Why Asian Investors Are Flocking to Japanese Real Estate in 2025

In recent years, a large amount of capital has flowed into the Japanese real estate market from Asian countries and regions such as China, South Korea, and Taiwan. In particular, the revaluation of Japanese real estate as a "safe asset" from a geopolitical perspective is a trend that cannot be overlooked. In this article, INA & Associates, Inc. provides an expert's perspective on the geopolitical background and economic benefits of why Asian capital is now seeking Japan.

Current Status of Japanese Real Estate Investment by Asian Capital

First, let's take a look at specific data on how active Japanese real estate investment by Asian capital is becoming. In particular, investment from Taiwan and South Korea has shown remarkable growth in recent years.

Expansion of Investment Scale

The Japanese subsidiary of Taiwan's leading real estate brokerage firm, Hsin-Yi Group, has reached 70 billion yen in transaction volume in 2024, a 20% increase over the previous year. Tokyu Livable's Taiwanese subsidiary also shows no signs of slowing down, having handled a cumulative ¥58 billion in inbound transactions over the past 10 years.

Investment from South Korea has similarly surged. According to data from the Ministry of Planning and Finance of South Korea, remittances for real estate acquisitions to Japan for the full year 2024 will total $39.2 million, approximately triple the $13.1 million in 2023 and a record high. Capital outflows from mainland China are estimated to have amounted to approximately 8-9 trillion yen in July 2025, and as one of the destinations, the real estate markets of developed countries, including Japan, are attracting attention from investors.

Investment Trends

These investors mainly prefer internationally well-known areas such as central Tokyo, Osaka, and Kyoto. In terms of property types, condominiums that are highly liquid and easy to manage boast stable popularity. In recent years, inquiries for high-end properties priced in excess of 100 million yen have been increasing, indicating that large investments by wealthy individuals are becoming more active.

The purposes of investment are also diverse. There are cases where parents of foreign students purchase properties for their children's residences, purely for asset management purposes, for use as second homes, and even for acquisition of investment management visas.

Geopolitical Reasons for China, South Korea, and Taiwan to Choose Japan

Why do they choose Japan over their home countries or other countries? At the root of this question are the unique geopolitical challenges faced by each country and region, and the contrasting "stability" of Japan.

Japan's Political Stability and Social Order

Japan is a remarkably stable country politically and economically in the Asian region. Despite frequent changes of government, the foundations of the rule of law are unshakable, and the risk of sudden, major changes in real estate policy is extremely low. This "high degree of predictability" is an irreplaceable attraction for investors who are considering long-term asset management.

In addition, Japan's world-class public safety and well-developed social infrastructure are also important factors that ensure the safety of assets. Japan's crime rate is extremely low among major developed countries, and the risk of physical damage to real estate is minimal. In addition, Japan has strict measures against natural disasters and strict building standards, and many of its buildings are earthquake resistant, which gives investors a sense of security.

Geopolitical Challenges Faced by Countries and Regions

On the other hand, China, South Korea, and Taiwan each face different geopolitical risks. These risks are driving capital outflows from their home countries and investment in Japan as a safe haven.

Geopolitical Risks in Taiwan

Of greatest concern to Taiwanese investors is the geopolitical risk stemming from the country's deteriorating relations with China. Taiwan's unstable international position has prompted investors to diversify their assets overseas in case of an emergency. Japan has become a strong choice as an asset haven not only because of its geographic proximity, but also because of its strong cultural affinity.

Taiwanese investors are diversifying their assets across multiple countries, including Japan, the U.S., Canada, and Australia, where Japan has the geographical advantage of short flight times and frequent visits. Combined with the pro-Japanese character of the people, this low psychological hurdle also encourages investment.

Political and Economic Environment in South Korea

In South Korea, the rapid rise in real estate prices and the frequent changes in real estate policies in response to this have caused investor unease. In particular, tightening regulations, such as heavy taxes on multi-residential property owners, have greatly undermined the attractiveness of real estate investment in the country. It is a rational decision to avoid the domestic market, where it is difficult to predict and stable asset formation is difficult, and to look to the more stable Japanese market.

The Korean real estate market is extremely difficult for investors to predict, as prices are repeatedly cooled and cooled by government policies. At one point in time, regulations are tightened to suppress real estate prices, and at another point in time, regulations are eased to stimulate the market, resulting in inconsistent policy management. In this environment, it is difficult to plan for long-term asset building, and it is natural for investors to turn to overseas investments.

Political Unrest and Economic Stagnation in China

In China, political uncertainties, such as the government's sudden tightening of regulations, are a constant source of concern. In addition, the severe real estate recession in recent years has forced many investors to face the harsh reality of declining asset values. The management crises of major developers such as Hengda Group and Bi-Gui-Yuan have greatly shaken confidence in the domestic real estate market and accelerated the "asset flight" trend, in which investors are shifting their capital overseas in search of safer investments.

In China's real estate market, real estate sales area declined by about 60% in 2023 from its peak in 2021. Local government finances are also at a 10-year low due to declining revenues from land sales, and the overall market is in a serious recession. Since real estate has been the center of Chinese people's asset formation, falling prices have significantly reduced households' net worth, creating a vicious cycle that has suppressed consumption and investment motivation.

Economic Benefits of Investing in Japanese Real Estate

In addition to geopolitical stability, the benefits of the current economic situation are also major factors attracting Asian capital to Japan.

Undervalued due to the weak yen

The current historic depreciation of the yen makes Japanese real estate extremely undervalued for foreign investors. For example, a property that would have cost 100 million yen a few years ago can now be purchased for 70-80 million yen in local currency. Compared to major cities around the world, Tokyo real estate prices are still undervalued, and as long as the yen continues to depreciate, the appetite for investment from overseas will not wane.

By 2024, the value of the yen will have fallen to its lowest level in 38 years, and the expectation of foreign exchange gains has also fueled the investment boom. Research has also shown that Tokyo's housing price level is considerably undervalued compared to world-renowned cities such as Hong Kong and London.

Stable Yields and Profitability

The Japanese real estate rental market, especially in Tokyo, is supported by strong demand, and stable yields can be expected. The average yield in Tokyo is about 3.5-4%, while in Taipei it is around 2%, giving Tokyo an advantage in terms of income yield. Hong Kong also offers nominal yields in the 3-4% range, but in some cases the investment appeal may be limited in light of price levels and operating costs. This is because real estate prices are soaring while rents are not keeping pace. For investors seeking stable income gains, the Japanese market is very attractive.

Japanese real estate is also an effective hedge against inflation. The value of real estate assets tends to rise as prices rise, and there is little risk of a decline in value, as is the case with cash deposits. Furthermore, rents also tend to rise in tandem with price increases, ensuring a stable cash flow even during inflationary times.

Advantages of the Real Estate System

Japan's real estate system is extremely favorable to foreign investors. The fact that foreigners can acquire full ownership of land and buildings under exactly the same conditions as Japanese nationals is noteworthy even from a global perspective. In addition, real estate transactions are highly transparent and information is thoroughly disclosed, allowing for peace of mind.

In particular, there are many similarities between Taiwan and Japan in the names and structures of their tax systems, as shown in the table below, lowering the hurdles to investment. For Taiwanese investors, the Japanese real estate transaction system is easy to understand and familiar.

Furthermore, Japanese building standards are among the strictest in the world, and are unrivaled by any other country, especially in terms of earthquake resistance. Taiwan is also an earthquake-prone region, so earthquake resistance is an important factor in investment decisions. In Taiwan, there have been a number of problems with pre-built sales, and in many cases the quality of common areas and private areas differs greatly from the initial description, whereas in Japan such risks are extremely low.

Problems facing real estate markets in various countries and regions

Structural problems in the real estate markets of Asian countries and regions are also encouraging investment in Japan.

China's Real Estate Crisis

China's real estate market is facing a serious crisis in the 2020s. The collapse of major developers such as Hengda Group and Bi-Gui-Yuan has undermined confidence in the market as a whole; by the end of 2024, property prices will continue to fall and local government finances will continue to deteriorate due to declining revenues from land sales.

High-rise buildings left unfinished are scattered throughout the country, leaving buyers in the dire situation of not only losing their money but also having no place to live. Under these circumstances, it is only natural that Chinese investors are avoiding investing in domestic real estate and shifting their funds to safer real estate in Japan.

Challenges in the Korean Real Estate Market

In South Korea, real estate prices, especially in the Gangnam area of Seoul, have skyrocketed to a level that is unaffordable for the average income level. The government is trying to curb prices through regulations such as heavy taxation on multifamily dwellers, but this is conversely causing investors to leave the domestic market.

It is not easy to find a good property in Seoul in the 1 billion won range, but the fact that one can purchase a residential apartment in Tokyo, a more international city, for the same amount of money is inspiring Korean investors.

Real Estate Market Issues in Taiwan

In Taiwan, real estate prices in Taipei have skyrocketed, making it difficult for the average salaried worker to purchase a property. In addition, there are frequent reports of problems with pre-built sales, where there is a large discrepancy between the developer's description and the actual finished product.

In many cases, the quality of common areas and private areas is significantly lower than originally promised, leading to increased dissatisfaction among buyers. Without such quality concerns, Japanese real estate is a safe investment for Taiwanese investors.

Reasons why Japanese real estate is valued as a "safe asset

Taken together, these factors make clear the reasons why Japanese real estate is highly valued as a "safe asset.

Effectiveness as an inflation hedge

Inflation is one of the biggest concerns in the current global economy. With prices rising and the value of cash virtually diminishing, the question arises as to how to protect one's assets. This is where real estate, a physical asset, can be a very effective inflation hedge.

During times of inflation, the asset value of real estate tends to rise along with prices. The risk of diminishing value, as is the case with cash deposits, is low, and an asset preservation effect can be expected. In addition, since rents tend to rise along with prices, stable cash flow can be secured even during times of inflation. Furthermore, real estate investment often involves loans from financial institutions, and when the value of money declines due to inflation, the burden of repaying loans is substantially reduced.

Use as an inheritance and tax-saving measure

Real estate in Japan tends to be valued lower than cash or securities for inheritance tax purposes, making it very effective as an inheritance tax measure. In addition, real estate income can be aggregated with other income and expenses, such as depreciation and amortization, to reduce income and inhabitant taxes.

These tax advantages are a major attraction for wealthy individuals who are considering long-term asset building. In many cases, real estate is a more advantageous option than cash, especially when considering the succession of assets from one generation to the next.

Conclusion: The Value of Japanese Real Estate Created by Geopolitical Advantages

As we have seen, the reason why Chinese, South Korean, and Taiwanese capital is seeking to invest in Japan is not just economic return, but also geopolitical stability, which is an extremely important factor. They are choosing Japanese real estate as a "safe asset" to hedge against political and economic uncertainties in their home countries.

The Japanese real estate market has a multi-layered appeal: political stability, good social order, a transparent transaction system, strict building codes, and an ownership system open to foreigners. These factors combine to form a powerful magnetic field that attracts Asian capital.

This trend is likely to accelerate further in the future, thanks in part to the tailwind of the yen's depreciation. The value of the "stability" of Japanese real estate will shine even brighter as the world becomes increasingly uncertain.

INA&Associates provides one-stop support from individual consulting to property introduction and post-purchase management in order to meet the diverse needs of overseas investors. If you are interested in investing in Japanese real estate, please feel free to contact us. We are here to help you protect and increase your valuable assets.

Frequently Asked Questions

Q1. Can foreigners freely purchase Japanese real estate?

Yes, it is possible. In Japan, there are no restrictions on real estate ownership based on nationality, and you can acquire exactly the same rights (ownership) as a Japanese national. However, you may be required to report to the Minister of Finance after purchase. Also, although you can purchase real estate regardless of whether or not you have permanent residency status, when using a mortgage loan, your permanent residency status and work status will be subject to screening.

Q2. Which areas are particularly preferred by Chinese, Korean, and Taiwanese investors?

Central Tokyo (Minato-ku, Shibuya-ku, Chiyoda-ku, etc.), central Osaka City, and the international tourist destination of Kyoto are particularly popular. These areas are valued for their stable asset values and high liquidity. Areas with a large number of foreign students and properties near train stations with convenient transportation are also popular.

Q3: How do Japanese real estate investment yields compare with those of other Asian countries?

Looking at surface yields alone, yields may be higher in emerging countries in Southeast Asia and other regions. However, Japanese real estate is superior in terms of low vacancy rates, stable rents, and above all, preservation of asset value, making it very attractive on a risk-adjusted return basis. Tokyo's 3-4% yield compares favorably with 1-2% in Taipei and other major cities in China.

Q4. What will happen to Japanese real estate prices if geopolitical risks increase?

If geopolitical risks rise in other countries or regions, such as in Asia, funds may flow into the relative safety of Japan, which may cause real estate prices to rise. Japanese real estate also has an aspect of being a "safe haven in case of emergency. In fact, investment in Japan tends to increase during periods of heightened tension in Sino-Taiwan relations and policy uncertainty in South Korea.