One of the biggest surprises for me this year has been how popular Japan has been as an investment destination. Whether it's a small condo in Ginza for an individual investor or a multi-unit apartment building in Roppongi for a family office - demand has been strong and consistent over the past 12 months, but especially over the last 6 months. I think part of it is the exchange rate, and the JPY is back on a weakening trend and close to the 5-year low of JPY 145 to the USD - but part of it is how affordable real estate is and the quality of the finished product.
In 2022 we created our “GMG Concierge Service” because more investors, namely family offices, asked us to source real estate for them alongside offering the financing. Although driven by demand from our clients, that decision proved to be a big winner for us as we successfully helped acquire 5 multi-family buildings in Tokyo over the past 12 months and are just getting started. Message me below to learn more.
We all know Japan is a popular tourist destination known for its vibrant cities, rich cultural history, and beautiful landscapes. This has made it a highly desirable location for property investments. In addition to these attractions, Japan also offers a number of other factors that make it a good investment market, including:
- Exceptional rental income prospects: Demand for rental properties in Japan is surprisingly high. According to Japan Property Central, apartments in central Tokyo deliver a rental yield between 4-5%, outperforming other global cities such as New York and London.
- Encouraging price appreciation forecast: The Japanese real estate market has been on an upward trend in recent years, and there is no sign of this slowing down. According to the Japan Real Estate Institute, Japanese property prices have steadily risen since 2013, with a 2.7% hike in 2021 and a 2.9% surge in 2022. This means that investors can also expect to see their property values increase over time.
- Affordable cost of living: Despite its reputation for high costs, Japan's living expenses are comparably low for developed countries. This cost-effectiveness can benefit investors managing properties while seeking to minimize expenses. The average cost of living in Japan is about 20% lower than in the United States.
According to the Japan Real Estate Institute, the number of foreign national investors in the Japanese real estate market has increased significantly in recent years. In 2022, there were over 100,000 foreign national investors in the Japanese real estate market, up from just 50,000 in 2013. This growth is being driven by a number of factors, including the strong performance of the Japanese economy, the low cost of living in Japan, and the growing popularity of Japan as a tourist destination.
Foreign investors have been pouring money into Japanese hotels at a scale unseen in years. In the past 12 months, overseas buyers have invested a total of $3.7 billion in Japanese hotels, according to data from research firm MSCI Real Assets. This is the highest level of investment since 2014.
In the past year, overseas buyers made up 47% of hotel deals that closed in Japan, which is notable because hotels make up about a tenth of real estate deal activity in the nation, said Benjamin Chow, MSCI’s Asia head of real assets research. Foreign investors have historically been more drawn to residential or retail properties, but they are now increasingly interested in hotels as well.
Tokyo, Osaka, and Kyoto are the most popular destinations for foreign national investors in Japan. These cities offer a variety of investment opportunities, including residential properties, commercial properties, and land. Foreign national investors can also benefit from several government programs designed to attract foreign investment in the Japanese real estate market.
Japan real estate investment for International Buyers
If you are considering investing in Japanese real estate, GMG can help you navigate the market and find the right property for your investment goals. GMG offers a variety of mortgage products for international investors, including fixed-rate and variable-rate mortgages, as well as a variety of repayment terms. GMG also provides legal and tax consultation, property management, and purchase process guidance, making your investment journey smoother.
To learn more about investing in Japanese real estate with GMG, please visit our website, www.gmg.asia, or contact us today. We would be happy to answer any of your questions and help you get started on your investment journey.
GMG Concierge Service
GMG offers an exclusive concierge program that provides investors with access to a wide range of benefits, including:
- A dedicated account manager who will work with you to find the right property for your investment goals.
- Access to a portfolio of exclusive secondary properties in Tokyo and Yokohama.
- Discounts on property management fees and other services.
- Access to new projects in Niseko, Tokyo, and Kyoto.