Ishihara Shotaro – A Japanese Investing Pioneer
When it comes to finding properties and good deals in the market, the information comes to him, and not the other way around
The Japanese are always known to be disciplined and wise. This seemed truer than true when we spoke to Ishihara Shotaro who moved to Malaysia in 1992 to develop a golf course in Penang. Ishihara then opened his own company in 1999, Tropical Resort Lifestyle (MM2H) Sdn Bhd to promote long-stay and MM2H (Malaysia My Second Home) programme to the Japanese market. Fast forward a few years and soon MM2H reached the shores of Malaysia in 2006, the streets of Tokyo in 2008 and the borders of Johor Bahru in 2012. As of 2015, TPCL has sponsored MM2H for more than 1,500 Japanese people up to date. Ishihara was appointed Japanese Advisor to Malaysia Property Incorporated, a government subsidiary company to promote Malaysia Property Oversea and was a committee member of FIABCI Penang Branch from 2008 to 2012.
As an investor in Malaysia, Ishihara started because he knew there were a few ways to utilise property not only as an investment but also as a home, for retirement and such. “The price will always go up, that is a good investment.” Being Japanese, Ishihara had to apply for a Malaysian PR. So, when he started to buy property, he would buy property under joint names of him and his Malaysian wife. At the time, loan approvals were easier to apply for. The economy in 2008 and 2009 was not so bad, so, the process was very easy. “There were no restrictions at the time so the loans was very easily attained. If I were to have bought properties on my own it would have been difficult as I am a foreign investor.”
The rest of the process was simple, his seed money came from hard earned savings and a small sum was from Ishihara’s parents-in-law. Ishihara started with a property priced at RM500k, and rented a property for his family of 5 in Penang. It has been 5 years and he has since moved to Kuala Lumpur. “When you are younger and your children are younger it makes more sense to rent out. When you are older you will only want a small place, comfortable enough for you and your wife. So, we rented until our children were big enough.”
Ishihara’s strategy in the market differs depending on the situation, as he sometimes holds enough for the capital to appreciate, then he may sell it off. “Do not just buy a property for the short term and sell them off. Hold for at least 5 years, but 10 years is better.” He also prefers buying from the primary market nowadays as there are better incentives and so many choices.” For the secondary market, Ishihara prefers to buy residential, as commercial has more capital and you only get a small fraction for the loan. He targets expats when renting out his units.
It is easy for Ishihara to handle his tenants and his accounts as he himself owns a few property agents. His own staff do the ground work for him. However, like any other investor, problems arise in one way or another and for Ishihara it is usually related to finding tenants, a common problem faced by most investors. “Other than that, Malaysian properties usually have technical problems. Defects that should not be there like a leaking pipe or uneven tiles that bulge out instead of being flat on the floor. A lot of the nitty-gritty.”
Ishihara says when it comes to finding properties and good deals in the market, the information comes to him, and not the other way around. “You read the newspaper, go to property fairs or through businesses and property brokerages, the information will make its way to you.” Indeed a positive way of looking at it.
When asked about hotspots and whether he believed in them, Ishihara immediately answered positively. “I definitely believe in hotspots. Follow the trend of population change, the in flow and the out flow of the population, the construction of new highways, the construction of MRT and LRT are all things you need to look out for, because that Is what buyers are looking out for, as well. These are important factors to consider and you should buy as soon as the planning of these highways and transportations are confirmed.” Ishihara explains it is always a good idea to buy areas which are deemed hotspots, as he did a few years back. He had purchased a property in Kota Damansara in 2012, which will be completed end of this year. The development itself will be in front of Surian Station, and when the MRT is completed, Ishihara would have already made a 50% profit from this property.
Does the future in the property market look bleak for Ishihara? “People always say it is not good, what is happening right now. But as I see it, Malaysia has to go through this process. It is indeed a cyclical process, and this needs to happen now.” Ishihara explains that in 2012 and 2013 property was easily sold due to DIBS (Developers Interest-Bearing Scheme) and other incentives so the price increase needed to be consolidated. “In the long term, this downturn is very necessary, however, there are still good deals out there so if you have the money, go out and buy.”
Ishihara explains that from a foreigner’s point of view, with the depreciation of the Ringgit especially for the Japanese, the prices this year are almost similar to a 20% discount, and for some, the prices have even dropped 30 to 40% compared to last year. “It is still possible for the population and their income to grow, so we need not worry.”
For those who are not fussy and looking into buying properties soon, the year to do so is 2018, and the properties to buy are high-rise condominiums. “The prices for high-rise condos looks like it will go down so you can wait for that. Prices for mid-range landed properties in the suburbs will not, but that also depends on the area.”
Aside from investing in property, Ishihara also has a fair amount of other businesses and responsibilities. When he is not investing, he is busy recruiting Japanese investors, companies or industries for the MM2H program in Malaysia. Most Japanese investors aim for Kuala Lumpur, Johor and Penang. Ishihara was also responsible for facilitating the deal between Malaysia Airport Holdings to bring in the Mitsui Outlet Mall not long ago by Mitsui’s Commercial Team, an investment worth RM300 million. Besides that he also has a JV with Eastern & Oriental Berhad for high end condominiums along Jalan Yap Kwan Seng. His company has been assisting Mitsui Fudosan Malaysian businesses for the past 7 years or so. Other JV include companies like Sunway to develop Geo Serviced Suites in Bandar Sunway.
Being a foreign investor and business man, Ishihara also does corporate businesses and has an office in Tokyo as well. It seems as the years pass, more and more Malaysians are going to Japan, either for holidays or to stay, and there has been a rise in the number of Malaysians purchasing properties in Japan. Japanese investors are coming in because of our inexpensive costs of living, our tropical weather throughout the year and being free from natural disasters. As much as we read on the news, the truth is, Malaysia is quite a harmonious country and Japanese investors like that, besides having an array of tantalising dishes to choose from.
I came across a Japanese proverb while writing this article, it says, ‘After the rain, the earth hardens.’ So will the situation in Malaysia with the property market, and all the industries in general. It will be a hard time for all, but if Japanese investors see our market as a good investment, then so should we. This rain is temporary, and when the economy gets back on track, so will the market. Learn from the past and choose properties which are liveable among locals and do not buy properties with too many investors. “Be sure to choose prominent developers with projects at good strategic locations as well. Don’t buy in the city center. Not many people live in the city center anymore.”
If Japanese investors can see the potential and beauty in our local property market, maybe it’s time we did too.
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