciation of their currency. The Japanese yen has depreciated significantly in the last six months. On Oct 24 last year, the yen was trading at 79.82 to the US dollar; on April 24, it was at 99.68, falling 24.9 per cent.
The yen's downward slide means that for these developers, whose core business lies in Japan and who thus make a large portion of their profit in yen, exchanging it for another currency to invest overseas has become increasingly expensive.
Despite this, the developers BT spoke to were unanimous in their optimistic outlook on international developments.
While acknowledging the increased cost of overseas investments, Mr Utagawa felt the yen's value was at an acceptable level for continuing business.
"So far the Japanese yen has been over-appreciated, so at around 100 yen to one USD, I think it's fine. I don't think it will continue falling by very much either, maybe to around 110 or 120," he said.
Some developers discounted the impact of short-term changes in the yen's value.
"Currency fluctuations are always unpredictable, especially over the long term," Mr Yamana said. "ORIX's decision to establish operations in Singapore is based more on strong fundamentals."
Jiro Ueda, managing director at Mitsui Fudosan Asia, concurred. "Ours is a long-term strategy, so the impact on our regional expansion, if any, will be minimal."
That the falling yen might actually facilitate overseas investments was another perspective that was put forward.
"The trend of Japanese currency depreciation has a positive effect in making our Singapore projects more profitable," Sekisui House's Mr Konishi said.
In fact, instead of scaling back on their overseas business, the developers all had plans to extend their presence in the region.
Mitsubishi Estate currently pulls in almost 8 per cent of its operating income from its international business activities in the United States, UK, China, Vietnam and Singapore; according to Mr Utagawa, the company aims to increase that figure to 20 per cent by 2020.
"Our new investment budget allocated to our international business is much bigger than what is allocated to our domestic business," he pointed out.
Mitsubishi Estate is currently exploring residential development opportunities in South-east Asia, though it declined to name specific countries.
Similarly, ORIX, which has partnered Federal Land in the Philippines, is developing two residential projects there; Mitsui Fudosan is looking at Malaysia, Indonesia, and Thailand for their residential and retail business.
For some, however, Singapore will remain the mainstay of their regional operations.
"We are planning to be stationed here, looking into the Singapore market as our main business," said Mr Konishi, though he mentioned Sekisui House Singapore was investigating regional markets as well.
Mitsui Fudosan's Mr Ueda noted that there were "higher risks" when investing elsewhere in the region, but those came with a strong growth potential.
Whether they will pursue these developments with their traditional JV partners, forge new collaborations, or set out on their own remains to be seen.
Mitsubishi Estate's Mr Utagawa said that while the company has a history of regional ventures with CapitaLand, it is now looking at "many companies in Asia" to partner with.
With Japan's average land prices finally bottoming out after a five-year slide, as well as such healthy prospects overseas, it seems Japanese developers will have no shortage of real estate opportunities for a while.
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