How to protect and nurture your assets is an extremely important issue in today's rapidly changing global situation and uncertain economic outlook. In particular, the prolonged conflict in Ukraine and the Middle East and the escalation of geopolitical risks such as the escalation of the conflict between the U.S. and China have shaken the conventional wisdom of asset management, forcing many investors to review their asset portfolios. Under these circumstances, the diminishing value of assets due to inflation has also become a serious concern, and we have entered an era in which it is difficult to maintain assets with cash and savings alone.
In this environment, the value of real estate is being reevaluated. Although real estate was once considered a risky asset, its stability as a real asset and its resistance to inflation have made it a "safe asset" under geopolitical risk. However, to be successful in real estate investment, it is essential to accurately read market trends and develop appropriate strategies.
In this article, INA & Associates, as a real estate expert, explains why real estate is now attracting attention as a "safe asset" in an easy-to-understand manner for the average consumer, while also providing data and market trends that provide the basis for this understanding. Based on our expertise and knowledge, we will thoroughly explore specific strategies and practical points for successful real estate investment as a means of asset defense in the age of geopolitical risk.
What is geopolitical risk? Analysis of the current situation in 2025
First, let's review the definition of "geopolitical risk. Geopolitical risk refers to the potential for heightened political and military tensions in a particular region to adversely affect the global economy and financial markets. Specifically, this includes wars, conflicts, terrorism, and confrontations between nations. These events can cause supply chain disruptions, resource price volatility, and trade stagnation, which can directly lead to a deterioration in corporate profits and a decrease in individual asset values.
As of 2025, the world faces multiple serious geopolitical risks. These risks are interrelated and complex. Particular attention should be paid to the following
| Major geopolitical risks | Scope of influence and current situation |
|---|---|
| The situation in Ukraine | The Russian invasion that began in February 2022 has been protracted, causing energy prices to soar and a food crisis. Sanctions against Russia by Western countries are accelerating the fragmentation of the global economy. |
| Middle East Situation | Conflicts, including the Israeli-Palestinian issue, are destabilizing oil prices and raising security concerns over maritime transportation routes. |
| China-Taiwan Contingency Risk | Tensions between the U.S. and China over Taiwan could have a serious impact on the global semiconductor supply chain. In the unlikely event of a military conflict, the economic impact would be immeasurable. |
| U.S.-China Conflict | The conflict between the U.S. and China is sharpening in all areas, including trade, technology, and security. The decoupling of the two countries could fundamentally change the structure of the global economy. |
According to a report by the International Monetary Fund (IMF), as geopolitical risks increase, investor sentiment deteriorates and funds shift from risky assets to safe assets. In particular, the report points out that stock prices in emerging market countries tend to fall sharply and sovereign risk (a country's credit risk) also rises. In this environment, it is essential to review asset management strategies centered on conventional stocks and bonds.
Why is real estate attracting attention as a "safe asset" now?
Why is real estate being reevaluated as a "safe asset" in an environment of heightened geopolitical risk? To understand why, it is first necessary to consider the three criteria for evaluating the nature of an asset: safety, liquidity, and profitability.
Generally speaking, "safe assets" are assets with extremely low risk of loss of principal and stable value. Typical examples are cash and government bonds, but these assets also have low profitability. On the other hand, risky assets such as stocks can be expected to have high profitability, but their prices fluctuate widely and they are vulnerable to changes in the external environment, such as geopolitical risk.
| Asset Type | Safety | Liquidity | Profitability | Characteristics |
|---|---|---|---|---|
| Cash and deposits | ◎◎ Cash and deposits | ◎ Cash and deposits | △ △ | Principal is guaranteed, but real value is diminished by inflation. |
| Government Bonds (JGBs) | ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ | ○ ○ △ △ | △ ○ ○ | Since they are issued by the government, they are highly creditworthy, but interest rates are extremely low. |
| Gold | ○ ○ | Gold (gold) ○ ○ | Gold is a real asset, known as "contingency gold. | Gold is a real asset known as "contingency gold" and is resistant to inflation, but it does not generate interest or dividends. |
| Stocks | ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ | ○ ○ ○ ○ | ◎ | High returns can be expected, but price volatility risk is high and they are susceptible to geopolitical risk. |
| Real estate | ○ ○ ○ | Real estate | ○ ○ | It has middle-risk/middle-return characteristics, and inflation hedge effects and stable income gains can be expected. |
As the table shows, compared to other asset classes, real estate has a "middle-risk-middle-return" characteristic with a good balance between safety and profitability. Although it is inferior to other financial assets in terms of liquidity (ease of redemption), its advantages more than compensate for this, and it is attracting attention in the current uncertain economic environment.
Of particular importance is the fact that real estate is a real asset. Even if the value of paper money declines due to inflation, the value of real assets such as land and buildings is unlikely to diminish, and in fact, asset values and rents tend to increase as prices rise. This is why real estate functions as a powerful inflation hedge.
Furthermore, even when geopolitical risks become apparent and financial markets are in turmoil, real estate maintains a relatively stable value. It is less at risk of a price collapse like stocks, and as long as there are tenants, it provides a stable rental income (cash flow) and can serve as a foundation for long-term asset preservation and building.
Real Estate Investment Strategies in the Era of Geopolitical Risk
With geopolitical risk on the rise, investors around the world are moving their funds in search of safe investments. One of the markets that is attracting the most attention is the Japanese real estate market. Political stability, the reliability of the legal system, and the undervaluation of prices due to the weak yen have become major attractions for wealthy foreign investors and institutional investors.
Driving the market's buoyancy is the strong appetite of foreign investors, who, according to CBRE's survey, will account for a noticeable increase in the second quarter of 2025, confirming the international recognition of Japanese real estate as a "safe haven" for investors.
In order to successfully invest in real estate in this environment, a strategic approach that incorporates a geopolitical perspective is essential. The first important factor is the selection of investment areas. In Japan, it is necessary to identify areas with high potential to maintain or increase in value over the long term, taking into account demographics, industrial structure, redevelopment plans, and other factors. In particular, metropolitan areas with international competitiveness, such as Tokyo, Osaka, and Fukuoka, can be expected to maintain stable rental demand and asset values in the future.
Portfolio diversification is also an important strategy. Instead of concentrating on a single property or area, diversifying investments across multiple properties with different characteristics can reduce risk and aim for stable income. For example, if you are looking for stability, you can invest in residences in central Tokyo. If you are aiming for higher returns, you can consider office buildings in areas of high economic activity, or hotels where a recovery in inbound demand is expected.
In this era of geopolitical risk, we believe that it is more important than ever before to think in terms of securing stable rental income (income gain) from a long-term perspective and steadily preserving and developing assets, rather than chasing short-term price gains (capital gains).
Five points for turning real estate into safe assets
In order to maximize the potential of Japanese real estate and make it function as a true "safe asset," a strategic approach based on professional expertise is essential. Here we will discuss five key points that will lead you to a successful real estate investment.
- Thorough location selection
The value of real estate depends largely on its location. Areas with a growing population, active economy, and convenient transportation tend to maintain their property values because they can expect stable rental demand over the long term. It is important to assess the future potential of an area from a macro perspective, taking into account future urban development plans and infrastructure trends. - Strategic Selection of Property Type
There are various types of real estate in which to invest, including residences, offices, commercial facilities, hotels, and logistics facilities. Each has different risk and return characteristics, so you should select the property type that best suits your investment goals and risk tolerance. For example, a strategy that emphasizes stability might be to invest in single-person residences in central Tokyo, while a strategy that pursues high profitability might be to invest in office buildings in growth areas. - Establish a risk management system
Real estate investment involves a variety of risks, including vacancy, falling rents, rising interest rates, and disasters. Assuming these risks in advance and taking specific countermeasures are the keys to achieving stable operations. For example, choosing a fixed-rate loan to deal with the risk of rising interest rates and purchasing appropriate insurance to deal with disaster risk are effective measures.
| Major Risks of Real Estate Investment | Specific Countermeasures |
|---|---|
| Vacancy risk | Select an area/property with high rental demand, and ask a reliable management company to find customers. |
| Risk of Rent Decline | Determine the future potential of the area from a long-term perspective and maintain the attractiveness of the property through regular maintenance. |
| Risk of rising interest rates | Select a fixed-rate loan whenever possible, or make a financial plan that anticipates interest rate rises. |
| Disaster Risk | Obtain fire and earthquake insurance, and select properties by checking hazard maps. |
| Liquidity Risk | Select an area with high demand or a popular property type, taking ease of sale into consideration. |
- Work with trusted professionals.
It is not easy for an individual to determine and execute all these points. Real estate investment requires a high level of expertise and experience, from property information gathering, financial planning, legal and tax issues, post-purchase management and operation, and exit strategies (sale). That is why the shortest route to success is to work as a team, collaborating with experts in each field. Finding a reliable real estate company, tax accountant, lawyer, or other partner is of the utmost importance. - Clear Exit Strategies
Buying a property is not the goal of real estate investment. It is important to clarify in advance what you will do with the property in the future, in other words, your "exit strategy. Will you sell the property at the optimum timing while monitoring market conditions and aiming for capital gains, or will you hold the property for the long term and continue to enjoy stable income gains? By planning an exit strategy at the entry stage, you will be able to build assets more systematically and reliably.
By ensuring these points, real estate can become a powerful "safe asset" for overcoming the stormy seas of geopolitical risk.
Conclusion: Real estate can be the "strongest safe asset" in cooperation with experts.
In this article, we have explained why real estate is an effective "safe asset" in this age of heightened geopolitical risk, and the strategies for maximizing its potential, from an expert's perspective.
With the increasing uncertainty of the global situation, it is becoming increasingly difficult to protect our valuable assets with conventional financial assets alone. It is precisely in these times that real estate, a real asset that is resistant to inflation and generates stable cash flow, can be a very attractive option to play a central role in your asset portfolio. In particular, the Japanese real estate market, with its political and social stability and active foreign investment, is a highly competitive investment destination from a global perspective.
But again, successful real estate investment cannot be realized without proper strategy and risk management. Professional knowledge and experience are essential throughout the entire process, from property selection to financial planning, management and operation, and exit strategies. In order to minimize risk and maximize returns, a reliable partner is of utmost importance.
We at INA & Associates, Inc. are more than just a real estate company that brokers properties. We provide "comprehensive asset consulting" to optimize the entire asset portfolio by staying close to the goals and future of each client and utilizing our professional network of legal, tax, and financial expertise. In a rapidly changing economic environment, we protect, nurture, and pass on our clients' valuable assets to the next generation. We take full responsibility for providing you with the best course of action to achieve this.
We are here to provide you with a real estate compass to navigate the uncharted waters of geopolitical risk. If you are interested in our asset protection strategy, please feel free to contact us.
Frequently Asked Questions
Q1. What exactly happens to real estate prices when geopolitical risk increases?
A1. When geopolitical risk increases, risk assets such as stocks are sold due to uncertainty in the financial markets, and funds tend to move toward safe assets. In the domestic real estate market, asset values may rise, especially in metropolitan areas such as Tokyo, due to an influx of domestic and foreign investment funds avoiding unstable conditions overseas and an increase in demand. However, if the risk becomes a situation that extends within Japan, the impact will not be spared. The key is to accurately assess the type of risk and the extent of the impact.
Q2. How much personal funds do I need to start investing in real estate?
A2. It is difficult to say, but generally speaking, it is easier to obtain financing from financial institutions on favorable terms if you have about 10-20% of the property price as personal funds. However, in recent years, investment methods that can be started with as little as 10,000 yen, such as real estate crowdfunding, have emerged. It is possible to consider various options according to your asset situation and investment goals, so please consult with a specialist first.
Q3. Which is safer, overseas or domestic real estate?
A3. Each has its own merits and demerits, but in terms of geopolitical risk, Japanese real estate, with its stable political and social situation and well-developed legal system, is safer than most overseas real estate. Although high yields may be attractive for overseas real estate, it is necessary to fully understand country risk, exchange rate fluctuation risk, and differences in legal and taxation systems.
Q4. Could you reiterate why real estate investment is advantageous during times of inflation?
A4. There are three main reasons why real estate is resistant to inflation. First, the asset value of real estate itself tends to increase as prices rise. Second, rents also rise in tandem with prices, making it easier to secure a stable income even under inflation. Third, when inflation lowers the value of money, it has the effect of substantially lightening the burden of loan repayment. For these reasons, real estate is considered an excellent inflation hedge asset.
Q5. What are the characteristics of real estate that make it particularly resistant to geopolitical risk?
A5. Real estate that is highly resistant to geopolitical risk has several things in common. First, they are located in metropolitan areas with strong economic fundamentals and large population concentrations. Second, they are residences that are less susceptible to economic fluctuations. Second, the property must be located in an area where a certain level of rental demand can be expected at all times, both domestically and internationally. Properties with these characteristics are less likely to lose their asset value even under unforeseen circumstances, and can be expected to provide stable management.
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.
.png)
