The View | Falling yen is great for 2 sectors in Japan
- The big story in global foreign exchange markets right now is the continued slide in the yen, to a fresh 34-year low
- As tourists in Japan buy luxury goods at a significant discount, retail rents and hotel rates are also up
More tellingly, global sales of fashion and leather goods – LVMH’s biggest division – to Chinese customers in their home market and abroad rose 10 per cent, indicating that spending by Chinese tourists overseas helped offset weak sales at home. A large portion of their spending abroad was in Japan.
The plunge in the yen – which stems from the large interest rate differential between Japan and the United States – has been a boon to Japan’s tourism industry by boosting the spending power of overseas visitors. It has also increased the appeal of Japanese commercial property.
According to data from MSCI, Japanese retail and hotel properties are among a handful of segments of Asia’s commercial real estate industry in which investment activity last year was on a par with, or exceeded, the average annual level of transaction volumes in 2020-2022.
Benjamin Chow, head of real estate research for Asia at MSCI, said the strong performance of the retail sector was “all the more striking given that Japan has a declining population, something investors don’t like”.
