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In 2023, Japan has become an attractive destination for visitors from Singapore, Hong Kong, and mainland China, primarily due to its real estate opportunities. The combination of a weak yen and extremely low borrowing costs has been a significant advantage for buyers. However, the driving force behind this trend is the strong underlying demand.
People are drawn to Tokyo for luxurious apartments, Osaka for its proximity to the upcoming casino, Karuizawa for mountain hideaways reminiscent of a James Bond villain’s lair, Kyoto for beautifully restored wooden mansions, and Niseko for prestigious ski lodges. Real estate agents have seen a remarkable five- to ten-fold increase in inquiries from individual foreign buyers between January and September.
This transformation is described as extraordinary and is paralleled by a notable shift in focus among institutional investors and sovereign wealth funds.
Private equity firms and corporations are both enthusiastic about establishing their presence in one of the world’s most dynamic and liquid real estate markets. For these influential investors, who are injecting billions into a previously stagnant market, Japan’s allure goes beyond merely seeking a lasting position in a sought-after tourist hotspot.
For those considering investments in commercial, residential, and industrial properties, Japan offers a sense of stability in an otherwise unpredictable global landscape. Despite the rapid shift to remote work during the pandemic, Japanese white-collar professionals have predominantly returned to their office spaces. However, companies are compelled to sell their land holdings and other real estate assets due to mounting pressure from shareholders, creating an irresistible opportunity for investors.
China, on the other hand, is swiftly losing its appeal as an investment destination, both in economic and geopolitical discussions, after being a dominant force for several years. Investors themselves highlight a crucial factor in this shift: Japan has entered a prolonged period of political stability.
Official statistics are now corroborating the enthusiasm expressed by consistently optimistic brokers and real estate agents. In the first half of 2023, international investment in Japanese real estate reached ¥513 billion, a notable increase from ¥362.1 billion during the same period the previous year, as reported by Jones Lang LaSalle.
Furthermore, Tokyo has risen to become one of the world’s most attractive cities for investment, narrowly missing the top position to Los Angeles in the first half of the year, according to the same report
The capital of Japan experienced a remarkable ascent, climbing 14 positions in global rankings, with a total investment of $9.3 billion flowing into its real estate market. This put Tokyo ahead of cities like New York, Paris, Dallas, and London in terms of real estate investment. In the western city of Osaka, it secured the 29th spot with $1.9 billion in investments.
The depreciation of the yen, which reached an all-time low against the Singapore dollar in 2023, has made Singaporean investors the most active cross-border participants in the Japanese real estate market this year. Importantly, their investment strategies have also undergone significant changes. Importantly, there has been a notable shift in strategies, with investment funds now actively seeking opportunities in thriving sectors such as logistics, as well as in hospitality businesses like hotels, inns, and restaurants. These industries were severely impacted by the Covid-19 pandemic but are now experiencing a resurgence in tandem with the recovery of international tourism.
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