STUDY OF THE JAPANESE COMMUNITY ON THE LOCAL RESIDENTIAL MARKET DURING THE ASIAN FINANCIAL CRISIS

Abstract

As a by-product of globalization, the Asian Financial Crisis which began on 2nd July 1997 in Thailand hit on the economies of many countries in both South East Asia and North East Asia. Public investment on infrastructure, as well as private investment from both domestic and foreign sources on a variety of sectors adjusted according to the drastic changes in the rates of currency exchanges. The size of expatriate communities in Singapore shrunk during the Crisis. Questions are raised, therefore, on how did the Asian Financial Crisis affect Singapore's real estate market? What effects could be discerned in terms of the changes as associated with the Japanese community in Singapore? And whether there was any effect on the residential market as a consequence of the Crisis in relation to the Japanese community here? The purpose of this study is to explore the effect of globalization on the local residential market, by looking into how the Japanese community in Singapore reacts during the Asian Financial Crisis and how their decisions affect the local residential market. The period of study is from 1997 to the end of 1999. This research has narrowed down to the Japanese community because of Japan's heavy participation in foreign investment in Asian countries and the strong sense of unity of the Japanese community. Data were collected from both primary and secondary sources. Questionnaire surveys were conducted on the basis of the Japanese Association in Singapore and the Japanese Schools here. A total of 200 questionnaires were distributed, and the return rate was 48%. Census data from the Japanese Embassy and the various Libraries at the National University of Singapore were compiled and analyzed. In data analyses, simple descriptive statistics were employed. Findings of the study reveal that during the Asian Financial Crisis, the strong foundations of Singapore and the Japanese Community helped to reduce the effects of the Crisis. The implementation of the anti-speculation curbs successfully ridden off the majority of the speculators before the crisis. This averted a sudden fall in the residential market, which might have a drastic consequence if this had happened. Further research has also revealed that the impact of the crisis on the local Japanese Community is not massive. Though there was an overall outflow of 1,163, the majority were made up of families. According to the survey, 86.64% are with their family. In addition, 10.42% of the sample surveyed arrived during the crisis, 17.71% of the sample arrived after the crisis in 1999. With respect to the residential market, the minimal impact of the crisis on the community is due to two main reasons. One, during the period of the crisis, the Japanese yen was increasingly more superior to the Singapore dollars, which signified an increase in purchasing power. Second, prices and rentals of the residential markets were decreasing during this period. Moreover, it is also shown that the interests of the Japanese Community lie in the rental market, which is relatively weak in Singapore. A further point to take note is that the main returns of the local residential market lie in the capital market, which deserves a separate investigation in order to understand the full impact of globalization on the real estate sector.