In our daily contact with many of our clients, we are often asked questions such as, "Why do high-net-worth individuals own real estate? What is the philosophy behind their real estate choices?
With the uncertain economic outlook, there is a renewed focus on the value of real estate as a real asset, in addition to traditional financial assets such as stocks and bonds. On the other hand, it is also true that real estate investment requires specialized knowledge and not everyone can succeed.
Therefore, in this article, based on the knowledge we have cultivated so far, we will explain the philosophy of "how to own" real estate and the specific strategies practiced by high-net-worth individuals in plain language from a professional perspective. We hope this article will be of help to you in your asset building strategy.
The reasons why high-net-worth individuals include real estate in their asset portfolios are not simply because it is profitable. There is a deeper, strategic intent to preserve and steadily grow their assets. Here are seven typical reasons.
Successful high-net-worth individuals have a common philosophy in real estate investment. Rather than focusing on immediate gains, they take a long-term, big-picture view of building "true assets" that will continue to generate value over 10, 20 years, or even generations.
As investor Robert Kiyosaki stated, "Assets put money in your pocket; liabilities take money out of your pocket." High-net-worth individuals adhere to this definition and view "assets" as real estate that generates continuous cash flow and increases the overall value of the asset. Even if the property has a high yield, it is considered a "liability" if it has high vacancy and repair risks, resulting in a high out-of-pocket expense.
High-net-worth individuals particularly prefer to invest in prime urban areas with high population concentration and economic activity. These areas have low vacancy risk due to stable rental demand, and future increases in asset value (capital gains) can be expected. The following data clearly demonstrates their superiority.
| Area | Base land price in 2025 (year-on-year change) |
|---|---|
| Tokyo 23 wards (commercial land) | +13.2% (year-on-year) |
| Tama area (commercial land) | +5.5 |
Source: Ministry of Land, Infrastructure, Transport and Tourism, "Survey of Land Prices in Prefectures in 2025," compiled by our company.
As you can see, land prices in central Tokyo are rising at a higher rate than those in the suburbs, and we believe that this is an extremely promising market in which to aim for long-term asset value growth.
Quality" of properties is an extremely important factor in aiming for long-term value creation. Wealthy people do not choose a property simply for its high yield. They value the structure of the building, the grade of facilities, the state of management, and above all, the "rarity of the location. This is because these factors are the foundation for maintaining asset value over the long term and ensuring stable rental demand.
| Building age | Asset value (when new construction is set at 100) |
|---|---|
| 5 years | 90-95 |
| 10 years | 80 to 85 years |
| 20 years | 60 to 70 years |
| More than 30 years | 40-50 (but varies greatly depending on location) |
Note: The above are general trends and will vary greatly depending on the property's management conditions and location.
Although the value of the building will decrease over time, if the land value of the property is high, such as in a prime location in the city center, the increase in land value will exceed the decrease in building value, increasing the likelihood that the total asset value will be maintained or even increase.
This article has explained the philosophy and specific strategies for "owning" real estate as practiced by high-net-worth individuals.
The key is to position real estate as a "strategic component" of your overall asset portfolio, rather than as a mere "dot. Do you aim for income gains or focus on capital gains? How will you incorporate objectives such as tax reduction and inheritance protection? Clarifying these objectives and building an optimal real estate portfolio from a long-term perspective is the key to maximizing your assets.
Real estate investment is not an easy path. INA & Associates, Inc. provides customized real estate consulting services tailored to each client's unique situation and goals. INA&Associates, Inc. provides customized real estate consulting services tailored to your individual situation and goals. If you would like to discuss your real estate strategy in more depth, please feel free to contact us for a consultation.
Q1: How much personal funds do I need to start investing in real estate?
A1: Although it is difficult to say, it is generally recommended that you prepare 10% to 20% of the property price as personal funds. However, depending on your attributes and the financial institution's evaluation, you may be able to start with less personal funds. The important thing is to have a reasonable financial plan.
Q2: Which do you recommend, a property in a rural area or a property in the city center?
A2: It depends on your investment objectives. There are strategies that aim for income gains from high-yield properties in rural areas, but if long-term stability of asset value and liquidity (ease of selling) are important, we recommend properties in central Tokyo, where the risk of population decline is low and rental demand is strong.
Q3: Can I leave all the management to you?
A3: Yes, we can. We offer a one-stop management service that supports everything from rental solicitation to tenant relations, building management, and rent collection on behalf of the owner. We realize stable real estate management without bothering the owner.