With the yen at a historic low, foreign investors are now looking eagerly at the Japanese real estate market. With Japanese real estate more undervalued than ever before, global money is being attracted to the market. But what does this mean for Japanese investors?
In this article, INA & Associates, Inc. explains why Japanese real estate is so attractive now, the specific impact of the weak yen on the market, and future investment strategies from a professional perspective that is easy for the average consumer to understand. The presentation will be easy to understand for the average consumer, yet from a professional point of view.
Real Estate Investment from Abroad Accelerated by the Weakening Yen
Understanding how attractive the current level of yen depreciation is to foreign investors is the first step to deciphering the market. In dollar terms, Japanese real estate is significantly undervalued compared to a few years ago.
Dollar/Yen Exchange Rate Trends
| Year | Average Rate |
|---|---|
| 2021 | 109.75 yen |
| Year 2022 | 131.50 yen |
| Year 2023 | 140.49 yen |
| Year 2024 | 151.37 yen |
| October 2025 | 150-153 yen range |
Source: ecodb, based on data published by various banks.
This exchange rate fluctuation has led to increased acquisition of Japanese real estate by foreign investors. According to a survey by JLL, a leading real estate service provider, real estate investment in the first half of 2025: 3,193.2 billion yen (up 22% from the previous year). The Nihon Keizai Shimbun also reported that in the first half of 2025 alone, purchases by foreign investors exceeded 1 trillion yen, a record high.
So why are they choosing Japanese real estate? The reason is not only the appeal of price.
Reasons Why Foreign Investors are Focusing on Japanese Real Estate
| Reasons | Details |
|---|---|
| Undervalued prices | In addition to the weak yen, real estate prices remain reasonable compared to major cities in other countries. |
| Stable profitability | Stable rental income (income gain) can be expected over the long term due to political and economic stability. |
| Inbound demand | Expectations are high for increased profitability of hotels and commercial facilities due to the increase in the number of tourists. |
| Reliability of legal system | There are no restrictions on real estate ownership for foreigners, and ownership rights are legally protected. |
| Risk Diversification | A move to incorporate real estate into portfolios as a safe investment destination compared to other regions where geopolitical risk is rising. |
Specific Impact of the Weakening Yen on the Real Estate Market
The influx of global money is having a multifaceted impact on the overall Japanese real estate market. The impact is particularly noticeable in central Tokyo.
According to land price trends as of January 1, 2025 announced by the Ministry of Land, Infrastructure, Transport and Tourism, land prices nationwide have risen for four consecutive years, with the increase particularly in metropolitan areas such as Tokyo. This is an indication of concentrated demand from foreign investors.
On the other hand, the depreciation of the yen also affects construction costs. Prices for new condominiums and buildings are on the rise as imported building materials and energy prices soar. This trend is also driving interest in the pre-owned market, where prices are relatively stable.
Furthermore, the recovery of inbound demand has boosted the occupancy rates of hotels and commercial facilities, directly leading to an increase in the value of these asset types. In particular, properties in tourist areas and near major train stations are becoming increasingly attractive investment targets due to their high profitability potential.
Real Estate Investment Strategies in the Era of a Weak Yen
In this market environment, what strategies should Japanese investors adopt? The weak yen has both advantages and disadvantages.
Merits and demerits of a weak yen from the perspective of domestic investors
| Merit | Disadvantages | |
|---|---|---|
| Asset Value | Due to inflows of funds from overseas, asset values of owned real estate can be expected to increase. | When purchasing new properties, property prices may soar. |
| Countermeasure against inflation | During periods of rising prices, real estate, as a physical asset, is resistant to inflation. | During periods of rising interest rates, there is a risk that loan repayments will increase. |
| Profitability | Rental income is expected to increase due to inbound demand and increased economic activity. | Yields may decline as competition to acquire properties intensifies. |
Given this situation, we recommend the following investment strategies
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Have a long-term perspectiveIt is important to select quality properties from a long-term asset-building perspective, without being swayed by short-term price fluctuations. It is necessary to assess the future potential of an area, such as demographics and redevelopment plans.
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Focus on income gainsDon 't just aim for price appreciation (capital gains); focus on properties that can generate stable rental income (income gains). Residences (residential properties) in central Tokyo, where rental demand is firm, are particularly attractive options.
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The market is constantly changing, and it is essential to make decisions based on accurate information . Having a trusted real estate professional as a partner and objective advice is the key to success.
Conclusion
In this report, we have explained the impact of the weak yen on the Japanese real estate market and future investment strategies.
Against the backdrop of the historically weak yen, Japanese real estate is now attracting significant attention as a global investment target. While the inflow of funds from abroad is pushing up real estate prices, it also brings both new opportunities and challenges for domestic investors.
The key is to calmly assess market trends and develop a strategy tailored to your own investment goals. The high road of nurturing asset value from a long-term perspective, rather than pursuing short-term profits, is the surest compass for overcoming uncertain times.
INA&Associates Inc. offers the best real estate investment plans tailored to each client's individual situation. If you have any interest in discussing your portfolio strategy or specific property information, please feel free to contact us.
Frequently Asked Questions
Q1:Is it too late to start investing in real estate?
A1: It is never too late. Property prices are on the rise, but monetary easing is continuing and loan interest rates remain low. If you select quality properties from a long-term perspective, there are ample opportunities to secure income. The key is to identify the right timing and property.
Q2:Are there any investment opportunities in regional real estate?
A2:There is ample investment potential. However, you need to have a different perspective than in urban areas. It is important to identify areas that are less susceptible to population decline, such as tourist areas where inbound demand can be expected and regional cities where certain industries are concentrated. As polarization continues, area selection becomes even more important.
Q3: What is the risk of the yen appreciating against the U.S. dollar?
A3:If the yen appreciates, overseas investors may be less willing to purchase, and the pace of real estate price appreciation may slow. However, if the property is supported by stable domestic rental demand, the impact of exchange rate fluctuations on rental income is limited. A strategy that emphasizes income gains is a good hedge against risk.
Q4:What are the most important points when selecting an investment property?
A4:The most important point is location. You need to thoroughly investigate whether the area is expected to generate rental demand in the future. We comprehensively evaluate the distance from the station, the surrounding environment, and redevelopment plans. In addition, the building's management status and long-term repair plans are also important factors in making a decision. We provide a detailed property report covering all of this information.
Q5:How much personal funds do I need?
A5:It depends on the price of the property and the financing conditions of the financial institution, but in general, about 10-20% of the property price is required as personal funds. However, in some cases, depending on personal attributes and the profitability of the property, it may be possible to start with less personal funds. We recommend that you first consult with one of our experts to develop a financial plan.
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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