As global economic integration deepens, an increasing number of Chinese companies are choosing to conduct business in Japan. In this process, providing stable housing for employees has become an important issue. Compared to renting, purchasing property not only provides long-term stable housing for companies but can also potentially become a promising investment. This article will analyze in detail the possibilities, processes, and financial options for foreigners buying property in Japan, as well as provide price comparisons and investment advice for different cities, aiming to offer comprehensive guidance for overseas companies looking to acquire property in Japan.

I. Possibilities for Foreigners to Purchase Property in Japan

1.1 Legal Regulations

Japan has no special restrictions on foreigners purchasing property, a policy that provides good opportunities for overseas companies. According to Japanese law, any foreigner legally residing in Japan, regardless of whether they have permanent residency, can freely purchase property. This policy is relatively rare among Asian countries and reflects the openness of Japan’s real estate market.

However, it should be noted that while there are no restrictions on purchasing property, land ownership may be affected by some regulations. For example, land near military facilities or other sensitive areas may be subject to additional scrutiny. According to the latest statistics, these restricted areas account for less than 1% of Japan’s total land area, having limited impact on most property buyers.

1.2 Residence Status Requirements

Although there are no explicit legal requirements for specific residence status to purchase property, in practice, a stable residence status greatly increases the likelihood of property purchase. Foreigners with work visas, student visas, or permanent residency are more likely to be recognized by real estate agents and banks.

According to the latest survey, about 95% of foreigners who successfully purchased property in Japan have stable residence status. Among them, 60% hold work visas, 25% have permanent residency, and 15% have other types such as spouse visas or highly skilled professional visas. This data suggests that companies should prioritize employees with stable residence status when considering property purchases for staff.

1.3 Proof of Fund Source

The Japanese government places great emphasis on the legality of fund sources. Property buyers need to provide detailed proof of fund sources, including salary income, deposit certificates, investment returns, etc. For corporate purchases, company financial statements and business condition reports are also required.

According to the latest regulations from Japan’s National Tax Agency, clear proof of fund source is required for property purchases exceeding 2 million yen. This regulation aims to prevent money laundering and other illegal fund flows. For overseas companies, it is crucial to prepare complete financial documents and fund flow records in advance. This not only facilitates a smooth property purchase process but also helps establish good corporate credibility.

II. Property Purchase Process in Japan

2.1 Property Search

The first step in purchasing property in Japan is finding suitable listings. Unlike many countries, Japan’s real estate market heavily relies on intermediary companies. Statistics show that over 80% of property transactions are completed through intermediaries. Therefore, choosing a reputable real estate agency familiar with the needs of foreigners is crucial.

Currently, major Japanese cities such as Tokyo, Osaka, and Nagoya have real estate agencies specializing in serving foreigners. These agencies usually offer multilingual services and are familiar with the special issues foreigners may encounter when purchasing property. According to the latest data, there are about 300 real estate agencies in Tokyo that provide foreign language services, with approximately 50 specifically targeting foreign clients.

When choosing a property, in addition to considering standard factors such as price, location, and area, special attention should be paid to the following: building age, earthquake resistance grade, surrounding facilities (such as schools, hospitals, public transportation), etc. These factors not only affect the quality of life but also influence the potential for future property value appreciation.

2.2 On-site Inspection

After finding a suitable property, the next step is to conduct an on-site inspection. In Japan, real estate agencies typically arrange “naiken” (on-site viewing). During the inspection, in addition to focusing on the condition of the house itself, one should also carefully examine the surrounding environment.

It’s worth noting that most Japanese houses use “tsubo” as the unit of area measurement (1 tsubo is approximately 3.3 square meters). When viewing a property, it’s important to distinguish between “land area” and “usable area”. Usually, the area advertised is the land area, and the actual usable area may be 10%-15% smaller.

Additionally, Japan’s housing type notation has its own peculiarities. For example, “1LDK” indicates one bedroom plus a living room, dining room, and kitchen. Understanding these notations helps to more accurately judge whether the house meets your needs.

2.3 Price Negotiation

In Japan, there is usually not much room for price negotiation, but there is still some flexibility. According to the latest data, the average negotiation reduction is between 3%-5% of the original price. However, in some remote areas or for properties that are difficult to sell, the price reduction may be larger.

During negotiations, consider the following aspects: the actual condition of the house (such as need for renovation), market conditions, prices of similar properties in the area, etc. For corporate purchases, if buying multiple properties at once, there may be more room for negotiation.

2.4 Contract Signing

In Japan, property transaction contracts are typically divided into two stages: Important Matters Explanation and Sales Contract.

The Important Matters Explanation (Jūyō Jikō Setsumei) is a process where the seller explains detailed information about the property to the buyer. This includes the legal status of the house, property rights information, mortgage situation, surrounding environment, etc. By law, this explanation must be conducted by a licensed real estate broker.

The Sales Contract (Baibai Keiyaku) is the formal legal document that specifies the terms and conditions of the transaction in detail. The contract typically includes property details, price, payment method, delivery date, liability for breach of contract, etc.

It’s particularly important to note that in Japan, once the sales contract is signed, a certain percentage of earnest money (tetsuke-kin) is usually required, generally about 10% of the property price. This earnest money is normally considered part of the payment under normal circumstances, but if the buyer breaches the contract, they may lose this deposit.

2.5 Property Rights Transfer and Registration

After completing all payments, the next step is to handle property rights transfer and registration procedures. This process is usually handled by a real estate agent or lawyer. Property rights transfer needs to be registered at the Legal Affairs Bureau, with fees based on the property value, generally between 0.5%-1% of the property price.

It’s worth noting that Japan’s property registration system is very comprehensive and transparent. Anyone can inquire about the registration information of a specific property through the Legal Affairs Bureau, which greatly reduces transaction risks.

2.6 Tax Payment

The property purchase process involves various taxes, mainly including:

Registration and License Tax: Paid when registering property rights transfer, the tax rate is about 0.4% of the property’s assessed value.

Real Estate Acquisition Tax: Paid after purchasing the property, the tax rate varies by region and property type, generally between 3%-4% of the property’s assessed value.

Stamp Duty: Levied based on the contract amount, generally ranging from tens of thousands to hundreds of thousands of yen.

Consumption Tax: Only applicable to newly built houses, with a tax rate of 10%. Second-hand houses usually do not require consumption tax.

These taxes and fees together may account for about 5%-7% of the property price. Companies should fully consider these additional expenses in their property purchase budget.

III. Japanese Mortgage Options

3.1 Possibilities for Foreigners to Apply for Mortgages

In recent years, the attractiveness of the Japanese real estate market to foreign investors has continued to increase, and the banking industry has gradually adjusted policies to adapt to this trend. According to the latest data, currently, over 30 Japanese banks offer mortgage services to foreigners, a 50% increase compared to five years ago. However, despite the relaxation of policies, foreigners still face high thresholds and strict scrutiny when applying for mortgages.

When evaluating foreign applicants, banks mainly focus on the following aspects:

First, residence status is the most basic requirement. Most banks require applicants to hold a work visa valid for at least 5 years or permanent residency.

Second, the length of work in Japan is also an important consideration factor. Usually, it’s required to have worked continuously in Japan for 3-5 years or more, and the longer the time working for the same company, the more favorable.

Third, income status is a key aspect of bank scrutiny. According to the latest statistics, most banks require applicants to have an annual income of no less than 4 million yen, with some high-end properties possibly requiring even higher incomes.

Fourth, the importance of credit history goes without saying. A good credit history not only includes timely repayments but also stable savings habits and reasonable credit card usage.

It’s worth noting that some banks have begun to adopt more flexible evaluation criteria. For example, some banks will consider the applicant’s asset status and credit history in their home country, providing more possibilities for high-net-worth individuals from overseas. At the same time, some banks have introduced preferential policies for specific industries (such as IT, finance, etc.), and foreign professionals in these industries may receive more lenient review standards.

3.2 Main Loan Types

The Japanese mortgage market offers diversified product choices, mainly divided into fixed-rate loans, variable-rate loans, and hybrid loans.

Fixed-rate loans maintain a constant interest rate throughout the loan term, providing borrowers with stability and predictability. According to the latest market data, the average interest rate for 10-year fixed-rate loans is between 0.6%-1.2%, and for 20-year loans, between 0.8%-1.5%. This type of loan is particularly suitable for those who expect stable future income or are concerned about rising interest rates.

Variable-rate loans have interest rates that adjust with market changes, usually every 3-6 months. Currently, the average interest rate for variable-rate loans is between 0.4%-0.8%. This type of loan usually has lower initial monthly payments but carries the risk of future interest rate increases. It’s suitable for borrowers with limited budgets in the short term but expecting income growth in the long term.

Hybrid loans use a fixed rate during the initial fixed period (usually 3-10 years), then switch to a variable rate. This type of loan combines the advantages of both types and is becoming increasingly popular. Currently, about 40% of foreign borrowers choose this type of loan.

In addition, some banks offer more flexible products, such as allowing multiple switches between fixed and variable rates during the loan term, or variable-rate loans with interest rate cap protection. These innovative products provide borrowers with more choices but also require more careful evaluation and planning.

3.3 Loan Amounts and Terms

Japanese banks’ loan amount policies for foreigners have been relaxed in recent years but are still relatively conservative compared to Japanese residents. Generally, the loan amount does not exceed 75%-85% of the property price, meaning buyers need to prepare a 15%-25% down payment. However, some banks offer higher loan amount products for high-income groups or specific professionals, up to 90% of the property price.

In terms of loan terms, Japanese mortgages are generally long-term. For applicants aged 25-35, 35-year or even 40-year loan products are not uncommon. However, for foreigners, most banks will limit the maximum loan term to 15-25 years. This policy reflects banks’ consideration of foreigners’ long-term residence intentions.

According to the latest survey data, the average mortgage amount for foreigners in Japan is about 35 million yen, an increase of 16.7% compared to three years ago. The average loan term is 18 years, also showing a slight upward trend. It’s worth noting that these figures vary significantly for different regions and property types. For example, in central Tokyo, the average mortgage amount for foreigners can be as high as 50 million yen or more.

3.4 Application Process and Required Documents

The mortgage application process typically includes the following steps:

First is the pre-screening stage, where applicants submit basic information to the bank, and the bank conducts a preliminary assessment. This stage usually takes 3-5 working days.

Next is the formal application stage, requiring submission of detailed application materials.

Then the bank conducts a comprehensive review, which may take 2-3 weeks.

If the review is approved, the bank will issue a loan approval letter.

The final stage is contract signing, where the loan contract is signed with the bank.

Throughout the process, required documents typically include:

Identity proof (passport, residence card, etc.)

Income proof (tax returns for the last 3 years, pay slips)

Employment certificate (requiring detailed description of position, years of service, and contract type)

Bank deposit certificate (usually requiring statements for the past 6 months)

Property-related documents (sales contract, important matters explanation, etc.)

Other asset proofs (if any)

It’s particularly important to note that all non-Japanese documents need to be provided with certified Japanese translations. Some banks may also require a guarantor within Japan. In addition, in recent years, some banks have begun to accept electronic applications, simplifying the application process, but core documents still need to be provided in original or certified copies.

3.5 Loan Costs

When considering a mortgage, in addition to interest, there are several additional costs to consider. First is the handling fee, generally 1.5%-2.5% of the loan amount, with some banks offering discounts to premium customers. Second is the stamp duty, levied based on the loan amount, usually between 10,000 to 50,000 yen. The mortgage registration fee is about 0.2%-0.4% of the loan amount, which may vary in different regions.

Moreover, most banks require the purchase of fire insurance, with annual costs varying depending on the property value but typically between 0.1%-0.3% of the loan amount. Some banks may require borrowers to purchase life insurance to reduce loan risk, the cost of which depends on the borrower’s age, health condition, and coverage amount, potentially accounting for 1%-3% of the loan amount.

In recent years, some banks have introduced “all-inclusive” loan products that integrate these additional costs into the loan. While this increases the total loan amount, it can reduce the borrower’s one-time expenses. Overall, these additional costs may account for 3%-5% of the loan amount. Therefore, when companies apply for mortgages for employees, these costs should be included in the overall budget consideration and fully communicated with employees to avoid misunderstandings or financial pressure.

It’s worth mentioning that some banks have begun to offer more value-added services, such as free property appraisals, legal consultations, etc. While these services are not directly reflected in costs, they may positively impact the overall property purchase experience. When choosing a bank, in addition to comparing interest rates and various fees, the value of these additional services should also be considered.

IV. Comparison of Housing Prices in Different Cities

4.1 Tokyo Metropolitan Area

As Japan’s capital and economic and cultural center, Tokyo’s real estate market has always been a focus for investors. According to the latest market research data, as of the second quarter of 2024, the average housing price in Tokyo has climbed to 1.1 million yen per square meter, an increase of about 4.8% compared to the same period last year. Although this increase is relatively stable, it is still significantly higher than Japan’s overall inflation rate.

The distribution of housing prices within Tokyo shows a clear concentric structure, with prices in the central areas far exceeding those in the surrounding areas. The following are the specific situations in various regions:

In the central districts (such as Minato, Chiyoda, and Chuo), housing prices continue to rise, with current average prices reaching 2.5 million to 3.5 million yen per square meter. In high-end residential areas of Minato Ward, such as Azabu and Roppongi, luxury home prices can even exceed 5 million yen per square meter. The price increases in these areas are mainly driven by demand from international buyers and high-net-worth individuals. Although the COVID-19 pandemic temporarily affected the market, with Japan’s complete lifting of border controls, international demand has strongly rebounded.

In the near suburbs (such as Setagaya, Suginami, and Meguro), housing prices are relatively moderate, currently averaging between 900,000 and 1.3 million yen per square meter. These areas are favored by middle-class families and young professionals due to their good living environment and convenient transportation. Setagaya Ward, in particular, has seen one of the highest housing price growth rates in Tokyo in recent years due to its high-quality educational resources and green environment, with a cumulative increase of over 15% in five years.

In the far suburbs (such as Hachioji, Machida, and Fuchu), housing prices are relatively affordable, averaging between 550,000 and 850,000 yen per square meter. These areas are benefiting from the Tokyo Metropolitan Government’s “Multi-Core Urban Development Strategy,” attracting many buyers seeking value for money by improving transportation and increasing job opportunities. Especially with the popularization of remote work, the demand for properties in these areas has increased significantly, with transaction volumes in 2023 growing by about 20% compared to 2019.

It’s worth noting that after the Tokyo Olympics, housing prices in some areas around the Olympic venues saw a slight adjustment. For example, the Harumi area in Chuo Ward, which served as the Olympic Village, was converted into a residential area after the games. Initially, housing prices fell, but have now stabilized and rebounded as supporting facilities have been improved.

Looking to the future, despite Tokyo facing challenges of an aging population and low birth rates, its real estate market is still generally viewed positively as a global financial center and technology innovation hub. It is expected that the average housing price in Tokyo will maintain a steady growth of 2-3% annually over the next five years. However, this growth may show more obvious regional differentiation, with more significant growth possibly occurring in central districts and high-quality near suburbs.

4.2 Osaka Prefecture

As Japan’s second-largest metropolitan area, Osaka has experienced significant economic recovery and urban renewal in recent years, which is directly reflected in its real estate market. As of the second quarter of 2024, the average housing price in Osaka City has risen to 680,000 yen per square meter, an increase of about 15% compared to five years ago. Although this growth rate is not as high as Tokyo’s, it still ranks among the top among major Japanese cities.

The distribution of housing prices in Osaka also shows clear regional differences:

In the city center (such as Kita, Chuo, and Nishi wards), housing prices have increased most rapidly, currently averaging between 900,000 and 1.35 million yen per square meter. Particularly in the Namba and Shinsaibashi areas of Chuo Ward, benefiting from the continuously growing tourism and retail industries, the prices of commercial properties and high-end apartments have risen significantly, with some premium projects even breaking the 2 million yen per square meter threshold. Around Umeda in Kita Ward, as Osaka’s business center, it has also attracted a large amount of investment, with new high-rise complexes featuring apartments averaging over 1.5 million yen per square meter.

In the near suburbs (such as Tennoji, Abeno, and Yodogawa wards), housing prices are relatively moderate, currently averaging between 550,000 and 900,000 yen per square meter. These areas are popular among middle-class families due to their convenient transportation and relatively complete living facilities. Abeno Ward, in particular, has seen one of the highest housing price growth rates in Osaka City following the completion of Japan’s tallest building “Abeno Harukas” and the continuous renewal of the surrounding area, with a cumulative increase of nearly 20% over five years.

In the far suburbs (such as Sakai, Hirakata, and Suita cities), housing prices are more affordable, averaging between 350,000 and 550,000 yen per square meter. These areas are benefiting from the expansion of the Osaka metropolitan area and the improvement of transportation networks. Suita City, in particular, has attracted a large number of young families in recent years due to its high-quality educational resources and good living environment, with housing price increases significantly higher than surrounding areas.

It’s worth noting that the preparations for the Osaka World Expo 2025 are accelerating, which has had a significant impact on the real estate market in the Osaka Bay area. In the Yumeshima area, where the main venue of the Expo is located, and the surrounding Konohana and Minato wards, housing prices have risen by about 25% over the past three years, far exceeding the average level in Osaka City. However, there are some concerns about the development prospects after the Expo, with some analysts warning of a possible short-term price adjustment.

Osaka’s real estate market has also benefited from the continuously growing number of international tourists. Although the international tourism industry was hit hard by the COVID-19 pandemic between 2020 and 2022, with Japan fully reopening its borders, Osaka’s tourism industry has quickly rebounded. In 2023, the number of international tourists received by Osaka has recovered to 85% of pre-pandemic levels, directly boosting the short-term rental market and in turn supporting overall housing price increases.

Looking to the future, Osaka’s real estate market is expected to maintain steady growth. The hosting of the World Expo will further enhance Osaka’s international visibility, and it is expected that the average housing price in Osaka City may maintain a growth rate of 2-2.5% annually over the next five years. However, this growth may show obvious regional differentiation, with more significant growth possibly occurring in the bay area and city center, while some far suburbs may face pressure of slowing growth.

4.3 Nagoya City

As Japan’s fourth-largest city and the economic center of the Chubu region, Nagoya’s real estate market has always been known for its stability. As of the second quarter of 2024, the average housing price in Nagoya City reached 560,000 yen per square meter, an increase of about 10% compared to five years ago. Although this growth rate is not as high as Tokyo and Osaka, considering Nagoya’s lower cost of living and stable economic foundation, this growth rate is still considered healthy and sustainable.

The distribution of housing prices within Nagoya City is as follows:

In the city center (such as Naka, Higashi, and Nakamura wards), housing prices are relatively high, currently averaging between 750,000 and 1 million yen per square meter. Among them, the Sakae area in Naka Ward, as Nagoya’s commercial and cultural center, has seen the most significant increase in housing prices, with high-end apartments already exceeding 1.5 million yen per square meter. Nakamura Ward, due to its proximity to Nagoya Station and convenient transportation, has also become an investment hotspot in recent years, with newly built high-rise apartments averaging close to 1.2 million yen per square meter.

In the near suburbs (such as Chikusa, Showa, and Mizuho wards), housing prices are relatively moderate, currently averaging between 550,000 and 750,000 yen per square meter. These areas are popular among middle-class families due to their good living environment and educational resources. Chikusa Ward, in particular, as the location of Nagoya University, has attracted a large number of higher education talents and research institutions in recent years, driving the steady rise of surrounding housing prices, with a cumulative increase of nearly 15% over five years.

In the far suburbs (such as Moriyama, Midori, and Tempaku wards), housing prices are more affordable, averaging between 350,000 and 550,000 yen per square meter. These areas are benefiting from the “satellite city” development strategy promoted by the Nagoya City Government, attracting many buyers seeking value for money by improving transportation and increasing job opportunities. Especially with the expansion of the subway network, the accessibility of these areas has greatly improved, with property transaction volumes in 2023 increasing by about 15% compared to 2019.

It’s worth noting that Nagoya’s real estate market is undergoing a structural change. As traditional manufacturing giants like Toyota Motor Corporation increase their investments in artificial intelligence and autonomous driving, Nagoya is gradually transforming into a high-tech center. This trend has driven up housing prices in areas around R&D parks, for example, around the “Nagoya Innovation District” in Higashi Ward, where housing prices have risen by about 20% over the past three years, far exceeding the city average.

Another trend worth noting is the redevelopment projects in Nagoya city center. Large-scale complex projects represented by the “Dai Nagoya Building” in front of Nagoya Station have not only enhanced the commercial value of the surrounding areas but also driven the demand for high-end residential properties. The top-tier apartments in these projects have already broken through the 2 million yen per square meter mark, setting a new high for Nagoya’s real estate market.

Nagoya’s real estate market has also benefited from its core position in the Chubu region of Japan. With the expansion of Chubu Centrair International Airport and the improvement of the Shinkansen network, Nagoya’s connections with Tokyo and Osaka have become closer, further enhancing its attractiveness as a regional center. Especially in the post-pandemic era, many companies have chosen to relocate some functions from Tokyo to the lower-cost Nagoya, directly driving the demand for commercial real estate and high-end residential properties.

Looking to the future, Nagoya’s real estate market is expected to maintain steady growth. Although the growth rate may not be as high as Tokyo and Osaka, its low-risk, high-value characteristics still attract a large number of investors. It is expected that over the next five years, the average housing price in Nagoya City may maintain a growth rate of 1.5-2% annually. However, this growth may show more obvious regional differentiation, with more significant growth possibly occurring in the city center and around innovation districts, while some far suburbs may face slowing growth pressure.

For companies or individuals considering investing in real estate in Nagoya, it is necessary to pay close attention to urban development plans and industrial transformation trends. Areas related to emerging industries, such as around R&D parks and university towns, may have better appreciation prospects. At the same time, with Nagoya City’s urban renewal plan, some old urban areas may also see significant value appreciation, which is worth investors’ attention.

4.4 Fukuoka City

As the economic, cultural, and transportation center of the Kyushu region, Fukuoka has been developing strongly in recent years, and its real estate market has flourished accordingly. As of the second quarter of 2024, the average housing price in Fukuoka City has reached 520,000 yen per square meter, an increase of about 18% compared to five years ago, ranking among the top growth rates in major Japanese cities. This significant growth is mainly due to the Fukuoka City Government’s active urban development strategy, favorable business environment, and increasingly close economic ties with other Asian countries.

The distribution of housing prices within Fukuoka City shows clear regional characteristics:

In the city center (such as Chuo and Hakata wards), housing prices have increased most rapidly, currently averaging between 700,000 and 950,000 yen per square meter. Among them, the Tenjin area in Chuo Ward, as Fukuoka’s commercial and fashion center, has seen particularly significant price increases, with high-end apartments already exceeding 1.5 million yen per square meter. Hakata Ward, due to having two transportation hubs – Fukuoka Airport and Hakata Station, has also become an investment hotspot, with newly built high-rise apartments averaging close to 1.2 million yen per square meter. It’s particularly worth mentioning that the Tenjin area is undergoing a large-scale urban renewal project called “Tenjin Big Bang,” which has further driven up housing prices in the surrounding areas, with some new projects even reaching 1.8 million yen per square meter.

In the near suburbs (such as Jonan, Sawara, and Nishi wards), housing prices are relatively moderate, currently averaging between 450,000 and 700,000 yen per square meter. These areas are popular among middle-class families and young professionals due to their good living environment and educational resources. Sawara Ward, in particular, has seen one of the highest housing price growth rates in Fukuoka City due to its high-quality school districts and natural environment, with a cumulative increase of nearly 25% over five years. Jonan Ward, due to its proximity to multiple universities including Fukuoka University, has attracted a large number of students and education workers, driving the steady rise of surrounding housing prices.

In the far suburbs (such as Higashi and Minami wards), housing prices are relatively affordable, averaging between 350,000 and 500,000 yen per square meter. These areas are benefiting from the “multi-core city” development strategy promoted by the Fukuoka City Government, attracting many buyers seeking value for money by improving transportation and increasing job opportunities. Especially with the expansion of the subway network and the development of new commercial districts, the accessibility and livability of these areas have greatly improved, with property transaction volumes in 2023 increasing by about 20% compared to 2019.

Fukuoka’s real estate market has also benefited from its unique geographical location and policy advantages. As the major Japanese city closest to the Asian continent, Fukuoka has become the first choice for many Asian companies entering the Japanese market. The “Startup Special Zone” policy introduced by the Fukuoka City Government has provided many conveniences for foreign entrepreneurs, directly driving the demand for office space and high-end apartments. According to statistics, the number of foreign companies established in Fukuoka in 2023 increased by 40% compared to 2019, with over 60% coming from Asian countries.

Another important factor driving Fukuoka’s real estate market is the rapid development of the tourism industry. Although the international tourism industry was hit hard by the COVID-19 pandemic between 2020 and 2022, with Japan fully reopening its borders, Fukuoka’s tourism industry has quickly rebounded. In 2023, the number of international tourists received by Fukuoka has recovered to 90% of pre-pandemic levels, which not only directly boosted the hotel and short-term rental market but also drove up the value of surrounding commercial real estate and residential properties. The Nakasu area in Hakata Ward and the Tenjin area, in particular, have become popular choices for tourists due to their rich shopping and entertainment resources, driving significant increases in surrounding housing prices.

The Fukuoka City Government is also actively promoting the city’s internationalization process. The “Fukuoka Smart City” project aims to use advanced technology to improve urban management efficiency and residents’ quality of life, which has not only attracted a large number of technology companies to settle in but also enhanced Fukuoka’s international attractiveness. The “Fukuoka Science City” in Higashi Ward is developing rapidly, with housing prices in the surrounding area rising by about 30% over the past three years, becoming a new investment hotspot in Fukuoka.

Looking to the future, Fukuoka’s real estate market is expected to maintain strong growth momentum. Benefiting from its geographical location advantage, open economic policies, and continuously improving urban environment, Fukuoka is attracting more and more attention from domestic and foreign investors. It is expected that over the next five years, the average housing price in Fukuoka City may maintain a growth rate of 3-4% annually, higher than most Japanese cities. However, this growth may show more obvious regional differentiation, with more significant growth possibly occurring in the city center and emerging development areas, while some far suburbs may face relatively moderate growth.

For companies or individuals considering investing in real estate in Fukuoka, it is necessary to pay close attention to urban development plans and industrial policies. Areas related to innovative industries, international trade, and tourism may have better appreciation prospects. At the same time, with Fukuoka City’s urban renewal and internationalization process, some traditional commercial districts and emerging technology parks may see significant value appreciation, which is worth investors’ attention.

4.5 Sapporo City

As the capital and largest city of Hokkaido, Sapporo occupies a unique position in Japan’s real estate market. In recent years, thanks to the booming tourism industry and continuous improvement of urban infrastructure, Sapporo’s real estate market has shown steady growth. As of the second quarter of 2024, the average housing price in Sapporo has reached 410,000 yen per square meter, an increase of about 12% compared to five years ago. Although this growth rate is lower than that of major metropolitan areas such as Tokyo and Osaka, it is still considered quite significant given Sapporo’s lower cost of living and unique quality of life.

The distribution of housing prices within Sapporo City shows the following characteristics:

The city center (mainly Chuo Ward) has seen the most significant increase in housing prices, currently averaging 600,000-850,000 yen per square meter. Among these, areas around Odori Park and Susukino, as Sapporo’s commercial and entertainment centers, have seen particularly noticeable price increases, with high-end apartments exceeding 1.2 million yen per square meter. Notably, areas near Sapporo Station have become investment hotspots due to convenient transportation and well-developed facilities, with newly built high-rise apartments averaging close to 1 million yen per square meter. It’s worth noting that as Sapporo bids for the 2030 Winter Olympics, some areas in the city center are undergoing large-scale urban renewal, further driving up housing prices.

Near-suburban areas (such as Kita Ward, Higashi Ward, and Toyohira Ward) have relatively moderate housing prices, currently averaging between 350,000-550,000 yen per square meter. These areas are popular among local residents and newcomers due to their good living environment and lower cost of living. Kita Ward, in particular, has attracted a large number of students and educators due to its proximity to Hokkaido University, driving a steady increase in surrounding property prices, with a cumulative increase of nearly 15% over five years. Higashi Ward has become a top choice for many people seeking quality of life due to its rich natural resources and relatively low housing prices.

Far suburban areas (such as Kiyota Ward, Teine Ward, and Atsubetsu Ward) have relatively affordable housing prices, averaging between 250,000-400,000 yen per square meter. These areas are benefiting from the Sapporo city government’s “livable city” development strategy, which aims to improve overall living conditions through enhanced public transportation and increased green spaces. Particularly with the expansion of the light rail system, the accessibility of these areas has greatly improved, with property transaction volumes in 2023 increasing by about 18% compared to 2019.

Sapporo’s real estate market has distinct seasonal characteristics, mainly determined by its unique climate conditions and tourism structure. In winter, as a famous ski resort, Sapporo attracts a large number of domestic and international tourists, boosting the short-term rental market. According to statistics, in the winter of 2023, the average occupancy rate of short-term rental apartments in Sapporo reached 85%, an increase of 10 percentage points compared to the same period in 2019. This seasonal demand has also prompted some investors to purchase apartments for short-term rentals, thus affecting overall housing prices.

Another noteworthy trend is Sapporo’s growing reputation as a “livable city.” In the post-pandemic era, more people are seeking better quality of life and lower living pressure. Sapporo, with its beautiful natural environment, well-developed urban facilities, and relatively low cost of living, has attracted a large number of migrants from other parts of Japan. According to Sapporo City Government statistics, the net population inflow in 2023 increased by 25% compared to 2019, with over 40% coming from the Tokyo metropolitan area. This population inflow has directly driven an increase in housing demand, especially in Chuo Ward and areas near subway stations.

The Sapporo City Government is also actively promoting the city’s internationalization and industrial upgrading. The “Innovative City Sapporo” plan aims to attract more IT and creative industry companies and talents, which not only injects new vitality into the city but also drives up real estate values in related areas. The “Creative Industry Park” located in Chuo Ward is developing rapidly, with surrounding property prices rising by about 20% in the past three years, becoming a new investment hotspot in Sapporo.

Moreover, Sapporo’s vacation property market is also worth noting. With the recovery of international tourism and the Japanese government’s promotion of “four-season tourism” strategy, the demand for vacation properties in areas around Sapporo, such as Jozankei Onsen area and Otaru City, has significantly increased. The prices of high-end vacation villas and apartments in these areas have risen by about 15%-20% in the past two years, attracting the attention of many domestic and foreign investors.

Looking ahead, Sapporo’s real estate market is expected to maintain steady growth. Although the growth rate may not match that of major cities like Tokyo and Osaka, its low risk, high cost-effectiveness, and good quality of life continue to attract a large number of investors and residents. It is expected that in the next five years, the average housing price in Sapporo may maintain an annual growth rate of 2%-3%. However, this growth may show more obvious regional differentiation, with more significant growth in the city center, tourist hotspots, and emerging industrial parks, while some far suburban areas may face relatively moderate growth.

Investment Advice

5.1 Choosing the Right City

For companies expanding overseas, choosing the right city for investment is crucial. The following factors need to be considered:

Economic development prospects are the primary consideration. The city’s economic growth potential directly affects the long-term appreciation of real estate. According to the latest data, the top three cities in terms of average annual GDP growth rate over the past five years are Nagoya (2.8%), Fukuoka (2.6%), and Osaka (2.5%). These cities have shown strong economic vitality and are expected to bring sustained demand to the real estate market.

Population mobility trends are equally important. Cities with continuous population inflow tend to have better real estate demand. The latest demographic data shows that despite the declining national population trend, the Tokyo metropolitan area still maintains slight growth, with an annual growth rate of about 0.5%. In particular, Tokyo’s 23 wards continue to attract a large young population due to concentrated job opportunities and convenient living.

Infrastructure construction is an important factor driving real estate market development. Large-scale infrastructure projects, such as new transportation lines and commercial district development, often drive up surrounding property prices. For example, Fukuoka City has been vigorously developing urban infrastructure in recent years, including the Fukuoka Airport expansion project and the Nanakuma Line extension project, which are expected to be completed within the next five years and are likely to further enhance property values in the area.

Government policies have a direct impact on the investment environment. Some local governments have introduced a series of preferential policies to attract businesses and talents. For example, Osaka Prefecture has launched the “Osaka Foreign Enterprise Attraction Center” project to provide comprehensive consulting services and partial tax incentives for foreign investors. Such policies help lower investment barriers and increase investment attractiveness.

In terms of investment returns, second-tier cities have performed remarkably. The latest data shows that the average annual return on real estate investment in second-tier cities such as Fukuoka, Osaka, and Nagoya is between 4.5% and 6.5%. Among them, Fukuoka City has the highest investment return rate, averaging 6.2%, due to its rapid economic development and relatively low housing prices. In comparison, although Tokyo has stable housing price growth, its return rate is relatively low, averaging between 3.5% and 4.5%, due to high entry costs.

5.2 Choosing Property Types

Different types of properties have different investment characteristics, and investors need to make choices based on their own needs and risk tolerance:

Apartments are one of the most popular investment types. They have relatively low maintenance costs and are suitable for long-term holding. In big cities like Tokyo and Osaka, small apartments (1R, 1K, etc.) usually have high occupancy rates and are a stable investment choice. The latest data shows that the average occupancy rate of small apartments in central Tokyo is as high as 95%, with an annual rental yield between 4% and 5%.

Detached houses, although requiring a larger initial investment, may have higher appreciation potential. In cities like Nagoya and Fukuoka, the demand for detached houses has increased in recent years. Especially in suburban areas, they are becoming increasingly popular among young families due to their relatively affordable prices and larger living spaces. Data shows that over the past three years, the prices of detached houses in Nagoya’s suburbs have risen by about 8%.

Commercial properties such as office buildings and shops may have higher returns, but they also come with increased risks and management difficulties. In economically active areas, such as Tokyo’s business districts, the annual return rate of high-quality commercial properties can reach 6%-8%. However, affected by the COVID-19 pandemic, the commercial property market has experienced significant fluctuations, and investors need to evaluate carefully.

The vacation property market has developed rapidly in recent years. In tourist destinations like Sapporo and Okinawa, the demand for vacation properties is strong. Although seasonal, these properties can offer considerable returns if managed properly. Data shows that before the pandemic, the average annual occupancy rate of high-end vacation apartments in Hokkaido reached 70%, with annual returns of 7%-9%.

According to the latest survey, among major cities, small apartments (30-50 square meters) have shown the most stable investment performance, maintaining an average occupancy rate of over 92%. Although commercial properties offer higher returns, they also carry a higher vacancy risk, with the current national average vacancy rate for commercial properties at about 6.8%. It is recommended that experienced investors consider this option.

5.3 Location Selection

Location is a key factor affecting property value. The following points are worth noting for investors:

Transportation convenience has always been the primary factor determining property value. Properties close to subway stations or major transportation hubs usually have more appreciation potential. The latest data shows that in Tokyo, properties within a 5-minute walk from a subway station are priced about 18% higher than those more than 10 minutes away. This trend is also evident in other major cities, with the difference being 15% in Osaka and 13% in Nagoya.

Educational resources are another important consideration. Properties in good school districts have always been investment hotspots. In Japan, properties near famous universities or excellent primary and secondary schools are often more popular. For example, Bunkyo Ward in Tokyo, home to several renowned universities, has seen an average housing price growth rate 2 percentage points higher than the overall Tokyo average over the past five years.

Future development plans have a significant impact on property appreciation. Paying attention to government urban planning and choosing areas with future large-scale development projects can often bring considerable returns. For example, Osaka is actively preparing for the 2025 World Expo, and property prices in related areas have already risen by about 10% in the past two years, with further increases expected.

The level of living facilities directly affects the living experience and property value. Areas with comprehensive medical, shopping, and entertainment facilities usually have properties that are easier to maintain and appreciate in value. Data shows that in central Tokyo, residential prices in areas with large-scale integrated commercial facilities are on average 12% higher.

5.4 Investment Strategies

Depending on the specific needs and financial conditions of the company, the following investment strategies can be considered:

Long-term holding is a stable investment strategy. The Japanese real estate market is relatively stable, and long-term holding can smooth out short-term market fluctuations. According to historical data, properties in major Japanese cities have an average annual return rate of 3.8%-5.5% over a cycle of more than 15 years. The performance of central Tokyo is particularly outstanding, with an annual return rate of 4.7% over the past 20 years.

Short-term renovation and sale is a high-risk, high-return strategy. It involves buying old properties, renovating them, and then selling. This strategy carries higher risks but also potentially higher returns. In major cities like Tokyo, successful renovation projects can bring price difference returns of 25%-35%. However, this strategy requires in-depth knowledge of the local market and professional renovation and marketing skills.

Rental operation is an effective way to obtain stable cash flow. Buying properties for rent provides steady rental income. In major Japanese cities, the annual rental yield of quality properties is usually between 4.5%-6.5%. Especially in areas with concentrations of international students and foreign workers, such as Shinjuku in Tokyo and Chuo Ward in Osaka, the rental yield of small apartments can reach around 7%.

Portfolio investment is an effective method of risk diversification. Diversifying investments across different cities or different types of properties can effectively reduce the risk brought by single market fluctuations. For example, one could simultaneously invest in small apartments in Tokyo, commercial properties in Osaka, and vacation apartments in Sapporo to balance cyclical fluctuations in different markets.

It’s worth noting that property taxes in Japan are relatively low, resulting in low long-term holding costs. The fixed asset tax and city planning tax combined are usually 1.4%-1.7% of the property’s assessed value. However, companies need to be aware that non-residents selling Japanese properties are subject to higher income tax (currently 15.315% of the transfer income plus local tax). Therefore, tax factors need to be fully considered when formulating investment strategies.

5.5 Risk Management

Investing in Japanese real estate also carries certain risks, and companies need to fully recognize and manage these risks:

Exchange rate risk is one of the main risks faced by overseas investors. Fluctuations in the yen exchange rate can significantly affect investment returns. Over the past five years, the yen-dollar exchange rate has fluctuated by more than 20%. Companies can consider using currency hedging strategies to manage this risk, such as using forward foreign exchange contracts or currency swaps and other financial instruments.

Natural disaster risk cannot be ignored in Japan. Earthquakes are frequent in Japan, and companies should choose buildings with good seismic performance and purchase adequate earthquake insurance. Currently, about 35% of property investors in Japan choose to purchase earthquake insurance. It’s worth noting that insurance premium rates vary greatly between different regions, with premiums in earthquake-prone areas like Tokyo and Osaka potentially being 2-3 times higher than in other regions.

The risk of an aging population is a long-term challenge facing Japan. Japan is experiencing a severe aging population problem, which may affect future property demand. The latest data shows that the proportion of the population aged 65 and above in Japan has reached 28.7% and is expected to rise to 35.3% by 2040. It is advisable to focus investments in areas with inflows of young population, such as Tokyo’s special wards and Fukuoka City.

Legal and policy risks need ongoing attention. Keep a close eye on changes in Japanese real estate-related laws and regulations. For example, the Japanese government is considering adjusting inheritance tax policies, which could affect property investment strategies. In addition, policies targeting foreign investors may also change, such as tightening restrictions on foreign property purchases.

To better manage these risks, it is recommended that companies hire professional real estate consultants and legal advisors, regularly evaluate their investment portfolio, and adjust investment strategies in a timely manner. At the same time, establish a comprehensive risk assessment system to quantitatively analyze and periodically review various risks to ensure the scientific nature and sustainability of investment decisions.

Conclusion:

For companies expanding overseas, purchasing property in Japan is not only a way to solve employee housing issues but also a potential investment opportunity. Japan’s stable political environment, sound legal system, and relatively mature real estate market provide a relatively safe investment environment for companies. However, due to cultural differences, language barriers, and complex legal procedures, purchasing property in Japan still faces many challenges. Companies need to fully understand the characteristics of the Japanese real estate market, carefully assess their own needs and risk tolerance, and formulate appropriate purchasing and investment strategies. Through careful planning and professional guidance, companies can not only provide comfortable living environments for their employees but also potentially achieve considerable investment returns, thus laying a solid foundation for the company’s long-term development.