The WEALTHTECH Book

Challenges in the Japanese Wealth Management Market – Digital Issuance and Distribution of Japanese Real-Estate Securitized Products

By Shinsuke Nuriya

CIO and CFO, Crowd Realty

Japan has a serious savings problem, caused by the low financial literacy relative to peer countries, and exacerbated by social security programmes as a result of unfavourable population demographics. In order to achieve sufficient levels of savings, individuals will need to invest in potentially higher yielding, unsecured assets outside of bank savings deposits. We believe that real estate both domestically and abroad offers attractive investment opportunities, but that current regulations and investment vehicles present excessive barriers to entry for individuals. Thus, we propose a peer-to-peer real-estate equity crowdfunding marketplace as a WealthTech solution.

Japan’s demographic development is a major challenge. Japan’s population peaked in 2010 and has gradually declined since then. The government expects that, by 2060, Japan’s population will further decrease from its present figure of 127 million to 99 million, and the number of live births per year will be at least halved. Japan’s old-age dependency ratio stood at 26.7% in 2015, which is far above the global average of 8.3%, and is expected to increase to 39.9% in 2060. Eventually, a single elderly adult will be taken care of by only 1.3 individuals in the labour-productive age range of 15 to 64.¹ This will lead to serious reductions in public ...