Subprime-mortgage woes and high oil prices afar may spur deflation and curb spending and investment for most in Japan, but not for the world's second largest cadre of millionaires - and those that cater to it. From exclusive social networking services (SNS) and luxury retail and hotel sales to financial services offering premier wealth management, things are looking up.
Sure, Japan slipped from 15 to 18 among 30 Organization for Economic Cooperation and Development (OECD) nations last year; and the first day of TSE trading in 2008 saw share prices fall (to an 18-month low) instead of rise for the first time in seven years. But the financial sector has been doing more than just reeling from the effects of a flagging U.S. economy. Along with technology and entrepreneurship, it's credited for the steady annual growth (5.1 percent in 2006) in the number of millionaires.
The number of those with 110 million yen (about $1 million) or more in financial assets grew to 1.47 million and account 60 percent of Asia's millionaires, according to the latest Capgemini/Merrill Lynch World Wealth Report for 2006. And with the global luxury market said to be growing about 10 percent to 15 percent annually, high-end services and goods are following the money - and it's not just in the retail sector.
This month, HSBC, one of Britain's top financial groups, unveils its HSBC Premier Centre in Tokyo's Akasaka and Hiroo to meet the wealth-management needs of the well-off. For a minimum 10-million-yen deposit, services include a "premier relationship manager" to help manage those cumbersome funds. These centers, however, aren't the only place where the moneyed can mingle free from the prying eyes of the less advantaged.
Wealthy "respectable" persons looking to network in a country-club-like corner of cyberspace can now turn to YUCASEE, an exclusive Japanese social networking service. The SNS is the offshoot of an investment information service for Japan's growing neuvo rich and only considers "applicants" with 100 million yen or more in financial assets. That's about 1.6 percent of the nation's households, up from 1.3 percent when YUCASEE launched a year ago, according J-Cast News. More tangible exclusive real estate is also attracting financial elites - and not just those from here.
Thanks to overseas investors and restructuring airlines, Japan's luxury hotel market is no longer for locals only, reports The Asahi Shimbun. Hotel sales in general are up from 10 in 2002 to 59 in 2006. One of the nation's biggest real-estate deals took place in June when a Morgan Stanley bought 13 Prince Hotels from All Nippon Airways Co., Japan Airlines Corp. and Seibu Holdings Inc. for 281 billion yen, including the flagship ANA Intercontinental Hotel Tokyo.
U.S.-based Aetos Capital LLC, Lone Star Fund and Citigroup Inc. recently snatched up Hotel Nikko Tokyo in Odaiba, Okinawa Royal View Hotel and Hokkaido's Niseko Higashiyama Prince Hotel, respectively. Foreign owned The Peninsula in Hibiya and the Ritz-Carlton in Roppongi, where 1.8 million yen will reportedly buy a martini with a diamond, also recently arrived. While Hong Kong icon the Shangri-la plans to open here in 2009. It may be reminiscent of the bubble years but what sets today's industry apart is an expected influx of wealthy visitors from abroad, not just domestically.
Tokyo is also an ideal place to satiate an appetite spurred by that diamonded martini. Recent brisk sales of the first Michelin guide to top Tokyo restaurants may not be a barometer of local gastronomy, but the eight eateries awarded the coveted three-star rating help single out Tokyo as this year's city with the most such stars. The prestigious "Michelin Guide Tokyo 2008" not only serves info on restaurants such as recently opened Yamadaya, where a meal with fugu (pufferfish) can run 30,000 yen. It tells the well-heeled world that Tokyo is on par with France and New York in appeasing its tastes.
Such tastes are just what supper-luxury retailers are also banking on. Rolls-Royce Motor Cars in Japan has seen a surge in custom orders that can add up to 60 million yen to the price of a car, while Maserati, Porsche and Ferrari have seen sales here rise 21 percent, 15 percent and 11 percent, respectively, reports The Japan Times. In fashion, Bottega Veneta, whose handbags start at 165,000 yen, boasts its store in Tokyo's Omotesando is doing brisk business, and Armani, Gucci and Bulgari all opened retail towers here over the past year. So, it would seem that not everyone in Japan worries about predictions of a worsening economy to come. Then again, for some, there are literally millions of reasons not worry even if such predictions prove true.