Private investors in Japan: Flying on the wings of tourism!

Private investors in Japan: Flying on the wings of tourism!

Japanese companies are increasingly turning to alternative forms of investment for individuals to benefit from the recovering tourism sector. Investments in aircraft and rental cars in particular have become more important as more and more investors are interested in participating in the coming tourism boom. For example, FPG Securities Co. is planning to raise capital for a novel investment project in June. This form of investment represents the first public aviation investment for private investors in Japan.

Private investors have the opportunity to participate in the purchase of an Airbus A320-200, which will be leased to the airline Iberia. The entry fee for each investor is 1 million yen, which corresponds to around 6,000 euros. FPG expects an annual return of around 6% for the first year. The leasing contract with Iberia runs for two years and ten months, with investors able to benefit from both dividends from the leasing income and possible sales proceeds.

Risks and challenges

As with any investment, there are risks. A sudden drop in air traffic caused by geopolitical crises or pandemics could have a significant negative impact on investors' returns. In addition, Mitsubishi UFJ Trust and Banking Corp. point out that they are also developing an investment product for private individuals, which will be created in collaboration with the rental car provider Idom Inc. The company operates the well-known used car chain Gulliver and has already purchased 200 vehicles in Okinawa that will be converted into an investment product.

The aim of these investments is to secure mobility offers in regions frequented by tourists. However, it is important to emphasize that there is no guarantee of a specific return. Market changes or weaker demand may affect distributions. A spokesman for the trust company expressed the hope that private investors can make their contribution to solving the problem of overtourism.

Market development and opportunities

Global air traffic is characterized by constant growth. According to forecasts by the International Air Transport Association (IATA), the number of passengers worldwide will double from 4 billion in 2017 to 7.8 billion by 2036, with Asia Pacific the biggest growth driver. The demand for transport services already often exceeds the available capacities.

In this context, closed aircraft funds are an important financing instrument for the aviation industry. Fund companies buy aircraft with capital from investors and rent them to airlines. This form of investment is relatively new compared to traditional forms of investment, but the risks associated with it should not be underestimated. Investors must consider both the leasing terms and the potential challenges and risks of the aviation market.

Overall, it appears that alternative investments, particularly in aircraft and rental vehicles, represent a promising, but also risky, opportunity for private individuals in Japan to benefit from the growing tourism sector. Investors should be well-informed and keep an eye on current market conditions to make informed decisions.