Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She understands the importance of transparency in today’s international market. Through her insight, she focuses on breaking barriers and helping investors feel confident about their property investments.

How did you get into the real estate industry?

I started my career as a mortgage agent in Toronto, Canada, first residential then commercial, working with banks as well as private lenders. When the industry took a hit after the financial crisis in 2007, I left the mortgage industry, but continued to remain a part of the industry through contributing articles to various e-magazines in the U.S. and Brazil. Now, I am back in real estate, this time in a marketing capacity in the unique position of building relationships with foreign investors to help build Japanese real estate portfolios.
 
What are some of your career highlights from your time in the industry?

Over the years, I have become familiar with the real estate market on many different levels: understanding debt and equity financing with residential and commercial loans in North America; building relationships with clients around the world through social media marketing, chatting in forums and contributing to popular online magazines such as RETalk Asia, REI Wealth Monthly in the U.S. and Business in Japan in Tokyo; and managing accounts for NTI finding suitable properties for foreign investors.

What are the biggest issues facing the industry in your market at the moment?

First, from a market perspective, even though the last three to four years have been very kind to properties located centrally in larger cities, particularly in Tokyo and Fukuoka, investment for capital growth has been highly speculative. The last two decades have seen shrinking or flat prices. Since this trend is new, investors have been focusing more on cash flow investments to benefit from rental income for now, while treating any capital growth as a bonus.

Second, natural disasters can happen anytime and anywhere in Japan leading to investors’ uncertainty of how their properties would be affected. The good news is investors are protected under insurance at a surprisingly low cost of only a few dollars a month. Furthermore, the building standards act was revised in 1981 for earthquake resistant construction methods. But, even buildings built prior to 1981 can be retrofitted to bring them up to code by renovating, repairing and re-strengthening exterior walls. During the investors’ due diligence process, as long as the building’s accumulated funds pool for repairs shows sufficient funds, there is very little risk to the investor. 

How has the industry changed in the time you have been involved with it?

The industry is directly affected by global economics. I have seen, for example, investors leaning toward the safe-haven of Japan properties after a drop in currency in Singapore, limited investment opportunities for the middle-class in China, and unpredictable markets in the U.S. and Europe, all creating a need for safer investments. Locally, we have seen the Tokyo market reach its peak resulting in the trickle-down effect of real estate investments in areas outside of Tokyo such as Sapporo, Fukuoka, Nagoya and other first, second and third tier markets. 

What changes would you like to see over the next two to five years in the industry?
One of the greatest challenges investors face is trying to get a loan from Japan to invest in Japanese properties. I would like to see banks relax their lending criteria for non-residents. Right now foreigners can’t even open a bank account. The rare few banks that do offer accounts for foreigners make it extremely unpractical to operate. For example, internet banking systems are strictly Japanese, and every transaction costs far too much, only feasible for very large transactions. Furthermore, banks such as Singapore and Hong-Kong based ones in Japan, only lend against "Class A" assets, which are newish properties in the hearts of the biggest cities, purely speculative and not high-yielding. The most important factors for loan approval are visa status, length of time in Japan and salary for at least five years. I would like investors to be able to benefit from Japan’s low lending rates. 

What advice do you have for people who are just starting out in similar careers?

I have learned that each investor has his or her own situation, needs and purpose. Finding a solution to each unique challenge is the best way to gain knowledge and experience in the industry, and build trusting relationships, which through word-of-mouth will open doors for a broader market. 

What do you believe is a unique factor of doing business in your market?

I think that most investors have a hard time believing in transparency and safety beyond investing in their backyard. I try to break these barriers by showing the value of investing in the Japanese property market such as the business culture, locations, size features, and understanding the cash flow from the investment. First time investors are pleasantly surprised to find that they don’t need to travel to Japan for the purchase, property management, financial management and eventual resale. I think this is quite a uniquely convenient factor. 

What is your favourite holiday destination in Asia?

I have already travelled across India experiencing its rich culture and history, and trekked through Kashmir and Nepal. My next journey in Asia will be across Japan to experience the vibrance of Tokyo, the beauty and slopes of Sapporo, the food of Osaka, and of course, a ride on the maglev bullet train. 

What’s your outlook for your sector/s for the next year?

To be honest, I don’t really view Japan as a capital growth environment. But, we could see some push and pull cycles of price increases up until the 2020 Olympics. Meanwhile, I think investors will probably stay focused on higher rental yields in cities with stable or increasing population.  Also showing signs of increasing is the demand for elderly-friendly dwellings, over the next ten years. Investors will also likely lean toward Japan property investments to take advantage of currency peaks and profit from the exchange, particularly with volatility at play in China, Europe, U.S., and a host of other Asia-Pacific nations. 

Where would your next purchase be?

I am interested in affordable investments with high-yield cash flow incentives to meet my retirement goals. That rules out the U.S., UK, parts of Canada, and Australia. So, for me, my next purchase will be in Japan. If only I had discovered the market many years ago.