In recent years, investment in Japanese real estate bywealthy Chinese has been expanding rapidly.
Behind the interest of Chinese investors in the Japanese real estate market are stable investment yields, a transparent legal system, and a sense of affordability due to the weak yen.
In this article, we will explain in detail the five reasons why wealthy Chinese arecontinuing to buy Japanese real estate and the areas and property types that are popular investment targets. As an expert in the real estate industry, I will also provide the latest information on legal restrictions on foreign real estate purchases and immigration using a business management visa.
The scale of Chinese real estate investment is expanding every year, clearly showing the strength of the momentum
In terms of purchase price range, the ultra-high-net-worth class of affluent Chinese are taking the lead, with property purchases in the 300-500 million yen budget range becoming the mainstream. It should be noted that almost 100% of these purchases are made as cash lump-sum purchases. This cash purchase avoids interest rate risk and allows for quick transactions.
An analysis of the demographics of Chinese investors reveals that they are primarily from the ultra-high-net-worth class. These investors have a long-term investment strategy with a view to immigration, not merely for asset management purposes.
The need to immigrate by obtaining a business management visa is also increasing, and more and more investors are realizing both real estate investment and immigration to Japan at the same time. With a capital of 5 million yen and a basic business plan, it is possible to obtain a residence visa, which is attracting attention as a means of immigration.
One of the biggest reasons why wealthy Chinese choose Japanese real estate is because of its permanent ownership. In China, land is state-owned, and individuals can only own buildings, and the right to use land is limited to 70 years. In Japan, on the other hand, permanent ownership is available for both land and buildings.
This difference is extremely important from an asset preservation perspective. Since Japanese real estate remains in perpetuity, it is possible to pass on assets from one generation to the next. For Chinese investors, this permanent ownership is more than just an investment, but is positioned as an asset base for the future of the family.
| Comparison Items | China | Japan |
|---|---|---|
| Land ownership | State-owned (70-year usufructuary right) | Permanent ownership |
| Building ownership | Private ownership possible | Permanent ownership |
| Inheritance | Succession of usufruct | Complete ownership succession |
| Asset value | Depreciation due to expiration of use | Permanence of land value |
In terms of investment yields, Japanese real estate has a clear advantage over Chinese real estate. While the average yield on real estate investments in China's major metropolitan areas is only around 2%, yields of around 3.5% to 4% can be expected in Tokyo.
This yield differential offers attractive investment opportunities for Chinese investors. In particular, considering that yields in major Chinese cities such as Beijing and Shanghai are approximately less than 2%, Japanese properties are expected to yield around 3.5-4%, making them extremely attractive as a source of stable income.
With a focus on yields of around 3-4% from annual rental income, single-building income-generating properties are particularly popular. This stable profitability is in line with the long-term asset management strategies of wealthy Chinese.
Japan's advantage is also clear in real estate price comparisons.
More importantly, Japanese real estate prices include land rights. In China, the price is for the building only, whereas in Japan, the price includes the land rights, making the real undervaluation more pronounced.
The depreciation of the yen is also a tailwind for Chinese investors. The advantages of the exchange rate have led to a relative decline in investment costs on a yuan basis, increasing the appeal of investment.
The transparency and stability of the Japanese legal system is a source of great comfort for foreign investors. Currently, there are few legal restrictions on foreign real estate purchases in Japan, and foreigners can purchase real estate and acquire full ownership under the same conditions as Japanese nationals.
As of April 2024, when a Japanese person residing abroad, a foreigner not domiciled in Japan, or a foreign corporation becomes the owner of real estate, contact information in Japan has become a registered matter, but this is a measure to increase transparency and does not restrict the purchase.
The highly transparent trading system allows Chinese investors to invest with confidence. Combined with political and economic stability, it is highly regarded as a long-term investment environment.
Geographical proximity provides practical advantages for Chinese high net worth individuals. Travel time from China to Japan is short, allowing for frequent travel to and from Japan. This is an important factor for use as a second home or as an educational center for their children.
Cultural similarities are another factor that cannot be overlooked. Being from a culture where Chinese characters are used, it is relatively easy to understand Japanese culture and customs, and to adapt smoothly to the living environment.
The quality of the educational environment is another reason for wealthy Chinese to choose Japan. A high-quality education system and a safe social environment are attractive factors for wealthy Chinese who value the education of their children. Increasingly, penthouses in luxury condominiums are being used as educational centers for their children in units over 120 square meters in size.
The most popular property areas among wealthy Chinese are prime central Tokyo locations in the 23 wards of Tokyo. In particular, cash purchases in the range of 300-500 million yen are becoming more active in premium areas such as Minato-ku, Shibuya-ku, and Chiyoda-ku. These areas are chosen because of their cosmopolitan environment, excellent accessibility, and stable asset values.
| Area | Characteristics | Average Purchase Price Range | Reasons for popularity |
|---|---|---|---|
| Minato-ku (Akasaka, Roppongi, Aoyama) | International flavor, good accessibility | 300-500 million yen | Rich foreign community, convenient as a business base |
| Shibuya Ward (Hiroo, Ebisu, Daikanyama) | High-class residential area, good cultural facilities | 200-400 million yen | Sophisticated living environment, proximity to educational facilities |
| Chiyoda Ward (Bancho, Kasumigaseki area) | Political and economic center | 300-600 million yen | Status as a top-class residential area, rarity of proximity to the Imperial Palace |
| Chuo Ward (Ginza, Tsukishima) | Commercial and financial center | 200-400 million yen | Stability of investment value, access to central Tokyo |
Minato-ku is particularly popular among Chinese investors, and the Akasaka, Roppongi, and Aoyama areas are valued for their international environment and excellent accessibility. With a strong foreign community and convenient access to business centers, these areas are ideal locations for investors looking to relocate.
The Hiroo, Ebisu, and Daikanyama areas of Shibuya Ward offer the dignity of an upscale residential area and a wealth of cultural facilities. The sophisticated living environment and proximity to educational facilities are attracting an increasing number of wealthy Chinese who are using these areas as educational centers for their children.
There is a clear trend in property selection by Chinese investors. For investment purposes, single-building income-producing properties are particularly popular, with an emphasis on yields of around 3-4% from annual rental income.
In penthouses of luxury condominiums, wide-scale units of over 120 square meters are preferred. These properties are often used as "second homes" or as educational centers for children, and the quality of residence is an important selection.
Tower condominiums are another popular property type among wealthy Chinese. As luxury properties in prime locations in central Tokyo, they combine value as status symbols with practicality. In particular, properties on the upper floors with good views are actively purchased, even at premium prices.
Office and commercial buildings close to train stations are also attracting attention as investment targets. These properties can be expected to generate stable rental income and are in line with the income-oriented investment strategies of Chinese investors.
In Osaka City, investment is increasing mainly in the Chuo and Naniwa wards. Investments in anticipation of the Expo and IR plans are on the rise. Lump-sum purchases for high-value properties are on the rise, indicating growing interest in the Kansai region by Chinese investors.
Condominiums in the bay area have also traditionally been popular with Chinese investors, and are attracting attention because the timing coincides with the lifting of travel restrictions from China to Japan. These areas combine future development potential with current affordability and are considered attractive from a long-term investment perspective.
In local cities, investments in high-end resort properties in tourist areas and hot spring resorts are also seen. These investments are mainly for the purpose of operating second homes or private accommodations, and in some cases, they are used as businesses that satisfy the requirements for obtaining a business management visa.
Investment in Japanese real estate bywealthy Chinese is rapidly expanding due to stable investment yields, permanent ownership, and a sense of affordability due to the weak yen. In particular, cash purchases of 300-500 million yen in premium areas of Tokyo real estate such as Minato, Shibuya, and Chiyoda wards are becoming more active.
This investment trend is having a multifaceted impact on the Japanese real estate market. One contribution to market activation has been an increase in the liquidity of high-value properties and the volume of transactions.
On the other hand, the impact on price appreciation cannot be ignored. The market is overheated, with the average price of new condominiums in Tokyo's 23 wards exceeding 110 million yen for the second year in a row, and one factor supporting this price surge is purchases by foreign investors.
The number of investors who are simultaneously investing in real estate and immigrating to Japan is increasing, as is the need for immigration using business management visas. There have been cases where business development through the operation of private accommodations has fulfilled the requirements for obtaining a "business management visa," and a combined need for investment and immigration is becoming apparent.
As for the future outlook, although free investment is possible due to the current lack of restrictions on real estate purchases, there is a possibility that tighter regulations will be considered from a security perspective, and changes in policy are expected, such as the "Foreigners' Land Acquisition Regulation Bill" submitted to the House of Representatives in December 2024, and the Ministry of Land, Infrastructure, Transport and Tourism's first survey of actual conditions. The real estate industry is expected to continue to make progress in light of these developments.
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.
If you are considering investing in Chinese real estate, we recommend that you consult with a trusted professional regarding legal restrictions, tax considerations, requirements for obtaining a business management visa, and other areas requiring specialized knowledge.
Currently, there are no legal restrictions on foreigners purchasing real estate in Japan. Foreign nationals can purchase real estate and obtain full ownership under the same conditions as Japanese nationals. Purchases are possible regardless of nationality, visa type, or permanent residency status.
However, as of April 2024, if a Japanese person residing abroad, a foreigner who does not have a domicile in Japan, or a foreign corporation becomes the owner of the real estate, contact information in Japan will be required for registration. In addition, from a security perspective, the possibility that regulations may be introduced in the future is being discussed.
In China, international remittances by individuals are limited to the equivalent of $50,000 per year. For high value real estate purchases, it is necessary to send remittances over multiple years or utilize multiple channels. In addition, RMB cannot be remitted directly; it must be converted into a foreign currency before remittance.
Due to these restrictions, wealthy Chinese who purchase properties worth 300-500 million yen will need to utilize multiple remittance routes or transfer funds over multiple years. We recommend that you consult with a specialist regarding the appropriate remittance procedures.
To obtain a business administration visa, one of the following requirements must be met
1. establish a company with a capital or total investment of at least 5 million yen
2. employ two or more full-time Japanese nationals, permanent residents, permanent residents, or spouses of Japanese nationals residing in Japan.
The requirements for 2024 have been relaxed to allow paid-in stock acquisition rights (J-KISS type) as capital. In addition, at least three years of work experience in the management or administration of a business is required, but one year of work experience is allowed for those who have completed a master's degree in a subject related to management at a graduate school.
Real estate investment and private accommodation management may also be recognized as a business. There are no restrictions on the applicant's age, language, or educational background, and family members may also stay with the applicant.
In Tokyo and other major metropolitan areas, an average yield of around 3.5% to 4% can be expected. This is a high level compared to about 2% in major cities in China. In some regional cities, even higher yields can be expected.
Chinese investors are evaluating the stable profitability of income-producing properties purchased in single-building, which are managed with an emphasis on yields of around 3-4% based on annual rental income. However, yields vary depending on the location, property type, and management conditions, so detailed examination of individual properties is necessary.
Minato-ku (Roppongi and Akasaka), Shibuya-ku (Hiroo and Ebisu), and Chiyoda-ku (Bancho) are popular among wealthy Chinese investors. Penthouses over 120 square meters and income-producing single-family properties are the most preferred property types, with budgets in the 300-500 million yen range.
These areas combine a cosmopolitan environment, excellent access, and the dignity of an upscale residential area, and are often used as second homes or educational centers for children. High-rise tower condominiums are also popular because of their value as status symbols and practicality.