Reflecting on Japan’s post-1990 real estate collapse, the author highlights how abnormal yen volatility deterred foreign investors and hindered solutions to non-performing loans. Recalling efforts to form large funds with overseas Chinese capital in Singapore and Bangkok, he criticizes both bureaucratic restrictions and media complacency that postponed resolution. Japan’s stagnation stems from short-sighted policies and failure to stabilize its currency, driving Asian capital toward safer investments abroad.

A personal account of Japan’s economic woes in the 1990s and 2000s, focusing on the volatile yen and the non-performing loan crisis. The author recounts his efforts to form a real estate fund, his negotiations with the Japanese government, and his conversations with wealthy overseas Chinese businessmen in Singapore and Bangkok. The narrative highlights how the dramatic and unpredictable fluctuation of the yen deterred significant foreign investment in Japan.

August 19, 2010
Over these past twenty years, the fluctuations of the yen have been extraordinary.
As I begin writing this, I cannot help but recall something.
After the implementation of the lending restriction on April 1, 1990, for those in the real estate industry, it was as if capitalism had suddenly ended—because financing had disappeared.
I led a corporate group that, working like a cart horse from morning till night and relying only on brokerage commissions, earned nearly 500 million yen annually, making us one of the top single-office performers in Japan.
My only respite was to go to Hawaii in summer, winter, and spring—because it was the only place where the phone would not ring.
When all of Japan began to suffocate and I lost the will to even travel to Hawaii for the New Year holidays, I realized that to continue in real estate when the banks were essentially bankrupt, I would have to form a fund.
I bought four related books and even brought them into “Senri no Yu,” a natural hot spring and open-air bath run by Mainichi TV, and read them continuously.
My conclusion was that this could not solve Japan’s nationwide problem of non-performing real estate loans.
To securitize first-class buildings with first-class tenants through top securities companies and trust banks—this was possible.
But 90% of the non-performing loans were in small, multi-tenant buildings, many of which violated building codes.
Still, at the end of January that year, I called the ministry that had branched off from the Ministry of Finance, the Financial Supervisory Agency.
I said unless the fund’s enrollment cap of 50 people was raised to at least 100, nothing could be done.
At that time, Japanese households held average savings of 5 million yen.
Because the required amount per unit of participation was too large, forming funds was difficult.
I asked them to put the division chief from the University of Tokyo on the line.
Over the past twenty years, bureaucrats and large corporations have closed themselves off like fortresses, but at that time things were still as before.
I spoke with her for an hour and a half, mixing in laughter.
At key points she responded, “I agree with your thinking, President.”
I pressed: forming funds is the only way to resolve this mountain of non-performing loans.
Why is the enrollment cap 50?
Is this not the government’s mindset that raising funds is the work of the state, and commoners must not gather money?
I pointed out that once, the 47 Ronin rebelled against the government but nothing happened.
If it is 50 people, surely there is no problem.
She laughed and said, “Not entirely wrong.
The reason is that when someone tries to start a business, they would probably have 50 family and relatives from whom to gather money.”
In 2006, the Asahi Shimbun and others, in a chorus of righteousness, allowed the matter to be glossed over with only 850 billion yen of injections, postponing the solution and causing today’s national crisis.
When I criticized the media, she immediately said, “I completely agree, the media is at fault.”
But I replied, “It was you who issued the lending restriction, too late and too radical, so you also bear responsibility.”
Sometime later, the Nikkei carried a short column titled “Fund Enrollment Cap from 50 to 100.”
In any case, I thought Japan’s money alone could no longer suffice.
Our client Mr. A, who had long done business with overseas Chinese companies in Bangkok and Singapore and who had introduced me to the Singapore tycoon mentioned earlier, had lived in Singapore for over five years in his youth.
Together we set out on a journey to visit overseas Chinese in Singapore and Bangkok.
As I have written before, the opinion advertisement that cost 10 million yen to distribute to every Nikkei subscriber household in Tokyo succeeded, and the super heavy taxation was abolished.
If we could form large funds, the non-performing loan problem could have been resolved and large profits generated.
Since Japan is part of Asia, I thought it better that Asians profit.
I chose Osaka as the investment destination—the stage of my life and then a treasure trove of properties with yields higher than Tokyo.
But my fixation on Osaka was also a mistake, as I will later write when discussing an elder in Bangkok.
I set out for Singapore to form a 50-billion-yen fund.
The wealthy Mr. G of Singapore instantly understood my intent and introduced me to one or two great tycoons.
With him, his wife, his eldest son, Mr. A, myself, and a truly splendid lady tycoon, we dined at a Chinese restaurant only they knew, one of the finest nights of my life.
At Mr. G’s request, “Kisara-san, you sing well, please sing a Japanese song,” I sang Chiyoko Shimakura’s “Karatachi Nikki” like an opera singer.
That prompted Mr. G to sing a series of beautiful Chinese love songs, joined by his wife, whose voice was more delicate than I imagined.
Finally, the beautiful lady, who had studied piano since childhood, began singing my favorite aria, “Un bel dì, vedremo.”
I joined her midway, and when the dinner ended and we left the restaurant, she and I continued singing the aria—she in English, I in Japanese.
How wonderful that night was—our client Mr. A, older than me, sometimes acted like an older brother because I had long lived as a hawk hiding its talons.
But on the ride back to the Shangri-La Hotel, he said, “That person was someone I had wanted to meet for 25 years but could not.
You captivated her in one night.
From now on I will call you the greatest magician.”
Later, when visiting a major overseas Chinese firm in Bangkok, I was received warmly by the patriarch, an elder I could only describe as a true adult of China.
I will write about that on another occasion.
Let us return to the theme at the beginning.
Every time I spoke with a rising overseas Chinese businessman in Bangkok—close to my age, and eventually my golf companion—he would say with gestures, “Because it is Kisara-san saying this, I trust it 100%, but investing in Japan is… the yen is too unstable.”
At that time, being focused solely on real estate, I only vaguely understood what he meant.
“Business talk aside, let us enjoy friendship,” I thought.
Now I understand clearly.
Even if Osaka real estate then yielded over 15%, their investments were in units of hundreds of millions of yen.
If the yen frequently fluctuated 20% or 30%, they were too fearful to invest in Japanese real estate.
There was no such thing as excellent real estate with 20% or 30% yields.
And even if it existed, from their perspective the effective yield would be negligible.
Better to invest through overseas Chinese networks in neighboring countries, or in Australia, the U.S., or Europe.
Even now I believe this remains their fundamental view.