3 Most Popular Spots in Japan to Buy a Property

Japan has rated as one of the best destinations for real estate investment among foreign investors due to the loose property purchase regulations and attractive properties with higher gross yield. The location of the property is one of the important considerations for the foreign investors before they decide on which property to buy. The top 3 favourite spots among them are Tokyo, Kyoto and Osaka.

The Main Capital of Japan - Tokyo

Tokyo has been rated as the top 10 Asian cities for real estate investment because Tokyo’s properties are most probably among the most valuable properties in Asia Pacific region. In comparison to other areas, Tokyo has higher properties’ price but the properties in this part of Japan are still having high demands among either locals or foreigners.

One of the reasons is because Tokyo is the city with the highest population in Japan. According to the last census set up by Tokyo Metropolitan Government, there were 13.16 million residents in Tokyo, and it is estimated that the population will increase up to 13.98 million in 2025. Many Japanese residents as well as foreigners are moving to Tokyo for better job opportunities and career development.

As the core of Japan economic, Tokyo properties have great potential in high rental income and capital appreciation in the future, especially for the arrival of 2020 Olympic Games. Tokyo’s property market has been an attraction for overseas investors for years and it is believe that this trend will be going on.

The Nation’s Kitchen of Japan - Osaka

Osaka is the second largest metropolitan area after Tokyo, which is located in the west part of Japan, called Kansai region and it accounts about 7% of the nation’s population. Being one of the leading economic centres in Japan, foreign investors are now shifting their attention to properties in regional cities like Osaka instead of focusing only on properties in central Tokyo. It has been reported that the demand for properties in Osaka is growing in a rapid rate fostered by the highly developing economy, especially from industrial and commercial tenants. 

According to CBRE, the vacancy rate of Osaka All-Grade properties fell to 3.2% by 0.7 points in Q1 2017. For Osaka Grade A properties’ vacancy rate, it hit the lowest level since Q1 2008, which was only 1.1% in Q1 2017. “Tenants are increasingly worried about being unable to find space because there is so little supply. More tenants are in a hurry to rent, which means the market is bound to tighten further,” said the executive director of CBRE’s Kansai branch.

In addition, the ambitious redevelopment projects in Osaka are also the attraction for the investment from overseas. Within this area, the construction of 100m high-rise buildings is now permitted and this is a big step for Osaka to move on to the future. The foreign investors believe that based on the market recovery and supply, the properties in Osaka are promising for attractive yields as well as high capital appreciation.

The Historical Centre of Japan - Kyoto

Located in the central part of Honshu, next to Osaka and with population of around 1.5 million, there are good anticipations for valorisation of land in Kyoto. Even though Kyoto is not as populated as other busy cities in Japan and also, has a lower demand in real estate, the unique atmosphere in Kyoto is one of the attractions for both Japanese and foreigners. The connection in Kyoto is convenient with subways and trains lines within the city. 

According to the Financial Times, the reason why Kyoto is a popular city for real estate investment is the lower bargain prices of the properties in this area. One of the biggest attractions for the foreign investors is ‘machiya’, the Japanese traditional house in Kyoto. This unique traditional wooden townhouse is obtainable at a very competitive price as an investment property. However, its attraction is not only on the affordability, but it also symbolizes the Japanese culture. Overseas investors who are seeking for affordable houses with historical value in Japan has started to dominate the real estate market in Kyoto.

Every of these popular spots has its own speciality which attracts foreign investors for real estate investment. Which spot would be your favourite one?

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