Eng 
日本語 
If you are an investor, real estate in Japan has great market dynamics. It’s the perfect place to diversify your real estate portfolio. But is Japanese real estate profitable? And can anyone buy a property or a land in Japan? In this article, we will share an overview of the common processes involved in buying Japanese real estate and share useful vocabulary words.
Jump to:
- Should I Buy a Japanese Real Estate?
- What’s The Average Land Price in Japan and Tokyo?
- Who Can Buy Japanese Real Estate?
- Is Japanese Real Estate Profitable?
- Who Should Invest in Japanese Real Estate?
- Where Can I Buy Japanese Real Estate Online?
- What Happens After You Buy a Real Estate in Japan?
- Important Vocabulary to Learn for Japanese Real Estate
Should I Buy a Japanese Real Estate?
Japan is entering a real-estate bubble era. Average land prices in Japan were stagnation for a long period, but it’s been growing again in the past 10 years. In 2021, average land prices fell by 95.97 thousand Japanese yen per square meter — a 1.5% drop from the previous year. This is partly because of the COVID-19 pandemic.
The coronavirus and low-interest rates, however, created a strong demand for homeownership. In fact, condominium prices in Tokyo in 2021 topped the record high amidst Japan’s asset price bubble.
A piece of land generally increases in value, and owning land is a great strategic move for foreigners to diversify their wealth portfolios.
What’s The Average Land Price in Japan and Tokyo?
In 2022, Tokyo Prefecture recorded the highest average land price of all 47 prefectures in Japan, at almost 1.13 million Japanese yen per square meter. It was followed by Osaka Prefecture with an average official land price of more than 311 thousand yen per square meter.
Japan’s population density is especially high in big cities like Tokyo, Sapporo and Osaka, which makes the average land prices Prefectures like Saitama, Chiba, and Kanagawa form the Greater Tokyo Area, which is one of the most populous metropolitan areas worldwide.
Who Can Buy Japanese Real Estate?
Unique in Asia, in Japan, anyone can own both property and the land it sits on. You do not need residence status or a valid visa to do so. For example, a 2017 report from the Forestry Agency mentioned that hectares of forest in Hokkaido was bought by Hong Kong, Taiwanese, and Singapore investors.
In practice, it is easier if you have residence status, or you incorporate a company to handle the dealings, but for institutional investors, there are many services available to Japanese real estate buyers.
Is Japanese Real Estate Profitable?
The short answer is: likely not — at least when you’re only looking from the capital-gain side of things.
But Japanese real estate is still a great way to diversify your portfolio. In most real estate markets, investors are looking for capital gains based on the value of the property. In Japan, things are a bit unique. Due to investor taste and market dynamics, including the tax code, real estate consistently depreciates.
This means that the property that you own (the building) will continue to use value for over 30 to 35 years until it is basically valued at zero (for detached houses).
This is due to the fact that most Japanese families like to rebuild. Generationally, the land is the asset — not the property.
Condo units, which are called “mansions” in Japan, can increase in value if they are centrally located in downtown Tokyo or Osaka. It depends on the age when you purchase them.
Japanese real estate investment strategy is to buy and hold long-term. You do this while making a return on the rental income of the property.
For this purpose, small single renter flats that are fully depreciated with reasonable commutation distance of major cities are the most traditional investment. Typically returns for these units are anywhere from 5-10% pre-tax.
Who Should Invest in Japanese Real Estate?
If you are living in Japan and you would like to diversify your real estate portfolio, Japanese apartment mansions are unique in the sense that some are affordable enough to purchase upfront in cash.
If you have an interest in making a safe and stable income, Japanese real estate is a great way to diversify your portfolio and lower the risk of some of your other riskier investments.
Where Can I Buy Japanese Real Estate Online?
You can search for available units online at several different websites. If your Japanese is not great, it severely limits your options.
If you would like to, you can search google for 不動産投資, which is the keywords real estate investment.
What Happens After You Buy a Real Estate in Japan?
Once you’ve settled your real estate payments, finalize the purchase and officially own a property, you must pay Fixed Asset Tax and City Planning Tax every year. If you are residing outside Japan, you can appoint a tax agent to complete this yearly obligation on your behalf.
Important Vocabulary to Learn for Japanese Real Estate
| 購入 | こうにゅう | (n,vs,vt) purchase; buy; (P) |
| 自宅 | じたく | (n) one’s home; one’s house; (P) |
| リフォーム | (n,vs,vt) renovation (e.g. a house) (wasei: reform); redecoration; makeover; updating; (P) | |
| 投資 | とうし | (n,vs,vt,vi) investment; (P) |
| 資金 | しきん | (n) funds; capital; (P) |
| 債権者 | さいけんしゃ | (n) creditor |
| 債権 | さいけん | (n) credit; claim; (P) |
| 金利 | きんり | (n) interest rate; interest; (P) |
| 債 | さい | (n,n-suf) debt; loan; (P) |
| 探す | さがす | (v5s,vt) (1) to search for; to look for; to hunt for; to seek; (v5s,vt) (2) to search (a house, pocket, etc.); to search through; to rummage in (e.g. a drawer); to fish around; (P) |
| 価格 | かかく | (n) price; value; cost; (P) |
| 価 | あたい | (n,adj-no) (1) price; cost; (n,adj-no) (2) value; worth; merit; (n,adj-no) (3) (math) (comp) value |
| 価 | か | (n-suf,ctr) (chem) valence; valency |
| 建物 | たてもの | (n) building; (P) |
| 間取り | まどり | (n) layout (of a house or apartment); arrangement of rooms; (P) |
| 住所 | じゅうしょ | (n) address; residence; domicile; (P) |
| 建物 | たてもの | (n) building; (P) |
| 構造 | こうぞう | (n) structure; construction; makeup; framework; organization; pattern; (P) |
| 建物構造 | たてものこうぞう | (n) Building type |
| 管理費 | かんりひ | (n) administration costs; administrative expenses; management costs |
| 修繕 | しゅうぜん | (n,vs,vt) repair; mending; (P) |
| 積立 | つみたて | (n) saving; savings; accumulation; putting aside; reserving; (P) |
| 修繕積立 | しゅうぜんつみたて | (n) building repair fund |
| 土地 | とち | (n) (1) plot of land; lot; soil; (n) (2) locality; region; place; (P) |
| 権利 | けんり | (n) right; privilege; (P) |
| 土地権利 | とちけんり | (n) land rights / type of land usage rights |
