Trending: Luxury Real Estate Boom In Japan

Sustained by low interest rates and the lifting of COVID restrictions, Japanese land prices have surged in the last year leading into 2023.

Attracted by the performance, low interest rates, and the devaluation of the JPY, foreigners have also poured into the market, accounting for 45%. Big names such as Singapore’s Sovereign Wealth Fund as well as the Norwegian Pension Fund are among the investors. Considering the global macroeconomic outlook, it's little surprise Japan is currently trending so much when it comes to real estate investment.

One of the reasons for the significant increase in foreign investment is that Japanese real estate has long been undervalued. It is only recently that developers have focused on the high-end residential market, bringing Tokyo closer to more mature cities like Hong Kong, New York, and London. Following this string of investment, Japan is now on the same stage as major global hubs.

COVID-19 was a driving force in the demand for residences. Due to stay-at-home measures, people were motivated to purchase properties. Two to three years ago, there was a boom in residential purchases, with a surge in demand for residential buildings. Furthermore, the depreciation of the yen has attracted more foreign investors looking to take advantage of the economic situation.

Abenomics, the economic policy of the late former Prime Minister Shinzo Abe, are gradually starting to show effects, with the ultimate goal to end deflation. While we can say that progress is being made, it is still uncertain if this will continue sustainably in the near future.

As Nikkei stock prices have surged, people’s wealth has increased. Higher stock prices have led to an increase in high-net-worth individuals in Japan, resulting in more land and real estate purchases. In addition, investments from wealthy individuals from Western countries and from China are increasing, making the attractiveness of Tokyo even more recognizable.

Chinese investors, in particular, are seeking to mitigate country risk by moving their fund overseas. Japan is seen as one of the safest and most viable options, making it very attractive for investment. We have sold properties ranging from JPY 300 million to JPY 3 billion to Chinese individuals in prime areas like Shibuya. They choose these prime locations to secure higher rent and NOI. Due to higher rent and guaranteed returns, in their view, condominiums costing millions to billions of yen are not considered expensive. Our high-end condominiums, which are branded under the name of “Excelsior”, have been developed to meet those needs.