Japanese love hotels: A recession-proof play?

People get intimate in good times and bad, so taking exposure to the leisure hotel industry while values are at all-time lows could be a wise counter-cyclical investment, argues Alchemy Japan, an asset management and advisory firm that operates the country’s 10th largest chain of love hotels.

Asset prices are dependent on the availability of leverage – and since banks and finance companies have been reluctant to lend during the financial crisis, property prices have dropped and capitalisation rates (net operating income divided by property price) are at record highs, says Garry Frenklah, Alchemy’s Asia ex-Japan representative.