Nicholas Spiro

The View | Japan’s economy may be lagging, but its property market is a star performer

Although Japan’s economic recovery is struggling to gain traction, it has been one of the most resilient and best-performing real estate investment markets since the pandemic erupted

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Pedestrians wear face masks in Tokyo’s Shinjuku area on April 24 after the Japanese Prime Minister Yoshihide Suga declared a state of emergency in an effort to curb a surge of coronavirus cases. Photo: ZUMA Wire/dpa

Nicholas Spiro

Published: 9:15am, 29 Jun 2021Updated: 9:15am, 29 Jun 2021

In the developed world, the post-pandemic recovery is proceeding apace. In the United States, 46 per cent of the population are fully vaccinated, the rate of expansion in the manufacturing and services sectors is close to a historic high and a key measure of core inflation increased at its fastest rate in nearly 30 years last month.

Even in the euro zone, whose recovery is less advanced and which initially struggled with its vaccine roll-out, business activity is growing at its quickest pace in 15 years as economies reopen and immunisation programmes accelerate sharply.

In Japan, however, the recovery is struggling to gain traction. Survey data published last week showed that private-sector activity was in contraction territory at the end of June, dragged down by a resurgence in Covid-19 infections that forced the government to impose a state of emergency in the biggest cities.

While the restrictions have just been eased, fears that next month’s summer Olympic Games in Tokyo could cause a much sharper spike in cases have led to a public outcry over the government’s decision to go ahead with the event.

In the US and Europe, the return to normality means growth and a withdrawal of monetary stimulus. In Japan, it means a continuation of deflationary pressures and ultra-loose monetary policy. Just as worryingly, Japan is lagging far behind on vaccinations, with only 9 per cent of the population fully inoculated.

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Yet, while Asia’s largest advanced economy may be missing out on the dramatic rebound in the developed world, it has been one of the most resilient and best-performing real estate investment markets since the pandemic erupted.