5. A Look at Japan

Geography Page 94

Dependent on imported raw materials, fossil fuels Positive trade balance Unrestricted flow of capital and financial transactions Unique to Japanese business—the Keiretsu Economy and Business Pages 95-96

Japan’s National Debt 230% of its GDP Offset by trade surplus, foreign currency portfolio Increasing consumption tax to 10% by 2015 Investor confidence Difficult reckoning in 10–20 years?  Aging population  Shrinking workforce  Cost of debt service  Waning export competitiveness Page 96

Human tragedy Lost families, homes, and livelihoods 363,000 buildings completely or partially destroyed; damage to infrastructure Most expensive natural disaster in history A decade to rebuild Opposition to nuclear power plants 2011 Disaster Pages 96-97

Scarcity of land Many small landholders, small land parcels Land lease system Landowner maintains title to the land Leaseholder receives the right to construct and occupy a building on it Land Lease Pages 97-98

No restrictions or conditions No government permission or approval Free flow of capital May establish a operate a business But…. Mortgage financing obstacles Can Foreigners Own Real Estate? Pages 98-99

Home values depreciate Sell at deep discounts 25-year old home has no value Most rebuilt after 25–30 years No value in quality construction Japanese favor new Previous owner’s bad fortune? Secondhand Housing Page 99

Homeownership rate—61% Small living spaces, condos—45 m2, single family homes—121 m2 Land prices barometer for new home prices 1 tsubo = two standard tatami mats (3.3 square meters, 35.5 square feet) Homeownership Trends Page 100

Pro-landlord, expensive process 5-7 months rent Key money—thank you for privilege of renting Direct transfer of rent payments from the tenant’s bank account Foreign Resident Registration Card Rental Property Pages

Real estate business licensing Sales agent licensing Ministry for Construction regulates commission rates Real Estate Professionals Page 102

Office Vacancy Rates Page 103

Despite weak growth, favored country for real estate investment Investment in senior housing Increase of vacancies Share houses and common living 2020 Olympics Abenomics Weakening Yen Top Trends Pages

Beyond the Basics Names Initial Contact and Introductions Intermediaries Business Relationships Business Cards Meetings Demeanor Negotiations and Decisions Social Etiquette A Few Taboos Pages

Amae Hada to hada Nemawashi Tatemae and honne Building Relationships Page 109

6. A Look at India

Geography Page 116

Economic Growth— surpassing China? Growing Middle Class Homeownership—86% Subsidies and Rising Commodity Prices Infrastructure issues Spreading urbanization, crowded cities Modern India Pages

Torrential downpours 80% of the annual rainfall June to August Beneficial monsoon season bolsters the economy Monsoon Season Page 120

FDI Top FDI Investors in India 1.Mauritius* 2.Singapore 3.United Kingdom 4.Japan 5.Netherlands 6.United States 7.Cyprus* 8.Germany 9.France 10.Switzerland Top Sectors for FDI 18%–Services 10%–Construction Development: Townships, Housing, Built-Up Infrastructure 7%–Telecommunications 6%–Computer hardware and software Pages

Your Next Client? United States: 2.2 million Canada: 1 million U.K.: 1.5 million S. Africa: 1.2 million Malaysia: 2 million Singapore: 590 thousand Saudi Arabia: 1.7 million UAE: 1.7 million India Diaspora Page 123

NRIs and PIOs Non-Resident Indian (NRI) Person of Indian Origin (PIO) Overseas Citizen of India (OCI) Prime source of investment in real estate Government encourages ties and long term investment NRI Colonies--full- amenity communities Pages

Diaspora pulls Indians abroad Career opportunities Family ties Immigration Real estate business potential Why is This Important? Pages

Bank Accounts Page 125 Determines flow of funds for real estate transactions Non-Resident Ordinary Rupee Account (NRO ) Non-Resident External Account (NRE) Foreign Currency Non- Resident Account (FCNR) Annual repatriation limit of US$1million RBI approval for repatriation NRIs only Funds must be from abroad Government approval required to withdraw funds for real estate purchase NRIs only Foreign currency from abroad

Indian property law  Maintain real property ownership by resident citizens  Quell speculation Limit ownership to Indian citizens, those with family ties No ownership of agricultural land, plantation property, or a farm house Buying Real Estate in India Page 126

Crore and Lakh Page Crore = 10 Million 1 Lakh = 100,000

Stamp Tax Registration Fee Capital gains tax Real estate agent fees Registration Property tax Transaction Costs Page 127

Foreign Ownership? Page 128 May purchase a residence Prior-year’s stay of 182 days required plus proof of intent to reside in India indefinitely Foreign Residents of Non-Indian Origin Non-Residents of Non- Indian Origin No purchase allowed May rent a residential property Maximum 5-year lease

Foreign corporations need Reserve Bank of India approval to buy or sell real property Trend toward outlying business park development Residential development funded with foreign capital requires 25 acres of land Commercial properties minimum 50,000m 2 Commercial Real Estate Page 128

Rent-control laws skew rental markets Apply to leases of 12 months or more 11-month leases common Serviced apartments provide short term housing for staff of foreign companies Rental Property Page 129

States regulate real estate practice No licensing Informal channels-homemakers, friends and relatives, kiosk owners, and janitors National Association of Realtors–India striving for professionalism nationwide MLS Real Estate Professionals Pages

Tremendous growth due to urbanization, increasing income, and FDI Benami Transaction Bill REITs and Commercial Real Estate Affordable Housing Senior Living Top Trends Pages

Introductions Women in Business Business Cards Conversation Starters Meetings Demeanor Contracts and Negotiations A Few Taboos Social Etiquette Beyond the Basics Pages

7. A Look at Philippines

Geography Page 144

12 million Overseas Filipinos (OF), Overseas Filipino Workers (OFW) Workers’ remittances $20.1 billion, 13% of GDP 2nd largest Asian-American group in U.S. California, Hawaii, Illinois, New Jersey, New York, Washington, D.C., Texas, and Florida Median household income of $78,000 Philippine Diaspora Pages

Exports to: China, United States, Singapore, and Japan  Agricultural  Industrial  Mining Infrastructure impedes development outside metro areas Tourism potential Philippine Economy Pages

Overtaking India English-speaking workers Service attitudes Low wages & office rents Makati City, Manila, Quezon City, Cebu City Driving office space, residential, retail development Business Process Outsourcing Pages

Cloud & Virtual Workforce Business Process Management (BPM) and Knowledge Process Outsourcing (KPO) Disaster Planning and Business Continuity Trends Pages

Building for Ecologically Responsive Design Excellence Philippine Green Building Council Local green building rating system Patterned after LEED BERDE Page 149

Cannot own land Condos okay if no more than 40% foreign occupancy Single-family home okay but not the land Foreign natural heirs of a Filipino citizen may inherit, cannot sell to foreigner Corporations less than 40% foreign ownership may acquire land Foreign Ownership of Real Estate Pages

Influx of expatriates and retirees keeps market active government encourages return of expatriates, those with family ties Citizenship Retention and Reacquisition Act Special Resident Retiree’s Visa Homeownership Page 150

Luxury condos  2–3 month’s rent deposit  Rent paid in advance, post-dated checks Standard rental  2 month’s rent deposit “Customs of the place“ Rental Property Page 151

National licensing Challenge to develop the real estate management skills Chamber of Real Estate and Builders Association Real Estate Professionals Page 152

Real estate market growing and prices are rising Manila Top Real Estate Market ASEAN Integration Top Trends Page 152

Names Initial Contact and Introductions Business Cards Negotiations and Decisions Demeanor Social Etiquette Beyond the Basics Pages

8. Country Profiles

A Look at Australia Geography  22.5 million, 6 states Economy  Continuous growth; strong stable system Foreign Ownership  Some restrictions for second-hand housing  Agents licensed by state/territory Beyond the Basics  Diverse and multicultural society  Informal in business and social life Pages

A Look at Hong Kong Pages Geography  7.1 million, Basic Law Economy  Expensive real estate, stamp duty Foreign Ownership  Can buy, rent, invest  Foreign exchange restrictions for mainland Chinese  Licensed agents Beyond the Basics  Behavior and protocol similar to China, but more relaxed

A Look at Indonesia Pages Geography  million, Diverse Economy  Many obstacles Foreign Ownership  Cannot own land, businesses, or houses but can purchase strata title  No license required for agents Beyond the Basics  Respect and relationships important  Strive for harmony and saving face

A Look at South Korea Pages Geography  Seoul is 10.4 million Economy  12 th largest  Chaebols Foreign Ownership  Few restrictions  Agents must be licensed  Expensive to rent Beyond the Basics  Strict hierarchy, respect for seniority and elders, and group harmony

A Look at Malaysia Pages Geography  30.1 million Economy  Exporter of oil and gas  Government subsidies Foreign Ownership  Few restrictions, but minimum value req.  MM2H  Agents must be licensed Beyond the Basics  Bumiputra  Modest, self- deprecating, and face-saving behavior admired

A Look at New Zealand Pages Geography  4 million, kiwis Economy  Agricultural exports  Globally competitive  Homes sold in auction format, no MLS Foreign Ownership  Few restrictions  Licensed agents (national) Beyond the Basics  Egalitarian  Concise, straightforward approach to business

A Look at Singapore Pages Geography  5.6 million, mix of Chinese, Malay, Indian Economy  #1 ease of doing business Foreign Ownership  Approval required in some cases  Stamp duties  License required Beyond the Basics  Indirect communication and saving face valued, yet keen negotiators

A Look at Taiwan Pages Geography  Taipei is 2.7 million Economy  Healthy trade surplus and foreign reserves Foreign Ownership  May purchase or lease if Taiwanese are allowed to in foreigner’s country  License required Beyond the Basics  Traditional Chinese culture  Family important  Group harmony

A Look at Thailand Pages Geography  Bangkok is 8.2 million Economy  Tested by recession, flooding, and political unrest, but resilient Foreign Ownership  Cannot own land, only condos and apts  Practitioners, business not regulated Beyond the Basics  95% Buddhist, sets tone for hierarchical relationships  Wai (greeting)  Body language key

A Look at Vietnam Pages Geography  93.4 million Economy  State-owned enterprises dominate Foreign Ownership  2015 law allows foreigners to buy houses with valid visa  Licensed property trading floors/agents Beyond the Basics  Value duty, loyalty, honor, respect for age and authority, and family devotion

Summary: What Did We Learn? Identify the social, political, and geographical characteristics of Asia/Pacific countries. Develop market intelligence by researching factors that shape Asia/Pacific real estate markets and assessing business opportunities. Adapt business and social behavior to conform to customs and cultural norms. Develop strategies for making productive network contacts and marketing your real estate services to clients and customers from Asia/Pacific countries. Page 225