Acquisition of a business manager visa by investing in real estates

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1. Background of wealthy Chinese investors investing in Japanese real estate

The prices of real estate in metropolitan areas in China and Hong Kong have skyrocketed due to their rapid economic growth in recent years, but the rate of yield is not high and full ownerships are not recognized for purchasers, so wealthy people are interested in overseas real estate.
Under such situation, the Japanese real estate market is especially popular as it’s stable and the yield is high.
One of the reasons for such popularity is that Japan does not have any restriction on the acquisition of real estate by foreigners.
In some areas of Hokkaido and Okinawa, all real estate properties are purchased by Chinese people.
Japanese real estate companies are also trying to sell to the wealthy Chinese.
Wealthy Chinese people purchase real estate in Japan for investment purposes, but many of them are also attracted to Japan’s living environment, education, and medical system and are interested in living in Japan.
Wealthy Chinese people who often come to Japan are looking for an easier way to go back and forth as acquiring a temporary visitor visa each time is troublesome.

For that reason, investors wonder whether it is possible to obtain a business manager visa by acquiring real estate.

2. What is the “management” required for a business manager visa?

If a foreigner acquires real estate in Japan, can he/she obtain a business manager visa? Actually, he/she cannot obtain a business manager visa just by acquiring real estate.
Why is that?

Japan permits visas (statuses of residence) for activities conducted by foreigners in Japan. Activities are specified for each status of residence, which is called eligibility for status of residence.
In the case of a business manager visa, it is stipulated as “activities to operate international trade or some other business in Japan, or to engage in the management of such business.”
In other words, a business manager visa is given for activities to run business or to engage in business management in Japan.

Then, can we say that acquiring real estate is the business management?
This is a point to be noted when aiming to obtain a business manager visa by investing in real estate.

Business means the continuous management of an organization, company, store, etc. for a certain purpose.
In this respect, since the acquisition of real estate is temporary, it does not fall under such business unless there is something extra.
For example, unless you make a profit by turning the purchased real estate property into a rental property or by using it for private rental lodging, you cannot call it business.

In conclusion, a business manager visa cannot be obtained only by the acquisition of real estate as it cannot be called business.

3. Scale required for real estate leasing business

Renting out purchased real estate is business of real estate leasing.
Yet, a business manager visa is not applicable unless the business has a certain scale.

Since it is business, expenses for business operation must be covered by sales (= rent).
In addition to compensation for directors, business operations require consignment fees for management of real estate properties, fixed-property taxes, non-life insurance premiums, office rents, and personnel expenses when hiring clerks.
Plus, the depreciation cost of the building will be incurred for accounting purposes. These expenses must be covered by real estate rental income.

Assuming that the estimated annual expense is 5 million yen, if the annual income from rent is expected to be less than 5 million yen, the business will not be able to continue.
If the yield rate is 4%, an investment of 125 million yen or more will be required.

In addition, if you receive loans to start a business, you need to have more rental income to secure the repayment amount.

Thus, when operating real estate leasing business, a considerable amount of prior investment will be required.
Real estate leasing is not considered business if it is just the purchase of a room in a residential condominium of around 50 million yen.

In other words, if you wish to get a business manager visa by investing in real estate, you need to buy 2 or 3 or even more real estate.

4. The form of real estate business that we recommend

As mentioned above, a large amount of prior investment is required to carry out the real estate business.
Yet, realistically, not everyone can make such prior investment, spending 100 million yen or more.

Therefore, we recommend to carry out other kind of business, in addition to real estate leasing business.
Having multiple business has an effect of risk hedging as well.

For example, in addition to the real estate leasing business, you can carry out a trading business or a travel agency business.
Many Chinese people who buy real estate in Japan are doing business in China.
For such people, we occasionally recommend to start business in Japan that is related to the business they conduct in China.

In such cases, doing business in Japan means that they are expanding their business in China overseas, so there is high credibility of the business content to be conducted in Japan. Thus, it is advantageous when acquiring a business manager visa.

5. Summary of acquisition of a business manager visa by investing in real estate

As mentioned above, it is not impossible to obtain a business manager visa by doing business of real estate leasing.
However, the business of real estate leasing has a high risk.

If you buy an unpopular property, the property may stay vacant as you cannot find any lessee.
In such case, it will be difficult to recover the initial investment, and the cash flow of the company will deteriorate.
Therefore, it is necessary to carefully select properties to invest before obtaining a business manager visa.

Daiichi-Sogo Group provides support for acquisition of a business manager visa, and also can introduce real estate properties via affiliated companies.
We can also provide services in Chinese, English, and Vietnamese, so please do not hesitate to contact us if you are aiming to obtain a business manager visa for real estate investment.