Real estate in Japan - statistics & facts
Japan is a country with very limited space for buildings, as mountains make up about three-quarters of its landmass. In addition to this, the country has a fairly large population, which leads to a high population density, especially in the cities. After a long period of stagnation that began with the burst of the asset price bubble in the 1990s, land and property prices have been on the rise again in recent years. Prices remain highest in the capital city of Tokyo, which is the economic center of Japan. The prefectures of Tokyo, Saitama, Chiba, and Kanagawa form the Greater Tokyo Area, one of the most populous metropolitan areas worldwide. In addition to this, the metropolitan areas of Osaka and Nagoya are major economic hubs. These urban areas still enjoy a stable population despite the country’s demographic changes. In contrast, rural regions have to cope with economic stagnation and depopulation tendencies.
Over the past years, prices for new and pre-owned condos have increased significantly in Tokyo and other metropolitan areas. Soaring material prices, construction delays, and more recently, strong demand from foreign investors, are factors that led to this upward trend. Except for some historically protected locations, Japan has no restrictions on foreign real estate property ownership, making it an attractive market for investors from other countries.
While the pandemic and the consequent decline in tourism temporarily hit commercial land prices, prices for industrial land continued to rise amid a growing e-commerce market and increased demand for logistics facilities. Since economic activity has normalized and the number of tourists entering Japan has recovered to pre-pandemic levels, investor interest in the hospitality industry and offices has grown again. In addition, driven by the weak yen, the Japanese real estate sector has recently seen a significant surge in foreign investment.
Residential real estate
A large and steady supply of new housing and a relatively small market for second-hand properties are characteristic of the residential real estate market in Japan. Combined with the country’s rapidly shrinking population, this has resulted in a growing housing stock and rising vacancy rates, especially in less populated areas. The growing share of empty homes, many abandoned and dilapidated, stands in stark contrast with strong demand and soaring prices for new homes in urban areas.Over the past years, prices for new and pre-owned condos have increased significantly in Tokyo and other metropolitan areas. Soaring material prices, construction delays, and more recently, strong demand from foreign investors, are factors that led to this upward trend. Except for some historically protected locations, Japan has no restrictions on foreign real estate property ownership, making it an attractive market for investors from other countries.
Commercial and industrial real estate
The major metropolitan areas have shown an increase in commercial land prices in the years leading up to the Tokyo Olympic Games. This trend was fueled by Japan’s burgeoning tourism industry and low interest rates that led to increased hotel and office building numbers throughout the country.While the pandemic and the consequent decline in tourism temporarily hit commercial land prices, prices for industrial land continued to rise amid a growing e-commerce market and increased demand for logistics facilities. Since economic activity has normalized and the number of tourists entering Japan has recovered to pre-pandemic levels, investor interest in the hospitality industry and offices has grown again. In addition, driven by the weak yen, the Japanese real estate sector has recently seen a significant surge in foreign investment.
