Foreign Buyers and a Tourism Boom Are Fueling Japan’s Luxury Real Estate Market

For those seeking second homes in the countryside, Japan offers a range of attractive options with a bonus of strong value compared to other Asian markets, as well as an array of climates, landscapes, world-class culture, food, and history.

As of Oct. 25, 1 yen was worth US$0.0067, reaching only a high of US$0.10 in the past three years, which provides buyers an advantage in stretching their money further.

Luxury properties in Tokyo are also relatively affordable. In a 2023 annual wealth report, it was reported that buyers with US$1 million to spend can purchase 60 square meters, or 636 square feet, of prime property in Tokyo, almost double what they can get in New York or Singapore and nearly triple that of Hong Kong.

Luxury buyers in Japan are increasingly interested in ultra-luxury residences, leading to a shift towards luxury and rising prices. Wealthy foreign residents, primarily making their second homes in Tokyo, are driving this trend.

According to Japan’s Real Estate Economic Institute, the average price of a new central Tokyo apartment increased to a record 129.6 million yen (about US$863,000) between January and June.

Three cities with strong potential for benefiting from tremendous growth projects that will reshape the luxury real estate and tourism markets are Fukuoka, Kyoto, and Niseko/Hokkaido.

Fukuoka, located on the northern shore of Japan’s Kyushu Island, is a tourist hotspot and is an up-and-coming city with ambitions of being a Japanese tech centre. According to the Japanese Land Ministry Land Value LOOK Report, Fukuoka residential land value increased by 6% or more in 2023’s second quarter, outpacing numerous markets.

Kyoto, known for its traditional architecture, historical temples, and shrines, has strict bylaws, making it difficult to push new developments forward. According to the Land Value LOOK Report in the second quarter, Kyoto’s residential land value change was between 0% and 3%, unchanged from the prior quarter.

However, it may see an uptick in real estate values from an integrated resort currently being developed in the neighbouring Osaka area.

Niseko/Hokkaido, with its light powder snow, ski resorts, and lengthy season for hitting the slopes, is known as one of the world’s significant alpine areas. Niseko’s popularity among international tourists, particularly those from Australia and other Asian countries, has increased.

A 2023 ski property report reported that typical dwellings include two to three-bedroom condominiums between 100 and 150 square meters in size with average prices between US$500,000 and US$1.5 million.

Japan offers second-home buyers an opportunity to invest in a range of attractive locations with strong growth potential. From Fukuoka’s blend of urban life and natural beauty to Kyoto’s historical temples and shrines and Niseko/Hokkaido’s great alpine areas, buyers can find the perfect second home that suits their preferences.

With the bonus of solid value compared to other Asian markets, now is the right time to invest before prices rise further and inventory gets tighter.