Here's a personal summer story. My wife's family is from Japan and we vacationed there July.

I checked out how we might invest in land in Japan... Before going, I googled "Japanese land prices" and even now you'll see the major story is "Japanese land prices ROSE 0.9% in 2005 for the first time in 14 years". I looked at this graph (c/o Mish's Global Economic Trend Analysis):

and I thought - look... Japanese land prices are at about 1980 level! Over the last five years, almost every industrialilzed country in the world has been experiencing land grab mentalities.


(c/o Economist, June 16, 2005 The Global Housing Boom, In Come the Waves)

So there's ripe fruit ready for picking on the Ginza, right?

Wait!! There is a common disconnect between the Californian and the Japanese thinking process that betwixts those who don't understand Japanese culture. The entrepreneurial Californian thinks - "Hey, California leads the world in setting trends... and we know the Japanese follow trends religiously and when the trend finally hits, the whole nation participates... look at the market for $200 pre-worn Levis..." I've met many a Californian living in Japan trying to execute a strategy of "what works in California today will work in Japan next year". It often doesn't happen. The Japanese think, "I hear what the foreigner is saying, but I'll just do it myself".

I worked as an investment banker in Japan and still got fooled trying to develop the new dot-com concepts popular in 1999 to the nascent Japanese "Bit Valley" internet scene. The whole thing crashed simultaneously worldwide the next year, and the popular internet concepts - Amazon, broadband, eBay - developed slowly (meaning - not with a BANG) and homegrown... eBay Japan never really took off there...

The moral of the story is - I knew something was fishy - there's more to why the Japanese real estate market didn't ride the global real estate wave that "lifted all boats". And why it's likely too late for it to skyrocket now (just like the dotcoms).

So I'm in Tokyo and I ask my banker friends what's going on? He says - "yes, Japanese commercial land prices are taking off..." He says prices may have almost doubled over the past four years (his possibly exaggerated guess, I have no idea) and that the foreign banks have been on a shopping spree along with a burgeoning appetite for domestic REITs. He didn't acknowledge seeing any activity in residential real estate investment like the clubs and seminars that you see in the US...

So I google "Japanese commercial land prices" and nothing significant comes up to support my friend's "doubled" prices contention. Maybe it's banker's remorse... Japanese banks sometimes seem to be last in line... Some articles concur that foreigners and the REITs are active. And here's an article from March 2006 that claims overall commercial and residential land prices are still declining, but some hot commercial areas like Ginza have appreciated 20% over the last year to about $20,000 / sqft, a real bargain from their peak at $200,000 / sqft. (Remember when the land under the Imperial Palace was worth more than Florida?)

I also googled "Japanese real estate investment clubs" and also zip... that means the Japanese Trumps and Kiyosakis haven't beached with their "cash out" pitch, anathema in such a debt-fearing society. The lack of investment clubs or a local investor celebrity also suggests market hesitation... I'm surprised no California transplant in Tokyo has adapted a Kiyosaki pitch and seminar to grow an investor base.

I hate to say this - I'm still baffled...  anyone from Japan able to shed light on whether one should invest in Japan? (yes, it is easier to do with relatives there to vouch for you in the ultimate "referral society")