Japanese Developers Are Looking For Homes Away From Home

Japanese Developers Are Looking For Homes Away From Home
Theodora Lee Joseph, CFA

3 months ago2 mins

What’s going on here?

Japanese developers started looking to settle down in the US of A.

What does this mean?

Japan’s economy shrank at its fastest pace in two years last quarter. That makes business tougher, especially for companies that usually flourish or flounder in tandem with the economy, like construction firms. Meanwhile, though, the US housing market has only been getting stronger, despite high mortgage rates threatening to turn owners into renters. So it makes sense that Japanese home builders Sumitomo Forestry, Daiwa House, and Sekisui House are eyeing up stateside homebuilders to make the most of that lucrative market. They won’t be limited to small fry, either: the trio are each worth between $5 and $20 billion.

Japan’s economy shrank

Why should I care?

For markets: Good value comes for those who wait.

Japan’s currency is at one of its lowest points in over a decade. That means if you’re converting from yen, each US dollar is more expensive – and the same is true for US acquisitions. But patience is a virtue: Japanese companies can borrow yen for cheap now, then wait for US interest rates to come down as inflation settles, which would weaken the dollar. At that point, those forward-thinking businesses can snap up firms for better value – especially if the Bank of Japan raises Japanese interest rates and bolsters the struggling yen.

The bigger picture: Offices, not golf courses.

Businesses in Japan aren’t just contending with a shrinking economy: the population is whittling down too, so the country’s trying to squeeze all the life it can out of its many aging citizens. The government has pushed back the retirement age for specific roles, while breaking down other jobs into smaller, more manageable tasks. Plus, it’s loosening up immigration rules to attract a younger, more sprightly workforce from abroad. Watch out, soon-to-be retirees: Japan’s plans, if they work out, could reinvent how the world deals with age.

Japan population
Souce: Statista
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