The title slide, titled "Portada," features the main topic "Inversión Extranjera Directa en el Sector Inmobiliario de Japón," which translates to "Foreign Direct Investment in Japan's Real Estate Sector." It includes a subtitle highlighting "Oportunidades, Riesgos y Estrategia" (Opportunities, Risks, and Strategy), authored by Elian S. Villot Vázquez for the INTB 2100 course with Professor Eliel Irizarry.

Inversión Extranjera Directa en el Sector Inmobiliario de Japón

Oportunidades, Riesgos y Estrategia Por Elian S. Villot Vázquez para INTB 2100 con Prof. Eliel Irizarry

Japan features a modern and economically stable market with low penetration of foreign direct investment, presenting untapped opportunities for real estate projects. An evaluation of viability for foreign investments is supported by long-term economic stability and the sector's high growth potential.

Introducción

• Japón: mercado moderno y económicamente estable.
• Baja penetración de IED ofrece oportunidades sin explotar.
• Evaluación de viabilidad para proyectos inmobiliarios extranjeros.
• Estabilidad económica respalda inversiones a largo plazo.
• Sector inmobiliario presenta alto potencial de crecimiento.

Source: Inversión Extranjera Directa en el Sector Inmobiliario de Japón

The executive summary highlights significant exposure to currency risk from JPY-denominated revenues, offset by low country risk supported by A+ ratings and strong reserves. It outlines viable investment options in Japan's growing real estate market using local financing, partial hedging of 50-70%, and JPY-denominated debt strategies.

Resumen Ejecutivo

• Exposición significativa al riesgo cambiario por ingresos en JPY.
• Bajo riesgo país respaldado por ratings A+ y reservas sólidas.
• Inversión viable mediante financiamiento local y estrategias de cobertura.
• Oportunidades en mercado inmobiliario japonés en crecimiento.
• Estrategias clave: deuda en JPY y cobertura parcial del 50-70%.

Source: Inversión Extranjera Directa en el Sector Inmobiliario de Japón - Elian S. Villot Vázquez

Japan's recent FDI inflows stand at 21.4 billion USD, while the accumulated FDI stock reaches 246.8 billion USD. However, its FDI penetration remains low when compared to other developed economies.

IED en Japón

• 21.4B: FDI Inflows

USD billions recent flows

• 246.8B: FDI Stock

USD billions accumulated

• Low: FDI Penetration

Compared to developed peers

In 2024, Japan's real estate market saw land prices rise by 2.7%, driven by robust activity in major cities like Tokyo, Osaka, and Nagoya. Attractive sectors include urban residential, hotels, logistics, and senior housing, presenting significant growth opportunities.

Mercado Inmobiliario Japonés

• Land prices increased by 2.7% in 2024.
• Strong activity in Tokyo, Osaka, and Nagoya.
• Attractive sectors: urban residential, hotels, logistics, senior housing.
• Significant growth opportunities available.

The slide on "Exposición Cambiaria" highlights the company's currency exposure, showing that 100% of revenues are generated in Japanese yen (JPY). It further details that 80% of costs are in JPY for local operations, while the remaining 20% are in US dollars (USD).

Exposición Cambiaria

• 100%: Ingresos en JPY

Todos los ingresos generados en yen japonés

• 80%: Costos en JPY

Mayoría de costos operativos locales

• 20%: Costos en USD

Minoría de costos en dólares estadounidenses

The Japanese Yen operates under a free-floating exchange rate regime, which historically keeps it weak and creates economical entry opportunities for investors, though it amplifies volatility and poses risks from currency fluctuations for foreign investors. Essential hedging strategies are implied to protect USD-denominated returns, while the flexible regime helps maintain overall macroeconomic stability.

Tipo de Cambio y Régimen

• Yen opera bajo régimen de flotación libre.
• Yen históricamente débil ofrece oportunidad de entrada económica.
• Fluctuaciones cambiarias representan riesgo para inversores extranjeros.
• Implicaciones: Estrategias de cobertura esenciales para retornos en USD.
• Régimen flexible amplifica volatilidad pero mantiene estabilidad macroeconómica.

The slide on Balance of Payments and Reserves projects a current account surplus of +29.3 trillion JPY for 2024. It estimates international reserves at USD 1.2–1.3 trillion with a very low external risk level that supports macroeconomic stability.

Balanza de Pagos y Reservas

• +29.3 tn JPY: Current Account Surplus

2024 projection

• USD 1.2–1.3 tn: International Reserves

Recent estimate

• Very Low: External Risk Level

Supports macro stability

The slide on "Riesgo País" highlights strong sovereign credit ratings, including S&P's A+ for robust creditworthiness and Moody's A1 for low risk and high quality, along with an OECD category 0 classification as the world's lowest risk. These favorable conditions support efficient local financing and attract investments by minimizing sovereign risk.

Riesgo País

• S&P rating: A+ – Strong sovereign creditworthiness.
• Moody’s rating: A1 – Low credit risk and high quality.
• OECD category 0: Lowest risk classification worldwide.
• Ideal conditions enable efficient local financing.
• Low sovereign risk attracts and favors investments.

Source: Presentación de Inversión Extranjera Directa en el Sector Inmobiliario de Japón

In a negative scenario where the JPY appreciates by 10%, the USD value of JPY-denominated revenues decreases, dropping the projected return from the baseline to 42.4 million USD and increasing volatility that could harm the real estate project's profitability. Conversely, in a positive scenario with a 10% JPY depreciation, the USD value of these cash flows rises, boosting the projected return to 51.9 million USD and enhancing the investment's viability and appeal for foreign investors.

Sensibilidad FX (±10%)

Source: Presentación: Inversión Extranjera Directa en el Sector Inmobiliario de Japón

The slide "Opciones de Decisión" outlines strategies for managing currency risks in a project involving Japan. It recommends pricing the project in JPY to align with local revenues, sourcing from local suppliers to cut foreign exchange costs, securing 60-70% financing in JPY from Japanese institutions, and using hedging tactics to reduce overall exchange rate exposure.

Opciones de Decisión

• Denominar precios del proyecto en JPY para matching con ingresos locales.
• Seleccionar proveedores locales para reducir costos en divisas extranjeras.
• Obtener financiamiento del 60-70% en JPY de instituciones japonesas.
• Implementar estrategias de cobertura para mitigar exposición cambiaria general.

Source: Inversión Extranjera Directa en el Sector Inmobiliario de Japón

The Estrategia de Cobertura slide outlines a currency hedging approach for yen exposure, including issuing JPY-denominated debt to match local income flows, using forwards to lock in future dividend exchange rates, and put options to safeguard against yen depreciation. It advocates partial coverage of 50-70% to balance risk management with flexibility, ultimately mitigating yen volatility while preserving USD returns.

Estrategia de Cobertura

• Deuda en JPY para alinear flujos con ingresos locales.
• Forwards en dividendos para fijar tipos de cambio futuros.
• Opciones put para proteger contra depreciación del yen.
• Cobertura parcial 50-70% para balancear riesgo y flexibilidad.
• Mitigación de volatilidad yen preservando retornos en USD.

Source: Elian S. Villot Vázquez - INTB 2100

The slide concludes by highlighting Japan as a stable and attractive investment opportunity, especially with the weakened yen making it ideal for entry. It invites questions and discussion on the viability of this investment.

Conclusiones + Preguntas

Japón: Estable, atractiva y con yen débil ideal para entrada.

¿Preguntas? Discutamos la viabilidad de esta inversión.

Source: Inversión Extranjera Directa en el Sector Inmobiliario de Japón - Elian S. Villot Vázquez