Cheap S.E. Asia property lures Japanese retirees

Southeast Asian developers are targeting Japanese retirees, hoping the lure of cheap homes and health care will create a profitable new niche market.

Although Australia's Gold Coast and Hawaii have been favoured destinations for Japanese in the past, Thailand, the Philippines and Malaysia are now promoting competing “long stay” programmes, offering foreign retirees visas and tax breaks.

Home builders are hoping today's trickle – just one in 3,000 Japanese pensioners live abroad – becomes a steady flow because over-50s hold 75 percent of Japan's individual wealth.

In the Philippines – which wants to attract nearly a million foreign retirees by 2015, creating 4 million related jobs – Robinson Land Corp plans to build houses for Japanese who are more used to cramped apartments.

“The government is selling the Philippines as a retirement destination, so we're looking at building leisure retirement villas,” Robinson Land President Frederick Go said at a recent conference in Hong Kong.

“For $100,000 you can really own a palace in the Philippines.”

As well as health care, developers are laying on special activities. For example, the Philslife Orchid Hills Club, near Manila, runs a website in Japanese (www.philslife.jp), promoting pastimes including organic food cultivation, cattle rearing, ballroom dancing, stargazing and cockfighting.

In Thailand, developers LPN Development PCL, Charn Issara PCL and Quality Houses PCL are building in a thriving “little Tokyo” in central Bangkok, an area popular with the 30,000 Japanese expatriates living in Thailand.

Some staff of Japanese firms, such as car makers Toyota Motor Corp. and Honda Motor Co., which have made Thailand a production hub, want to bring over retired relatives.

A Bangkok apartment is typically a third the price of the equivalent in Tokyo. “It's affordable,” said Rei Yamamoto, 30, who works for a Japanese software firm in Bangkok. “I decided to buy because my mother wants to spend her vacations here in the future.”

The average pension in Japan is about $1,500 a month for men and $690 for women. But in an effort to head off a crisis, Japan passed a law in 2000 to cut private-sector pension payments and raise the age at which people can receive pensions to 65 from 60.

Retired banker Kou Oikawa, 62, said elderly Japanese had a comfortable life in Thailand because of its cheap hospitals.

Thai hospitals Bangkok Dusit Medical Services and Bumrungrad Hospital are competing for “health tourism” business with the likes of Singapore's The Raffles Medical Group and Malaysia's KPJ Healthcare Sdn Bhd

The average cost to an insurer for a hip replacement operation in Thailand and Singapore is US$12,000, according to medical tourism firm Planet Hospital. In Japan, costs for the procedure can mount to US$17,000.

“I feel Thais are good friends to Japanese,” Oikawa said.

Oikawa knows a baby boom after World War Two, followed by a drop in the birth rate, means millions will join him in retirement over the next decade.

Some estimates show Japan will have one person over 65 to every two of working age by 2025, a higher dependency ratio than any other major industrialised nation. Now pensioners make up nearly a quarter of the 127 million population.

Scams
But high-profile scams could put many retirees off.

In December, six elderly Japanese filed a lawsuit in the Tokyo district court against a firm saying it reneged on promises to provide land for homes on the Philippine island of Cebu.

The plaintiffs, some in their seventies, said they had paid up to 9 million yen ($76,210).

But instead of dream homes with one-on-one health care, they found empty, rubbish strewn plots, according to Japanese media reports. When one tried to build a house, he found the consultancy firm had no land titles.

One 73-year-old retiree was quoted by Kyodo news agency saying he wanted to “sound the alarm that there are some shady deals involving the retirement business”.

But Southeast Asian governments hope their incentives will be enough to win over foreign retirees. Malaysia has been at the forefront of the region's efforts, launching in 1996 a “silver hair” scheme, now called the “Malaysia my second home” programme.
In the last four years, nearly 10,000 people have taken advantage of Malaysia's package of a 10-year renewable multiple entry visa, tax exemption on pensions, a waiver of import and sales tax for vehicles, and permission to import domestic staff.

Developers such as MK Land Holding Bhd and Country Heights Holding Bhd could get a boost if the government goes ahead with plans to make a property purchase of at least 250,000 ringgit ($71,400) a qualification requirement.

In Thailand, LPN Development is reporting brisk sales to Japanese buyers at two of its Bangkok buildings, where a 100 square metres (1,076 square foot) sells for up to $184,700.

Property investment is exempt from the capital control measures introduced last week to halt appreciation of the baht currency.
This year's bloodless military coup had no impact on enthusiasm for the properties, according to LPN managing director Apas Sripayak.

“The locations have led to the strong demand,” Apas said, citing the proximity of hospitals and Japanese restaurants.