In recent years, the number of affluent households in Japan has been steadily increasing, reaching a record high of 1.65 million in 2023.
However, many people hear the term "affluent" but do not understand exactly what criteria are used to define it or what characteristics it has.
In this article, I will explain the definition of "high-net-worth individuals" and their investment behavior, especially their characteristics in real estate investment, based on my experience as the representative director of INA & Associates, Inc. and my daily contact with ultra-high-net-worth clients.
This presentation will provide useful information for those who aim to build assets and those who are involved in businesses for the wealthy.
The most authoritative definition of the wealthy in Japan is provided by Nomura Research Institute, Ltd.
The institute classifies households into the following five tiers based on the amount of net financial assets held by the household.
Net financial assets are defined as the total amount of financial assets, including savings, stocks, bonds, investment trusts, and lump-sum life insurance and annuities, minus liabilities, such as borrowings for the purchase of real estate.
In other words, even if a person simply has a large amount of financial assets, he or she will not be classified as wealthy if he or she has a large amount of liabilities.
| Hierarchy | Net financial assets held | Number of households in 2023 |
|---|---|---|
| Ultra-high-net-worth households | 500 million yen or more | 118,000 households |
| High-net-worth households | 100 million or more but less than 500 million yen | 1,535,000 households |
| Semi-wealthy | 50 million yen or more but less than 100 million yen | 4,039,000 households |
| Upper-mass group | 30 million yen or more but less than 50 million yen | 13.07 million households |
| Mass group | Less than ¥30 million | 42.13 million households |
In this classification, the "wealthy" are generally defined as households with net financial assets of 100 million yen or more but less than 500 million yen.
Households with net assets of 500 million yen or more are classified as "ultra-high-net-worth" households, which are positioned at a higher level of wealth.
The semi-wealthy are defined as households with net financial assets of at least 50 million yen but less than 100 million yen.
This group is attracting attention as a group aiming to move up to the HNWIs and has a high possibility of becoming a member of the HNWIs through appropriate asset management.
The transition from the semi-net-worth group to the high-net-worth group involves not only a simple increase in assets, but also a change in investment attitudes and behavior patterns.
At the semi-affluent stage, salaried income is still often the main source of income, but investment and business income tend to be more heavily weighted in the affluent group.
To compare with the Japanese definition, we should also mention the international criteria for the HNWIs.
Global research organizations generally define HNWIs as households that own more than $1 million in investable assets, excluding principal residential real estate, collectibles, consumer goods, and consumer durables.
Considering the current exchange rate, $1 million is approximately 150 million yen, which is slightly higher than the Japanese standard.
This is thought to reflect differences in economic conditions and cost of living in each country.
According to the latest survey by Nomura Research Institute (released in February 2025), the number of affluent households in Japan in 2023 was 1,535,000, and the number of ultra-affluent households was 118,000, reaching a total of 1,653,000.
This represents an 11.3% increase from the 1,485,000 households in 2021 and is the highest since the survey began.
Multiple factors can be attributed to this increase.
First is the strong performance of the stock market; in 2023, the surge in stock prices, in particular, led to a significant increase in the value of risky assets.
High-net-worth and ultra-high-net-worth individuals, who generally hold a high percentage of risky assets, benefited greatly from this increase.
Secondly, the depreciation of the yen increased the real value of assets denominated in foreign currencies.
Many high-net-worth individuals are internationally diversified and hold a certain amount of assets denominated in foreign currencies.
During the yen's depreciation, the yen equivalent value of these assets increased, contributing to the increase in net gold and loan assets.
Third, the increase in asset transfers through inheritance cannot be overlooked.
With the aging of society, asset transfers from the generation that built up assets during the postwar reconstruction period to the period of high economic growth to their children are becoming more active.
The assets of the wealthy who have taken appropriate inheritance measures are being passed on to the next generation, contributing to the increase in the number of wealthy households.
Looking at the regional distribution of the wealthy, there is a marked concentration in Tokyo.
According to the 2019 National Household Income and Expenditure Survey by the Statistics Bureau of the Ministry of Internal Affairs and Communications, the highest total household assets (average) for households of two or more persons is in Tokyo at approximately 47 million yen.
This is followed by Kanagawa Prefecture (approx. 37.9 million yen), Aichi Prefecture, and Saitama Prefecture.
The high total household asset value in Tokyo is largely due to soaring real estate prices, in addition to high salary levels.
In particular, continuous price increases for residential and commercial real estate in central Tokyo have boosted the asset values of their owners.
On the other hand, the wealthy also exist in rural areas, especially among business owners, doctors, lawyers, and other professionals in rural areas.
Because real estate costs are lower for the wealthy in rural areas than in the Tokyo area, they tend to have a relatively high weighting of financial assets.
Looking at the distribution of the HNWIs by age, there is a tendency for the peak of the HNWIs to be in their 50s and 60s.
This reflects the high income at the peak of their careers, and the time when the results of long-term asset building come to fruition.
Very few households reach affluence in their 30s. According to a survey by the Central Council for Financial Services Information, only 2.2% of all households in their 30s have financial assets of 30 million yen or more.
In contrast, the percentage increases to 4.9% for those in their 40s, and further rises for those in their 50s and beyond.
This trend indicates the importance of time in asset building.
Long-term investments that take advantage of the compound interest effect and the increase in income that accompanies career development are forming the path to becoming wealthy.
According to a survey by Nomura Research Institute, about one-third of Japan's HNWIs are business owners.
This indicates the importance of business management in the formation of the wealthy.
Compared to salaried workers, business owners have no income ceiling and have the potential to significantly increase their assets as their businesses grow.
As business owners, HNWIs are well versed in business and market trends, and they apply this knowledge to their personal asset management.
They do not simply hold their assets as savings accounts, but actively invest in financial instruments such as stocks, bonds, and mutual funds.
In addition, business owners maintain a clear separation between business funds and personal assets to ensure thorough risk management.
By diversifying business and investment risks, we ensure overall asset stability.
The investment behavior of high-net-worth individuals has some characteristics that differ from that of ordinary investors.
First, they emphasize investment from a long-term perspective.
They aim to build assets over a long-term span of 10 to 20 years, rather than being swayed by short-term market fluctuations.
Second, we thoroughly diversify our investments.
By diversifying across multiple asset classes, such as stocks, bonds, real estate, and alternative investments, we pursue stable returns while reducing risk.
Third, we actively utilize professionals.
We collaborate with experts in various fields, such as financial planners, tax accountants, lawyers, and real estate consultants, to create optimal investment strategies.
High-net-worth individuals place the highest priority on preserving their assets.
Rather than pursuing large returns, they first focus on not reducing their assets.
For this reason, they conduct careful due diligence in their investment decisions and carefully consider the balance between risk and return.
In addition, high net worth individuals are sensitive to changes in economic conditions and do not neglect to prepare for inflation risk and currency risk.
It is common for them to hedge against inflation by investing in real assets such as real estate and precious metals.
In recent years, a new segment of the population has emerged that has been attracting attention: the " somehow wealthy.
This group is different from the traditional HNWIs, and mainly consists of corporate employees in their late 40s and 50s.
In many cases, the "Someday HNWIs" have invested more than ¥100 million in assets through the use of employee stock ownership plans, defined contribution pension plans, and NISA limits.
They maintain the same lifestyle as before within their salary income, and even though their financial assets have increased, their relationships with financial institutions have not changed.
It is estimated that this group accounts for 10-20% of all households in the affluent class and above, and is expected to occupy an important position in the affluent market in the future.
Real estate investment by the affluent class has attracted attention as one of their distinctive investment behaviors.
According to a survey by the Ministry of Land, Infrastructure, Transport and Tourism, the percentage of respondents with real estate investment experience increases significantly when annual household income exceeds 8 million yen, and among households with financial assets of 100 million yen or more, the percentage of respondents with real estate investment experience is approximately four times that of those without experience.
High-net-worth individuals choose to invest in real estate for a variety of reasons.
The first is the middle-risk/middle-return investment characteristics.
It is positioned as a balanced investment, neither high risk/high return like a stock investment nor low risk/low return like a deposit.
Second, it is possible to earn unearned income.
By selecting an appropriate property and outsourcing the work to a management company, the owner can earn continuous rental income without being actively involved himself.
This is an attractive feature for wealthy individuals who wish to increase their assets while concentrating on their core business.
Third, tax savings can be expected.
Real estate investments can reduce income taxes by recording depreciation and various other expenses.
It is also effective as an inheritance tax measure. By converting cash into real estate, the assessed value for inheritance tax can be reduced.
Fourth, the leverage effect can be utilized.
Wealthy individuals are highly trusted by financial institutions and can obtain loans with favorable terms.
By adding loans to their own funds, they can expand the size of their investments and aim for greater returns.
The most popular type of real estate investment for high-net-worth individuals is a single building.
By owning an entire condominium or apartment building, you can earn rental income from multiple units and diversify vacancy risk.
Also, owning the entire building allows for greater flexibility in management, which can increase long-term asset value.
Sectional tower condominiums are also a popular investment for high-net-worth individuals.
Tower condominiums in good locations in urban areas have strong brand recognition and can be expected to generate stable rental demand.
They are also highly liquid and can be sold in the future for a capital gain.
Investment in commercial real estate is another option for high-net-worth individuals.
Commercial real estate, such as office buildings and retail stores, tend to offer higher yields than residential real estate.
However, more specialized knowledge is required, such as the creditworthiness of tenants and the future potential of the location.
The real estate investment strategies of high-net-worth individuals are positioned as part of a comprehensive asset strategy, rather than simply pursuing income.
They seek to achieve the following goals through real estate investments
Aim to achieve portfolio diversification.
Reduce overall risk by incorporating real estate, which has different price movements than stocks, bonds, and other financial assets.
They are used as an inflation hedge.
Since real estate is a real asset, its price tends to rise during times of inflation.
We position real estate investment as a preparation against long-term inflation risk.
It is used as an inheritance measure.
By converting cash into real estate, the assessed value for inheritance tax is reduced and assets are efficiently transferred to the next generation.
In some cases, it is used as a business succession strategy.
High-net-worth individuals who are business owners can increase the stability of their businesses and facilitate future business succession by owning business real estate.
There are some points to be noted in real estate investment by high-net-worth individuals.
First, there is the risk of tax system reform.
The taxation system for real estate investment is regularly reviewed, and the tax benefits may change.
Second, there is the risk of interest rate fluctuations.
In real estate investment using loans, profitability may deteriorate due to rising interest rates.
It is important to utilize fixed interest rates and to consider measures against interest rate rises in advance.
Third is liquidity risk.
Real estate is less liquid than stocks and other assets, and it may take time to sell.
It is necessary to maintain an appropriate cash ratio to be able to respond to sudden capital needs.
Fourth is the management effort.
Real estate investment involves property maintenance, tenant relations, repairs, and other tasks.
Outsourcing to a management company can reduce this burden, but it does not completely take it off your hands.
According to the Nomura Research Institute's definition, the wealthy are defined as households with net financial assets of 100 million yen or more but less than 500 million yen, and as of 2023, 1,535,000 households will fall into this category.
When combined with the ultra-high-net-worth group, the total number of households will reach 1,653,000, a record high.
About one-third of the HNWIs are business owners, and they are characterized by their long-term perspective, thorough diversification of investments, and active use of specialists.
In recent years, a new class of "someday affluent" has emerged, and the affluent market is becoming increasingly diversified.
In real estate investment, middle-risk/middle-return characteristics, the ability to earn disposable income, tax savings, and leverage effects have made it popular among the wealthy.
Single-family properties and condominium towers are the main investment targets, and they are also used for portfolio diversification, inflation hedging, and inheritance protection.
The road to becoming a wealthy individual is not a smooth one, but it is an attainable goal with proper asset-building strategies and a long-term perspective.
INA&Associates Inc. supports high net worth and ultra high net worth individuals in their asset building and real estate investment.
If you have any questions about asset management or real estate investment, please feel free to contact us.
The definition of wealthy is the amount of net financial assets held, and there is no annual income standard.
However, in general, most HNWIs have high annual incomes.
What is important is not so much the high annual income as it is to keep the ratio of expenses to income low and to invest surplus funds appropriately.
Even if your annual income is 10 million yen, you cannot become wealthy if you spend too much, and even if your annual income is 5 million yen, you can become wealthy through systematic asset building.
The difference is the amount of net financial assets held.
A semi-net worth person has net financial assets between 50 million yen and 100 million yen, while an affluent person has net financial assets between 100 million yen and 500 million yen.
In addition to differences in monetary amounts, there are also differences in investment behavior and relationships with financial institutions.
High-net-worth individuals have access to specialized financial services, such as private banking, and can engage in more sophisticated asset management.
Yes, you do not have to be wealthy to start real estate investment.
However, since wealthy individuals are more trusted by financial institutions, they are able to obtain loans with more favorable terms and conditions and have a wider range of investment options.
It is possible for the general public to build assets through real estate investment with appropriate property selection and financial planning.
Private Banking is a financial service specialized for high net worth individuals.
Dedicated private bankers provide comprehensive support for clients' asset management, investment, inheritance planning, and tax advice.
Unlike general banking services, the service is based on individualized attention and is tailor-made to meet the client's needs.
The basic steps to becoming wealthy are as follows.
First, we identify household income and expenditures, optimize spending, and secure surplus funds.
Next, put the secured funds into investments with a long-term perspective.
Diversify investments into multiple asset classes such as stocks, bonds, and real estate to increase assets while managing risk.
It is also important to build a comprehensive asset strategy, including tax planning, with the advice of experts.