Expatriate life can be as unsettling as it can be exhilarating, particularly for those not intending to remain in said country permanently. Cut off from their own country but denied the benefits that come with citizenship, and often handicapped by linguistic shortcomings, expats often feel stuck in a sort of suspended animation as they watch their friends and colleagues back home proceed merrily along with home and car loan payments, contribute to a retirement savings plan, and generally lay the groundwork for their future financial and material well being. Fortunately, for those who find themselves in this quandary, an increasing range of options exist for expats who intend to remain in Japan for an extended period but nevertheless desire to build themselves a comfortable nest in their home countries or elsewhere—thanks to the growing number of financial institutions that offer yen-based loans to expatriates desiring to purchase property overseas. Moreover, the low interest rate of the Japanese yen has made such mortgages highly attractive to mortgagees not averse to a bit of currency risk. Many not only take out new mortgages on desired real estate in Japan, but also refinance existing mortgages while abroad, with a view to taking advantage of favorable interest rate climate here.
“the low interest rate of the Japanese yen
has made such mortgages highly
attractive to mortgagees…”
Given Australia’s recent ascendancy in the global real estate market, it is hardly surprising that Australian financial institutions have assumed a leading role in the overseas property market. One such institution is the Australia and New Zealand Banking Group Ltd. (ANZ), Australia’s third-largest bank and New Zealand’s largest bank since its absorption of the National Bank of New Zealand in 2003. Establishing a representative office in Tokyo in 1969, a full-fledged branch in 1985, as well as an additional branch in Osaka in 1990, ANZ has since emerged as Australia and New Zealand’s foremost financial vehicle in Japan, with its Tokyo branch offering a wide range of services, including overseas remittances. Corporate banking services, project and structured finance, markets and risk managment servcies, other structured financial products and deposits a well as Australia- and New Zealand-based mortgages, Expat Mortgages, as they are commonly known, ANZ is certainly making its mark here in Japan.
As Natalie Foxwell, Mortgage Relationship Manager at ANZ Tokyo, explains, the key criteria for an ANZ Expat Mortgage is that the client be a resident in Japan, earning a yen income, and wishing to finance a property in Australia or New Zealand, be that a refinance of an existing mortgage, a new property purchase, construction loan or land loan. “We have clients of all sorts of nationalities living here in Japan and interested in Australia and New Zealand property,” says Foxwell. “For our clients, the whole point [of borrowing funds this way] is to pay a mortgage in the same currency that they are earning their income in, therefore taking advantage of the low [around 2%] interest rate in Japan, compared to the 9% interest they would be paying in Australia and over 10% interest in New Zealand.
While currency movement is a risk inherent to having a property in one currency and a mortgage in another, ANZ Japan seeks to minimize this risk by offering clients facilities such as switching currencies, forward contracts, making additional principal payments, and splitting their mortgage between Japanese yen and Australian or New Zealand dollars. Explains Foxwell; “we allow clients to manage their mortgages by switching from Australian dollars to yen, from New Zealand dollars to yen, or vice versa. Likewise, clients can choose to draw a certain percentage of their mortgage in Japanese yen and the remainder in Australian or New Zealand dollars, that way reducing the effects of currency fluctuation.”
Australia’s resources boom of the last decade or so has seen the antipodean tiger outshine most of its western counterparts economically, resulting in robust employment statistics, high wages, and generous infrastructure spending—all the necessary conditions for a property boom. This, coupled with the country’s obvious climactic and lifestyle attractions, and continuing anxiety over the recent housing market crash in the United States, has helped Australia emerge as a world-beater in the global real estate market. “The outlook for the Australian property market generally remains very strong throughout the major capital cities and seaside locations,” remarks David Stafford, General Manager of Sales & Marketing of the Brisbane-based Indigo Group.
According to Stafford, South East Queensland, the region encompassing the Brisbane-Gold Coast conurbation and currently Australia’s fastest growing region, is a particularly promising growth market for investors in overseas real estate. “Population growth, infrastructure spending and lifestyle benefits in this state are almost unparalleled elsewhere in Australia and there continues to be a shortage of supply versus demand,” notes Stafford. “Rental yields are rising and the state’s economic fortunes look set to continue for several years yet. Queensland property also offers the most alternatives for lifestyle buyers, with the Gold and Sunshine Coast markets leading the charge.” Stafford notes that international buyers are quickly moving into niche premium markets that cater to savvy investors wanting to secure property in coming boomtowns before prices explode—places such as Palm Cove, north of Cairns. In terms of pinning down such locations, Stafford advises buyers to “Look for destinations that cater for an international clientele, have excellent restaurants and cafes, and are close to all amenities but hidden from the main tourist stretch.”
As Australia’s property market continues to grow ever more enticing, securing that spot of land under the southern sun is becoming an increasingly straightforward matter, thanks to ANZ Bank and other institutions. In sum, expatriates need no longer feel cut off from the real estate game, and can even use their expat status to their advantage in the pursuit of their slice of paradise.
For more information about the Australia and New Zealand Banking Group in Japan and the services they offer see www.anz.com/japan/japan.asp or call 03-6212-7777. For Indigo Group see www.indigogroup.com.au or call +61(7)3018-4888.
