In recent years, investment in Japanese real estate bywealthy Chinese has been expanding rapidly, as evidenced by the fact that 87.5% of Greater China investors in a 2024 survey said that now is the right time to buy Japanese real estate.
Behind Chinese investors' interest in the Japanese real estate market are stable investment yields, a transparent legal system, and a sense of affordability due to the weak yen.
Reasons why wealthy Chinese are choosing Japanese real estate
Stable investment yields and profitability
The biggest reason why Chinese investors are attracted to Japanese real estate is the stable profitability. Japanese properties are estimated to yield 3.5% to 4%, which is higher than yields in major Chinese cities such as Beijing and Shanghai (about less than 2%), making them attractive as a stable source of income.
| Comparison Items | Major Cities in China | Japan (Tokyo) |
|---|---|---|
| Average Yield | Approx. 2.0 | 3.5～4.0 |
| Price stability | Large fluctuations | Relatively stable |
| Ownership | 70-year usufructuary right | Permanent ownership |
Asset protection through permanent ownership
In China, land is state-owned and only buildings can be owned, whereas in Japan, permanent ownership, including land rights, is the preferred means of asset preservation . This allows for asset succession from one generation to the next.
Investment Trends and Data Analysis
Purchase Budget and Payment Methods
The ultra-high-net-worth class of Chinese HNWIs purchase properties with a budget of 300-500 million yen, almost 100% of which are purchased in a lump sum in cash. This cash purchase avoids interest rate risk and allows for quick transactions.
Rising Ratio of Foreign Purchases
Real estate purchase trends in Tokyo's Minato Ward indicate that foreign real estate purchases will account for about 15-20% of all purchases in 2024, if only for high-end properties in central and Minato wards of Tokyo. Condominium brokerages for foreigners are signing around 40 contracts each month, which is about double the number of contracts signed a year ago.
Popular Areas and Property Types
Premium areas popular among the ultra-wealthy
The most popular property areas for wealthy Chinese are the prime central Tokyo locations in the 23 wards of Tokyo. Specifically, the following areas are representative of high-end residential areas:
| Area | Characteristics | Average Purchase Price Range |
|---|---|---|
| Minato-ku (Akasaka, Roppongi, Aoyama) | International flavor, good accessibility | 300-500 million yen |
| Shibuya Ward (Hiroo, Ebisu, Daikanyama) | High-class residential area, good cultural facilities | 200-400 million yen |
| Chiyoda Ward (Bancho, Kasumigaseki area) | Political and economic center | 300 to 600 million yen |
Characteristics of Investment Properties
For investment, single-building income-producing properties are popular, with an emphasis on yields of around 3-4% based on annual rental income. Increasingly, penthouses in luxury condominiums are being used as "second homes" or educational centers for children, with wide units of over 120 square meters.
Business Management Visa and Migration Trends
Utilization of Business Management Visa
An increasing number of wealthy Chinese are using real estate investment as a gateway to obtain a business management visa and immigrate to Japan. With a capital of 5 million yen and a basic business plan, a legal status of residence can be obtained, and this is attracting attention as a means of immigration.
Business Development through the Management of Private Residences
There have been cases where business development through the operation of private accommodations has satisfied the requirements for obtaining a "business management visa. As a result, an increasing number of investors are simultaneously investing in real estate and immigrating to Japan.
Regulatory Environment and Future Outlook
Current Regulatory Status
Currently, there are no laws or regulations restricting foreign real estate purchases in Japan. Since there are no restrictions on real estate purchases, foreigners can buy and sell under the same conditions as Japanese nationals.
Possibility of Tighter Regulations in the Future
On March 25, 2024, former Prime Minister Kishida stated at a meeting of the Budget Committee of the House of Councillors that "we will consider regulations on land sales related to security" and that future discussions should include the introduction of investment regulations for foreigners.
Restrictions on Remittance
Chinese yuan cannot be directly remitted internationally, but must be converted into foreign currency and then remitted from a foreign currency account. International remittances by individuals are limited to the equivalent of $50,000 per person per year, so it is necessary to use multiple remittance routes when purchasing expensive real estate.
Conclusion
Investment in Japanese real estate bywealthy Chinese is expanding rapidly on the back of stable investment yields, permanent ownership, and a sense of affordability due to the weak yen. 87.5% of Greater China investors believe that "now is the time to buy" as of 2024, with cash purchases of 300-500 million yen in premium areas of Tokyo real estate such as Minato-ku, Shibuya-ku, and Chiyoda-ku in particular becoming active. In particular, cash purchases of 300-500 million yen in premium Tokyo real estate areas such as Minato, Shibuya and Chiyoda wards are becoming more active.
The need to immigrate using a business management visa is also increasing, and an increasing number of investors are simultaneously investing in real estate and immigrating to Japan. Currently, there are no restrictions on real estate purchases, allowing for free investment, but there is a possibility that tighter regulations will be considered in the future from a security perspective.
In light of these trends, it is important for the real estate industry to provide services that meet the needs of Chinese investors and to establish an appropriate compliance system. We will continue to provide support for sustainable real estate investment as a trusted partner to high net worth individuals in China.
Frequently Asked Questions
Q1:Are there any legal restrictions on Chinese investors purchasing real estate in Japan?
A1: Currently, there are no legal restrictions on foreigners purchasing real estate in Japan. Foreigners can purchase real estate and acquire full ownership under the same conditions as Japanese nationals. However, from a security perspective, the possibility that restrictions may be introduced in the future is being discussed.
Q2:Are there any restrictions on remitting funds for the purchase of real estate from China to Japan?
A2:In China, international remittances by individuals are limited to the equivalent of $50,000 per year. For high value real estate purchases, remittances over multiple years or multiple channels must be utilized. In addition, RMB cannot be remitted directly; it must be converted into a foreign currency before remittance.
Q3:What are the requirements for immigrating to Japan through the Business Management Visa?
A3:To obtain a business administration visa, you must establish a company with capital of at least 5 million yen and a specific business plan. Real estate investment or private accommodation operation may also be accepted as a business. There are no restrictions on the applicant's age, language, or educational background, and family members may stay with the applicant.
Q4:What kind of yield can I expect from real estate investment in Japan?
A4:In Tokyo and other major metropolitan areas, you can expect an average yield of around 3.5% to 4%. This is a high level compared to yields of approximately 2% in major Chinese cities. In some regional cities, even higher yields can be expected.
Q5:What are the popular investment areas and property types?
A5:Minato-ku (Roppongi and Akasaka), Shibuya-ku (Hiroo and Ebisu), and Chiyoda-ku (Bancho) are popular among the ultra-wealthy. Penthouses and income-producing properties with a floor area of 120m2 or more and a budget of 300 to 500 million yen are the most popular property types.
Daisuke Inazawa
Representative Director of INA&Associates Inc. Based in Osaka, Tokyo, and Kanagawa, he is engaged in real estate sales, leasing, and management. He provides services based on his extensive experience in the real estate industry. Based on the philosophy that “human resources are a company's most important asset,” he places great importance on human resource development. He continues to take on the challenge of creating sustainable corporate value.
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