Investing in Japan Property: The Ultimate Guide - InvestAsian (2024)

FAQs

Is Japan property worth investing? ›

Property in Japan remains a relatively stable and safe investment…. if done correctly. Just don't expect appreciation or rental yields above 7% like you can get in Cambodia or the Philippines. Japan is among a select few countries in Asia where foreigners can own land and houses.

Securing a home loan or mortgage from a Japanese bank as a foreigner living in Japan can be challenging, as banks have strict requirements and regulations for lending to non-Japanese residents. However, with the right preparation and documentation, it is possible to obtain financing for a property purchase.

Sure, on average, they do. However, the idea that “Japanese buildings depreciate while American and British buildings appreciate” is false. One of the reasons for this misconception is that in Japan, Japanese houses and buildings are separate. For example, for tax purposes, they are two different entities.

In Japan, unlike other countries, there are no restrictions for foreigners based on whether or not they have permanent resident status, Japanese nationality, or based on their visa type. This means that foreigners are allowed to own both land and buildings in Japan as real estate properties.

With the dollar strong, is now a good time for foreigners overseas to buy property in Japan? Of course. It is a prerequisite that you buy a place where the real estate you are buying is of high value, but now is a good time for foreigners to buy real estate in Japan, especially if they have cash abroad.

We've also seen interest reignited in 'value' companies. Japan is considered one of the most attractive markets for value stocks, and as global inflation remains high, the case for investing in these types of stocks is strengthening.

You must have a valid passport and an onward/return ticket for tourist/business "visa free" stays of up to 90 days. Your passport must be valid for the entire time you are staying in Japan.

1. Buying Property Doesn't Give You A Visa. First and foremost, buying a house in Japan does NOT help you acquire a visa or permanent resident status. The residency process is the same whether you own property or not.

When it comes to real estate, the same rules apply to both Japanese and foreigners; there are no restrictions on this under Japanese law. In fact, Japan is one of the few Asian countries where you can own land on a freehold basis. In addition, there are no requirements for citizenship or residence visa.

An unusual feature of Japanese housing is that houses are presumed to have a limited lifespan, and are often torn down and rebuilt after a few decades, generally twenty years for wooden buildings and thirty years for concrete buildings – see regulations for details.

Is it better to buy a house or an apartment in Japan? ›

Ultimately the decision to buy or rent is a personal one and will depend on your individual circ*mstances and long-term plans. For those in Japan on a short-term assignment, renting may be the best choice. Those planning to be in Japan for the medium to long-term may consider buying.

According to Nomura, a brokerage, the value of the average Japanese house depreciates to zero in 22 years. (It is calculated separately from the land, which is more likely to hold its value.) Most are knocked down and rebuilt.

This is an annual tax payable by property owners in Japan. The amount of tax is based on the property's appraised value as of January 1st of each year. The tax rate can vary depending on the location, but it is typically around 1.4% of the appraised value.

However, this depends on where you come from. But, if you want to move to Japan permanently, you will need to apply for a long-term stay visa at the Japanese diplomatic missions (embassy/consulate) in your home country to enter Japan. Once you get the status of a permanent resident in Japan, it will be indefinite.

If you want to stay longer than 90 days, you will have to gain a working visa or a spouse visa. This means you must either work in Japan or marry a Japanese citizen. The final way to get a permanent resident visa takes many years. First, you must stay in the country for three years on one-year visas.

Monthly home loan repayments of working households in Japan 2012-2021. In 2021, the average monthly home loan repayments of working households with housing loan debt in Japan amounted to around 91.1 thousand Japanese yen.

Japan's house prices start around 25,000,000 JPY (230,000 USD) and go up from there. The overall national average for buying a house is 35,760,000 JPY (337,000 USD).

The three most affordable prefectures to buy a new apartment this year were (income multiple in parentheses): Kagawa (5.44) Yamaguchi (5.64) Nagano (5.90)

The average monthly cost of living in Japan is around $2000 For the Local Natives. Expats and Digital Nomads will spend more to keep up with their living standards of around $1100 to $2000 per month while Living in Japan.

Yes, definitely. Even assuming this is including txa and that you need to pay for rent, bills, transportation and food / entertainment. 500,000 yen per month is higher than the average salary and rent and food should be cheaper than Tokyo.

What is the best investment in Japan? ›

One of the best ways to profit from Japan's future growth prospects is to invest in Japanese stocks and mutual funds. Japan mutual funds (also known as equity funds) are a type of mutual fund that invests in Japanese company stocks and can span a wide range of market capitalizations, sectors, and styles.

Dual citizens should carry both valid passports (U.S. and Japan) at all times when traveling to/from the U.S. The dual citizen must present the Japanese passport when going through Japanese immigration and the U.S. passport at U.S. immigration. You do not need and should not register for ESTA.

In the US, the average price per square foot to buy a residence in the city center is around $335, whereas in Japan a comparable figure is $760. This is an approximate 57% increase. However, on the whole, house prices are generally lower in Japan than the US, especially since the Covid pandemic.

Traditionally, for a foreign national to obtain permanent residency (PR) in Japan (when he/she does not have a Japanese spouse or parents, for example), the applicant must have resided in Japan for at least 10 years.

Down payment

All Japanese banks that lend to foreign residents expect you to put down a certain percentage of the property price. The minimum is 10%, but generally, 20-35% is accepted.

More than 70 per cent of countries allow dual citizenship. Japan is not one of them.

A person who already stayid in Japan and would like to extend stay for long period of time can apply for permanent resident visa. You can get permission to live in Japan with no period, without changing your nationality.

If you want to stay longer than 90 days, you will have to gain a working visa or a spouse visa. This means you must either work in Japan or marry a Japanese citizen. The final way to get a permanent resident visa takes many years. First, you must stay in the country for three years on one-year visas.

To apply for an apartment and make a lease contract in Japan, a non-Japanese person usually needs to provide two forms of official identification: A Passport. Either a visa or residence card.

Why are Japanese houses torn down? ›

Many regions in Japan have houses that were not designed to last, but rather have a useful life of 30 years. It is not uncommon when someone dies, for their house (no longer with any resale value) to be demolished to build a new one.

With the exception of Hokkaido, homes in Japan generally lack central heating and can get very cold during the winter. While you can set your air conditioner to the heating mode, this may cause air to become dry, and the cost of electricity can quickly add up.

The first thing you will notice when you go to Japan is that it is not just their homes that are orderly and clean. This extends even to their public places. The Japanese as a society take care of keeping their hospitals, markets, neighborhoods, and other shared places clean, and this habit begins in their houses.

Monthly living expenses

According to a survey by the Ministry of Internal Affairs and Communications, the average monthly consumption expenditure (living expenses for individuals and families to sustain their lives) for those living alone (58.5 years old on average) for the year 2020 was about ¥150,000.

60% of Japanese own their own homes, and 40% rent. Among foreigners, 17% own. There are many pros and cons to both buying and renting, and that goes for both foreigners and Japanese people.

A simple wood-framed house costs on average 200,000 Yen/sqm to build, while basic reinforced-concrete houses can cost anywhere from 450,000 Yen/sqm and up. Prices will rise depending on design and finish, with some luxury custom-builds costing up to 1,000,000 Yen/sqm+.

Japan's stock market has long been seen by investors as a 'value trap' where companies focus on market share, hoard cash and care little about shareholder returns. While there has long been talk of change, 2023 has seen some real evidence of a shift.

Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years. When someone moves out of a home or dies, the house, unlike the land it sits on, has no resale value and is typically demolished.

Unlike in other countries, homes in Japan rapidly depreciate over time, becoming nearly valueless 20-30 years after they were built. If someone moves out of a home before that time frame, the house is seen as having no value and is demolished in favor of the land, which is seen as being high in value.

Non-residents

A non-resident taxpayer's Japan-source compensation (employment income) is subject to a flat 20.42% national income tax on gross compensation with no deductions available. This rate includes 2.1% of the surtax described above (20% x 102.1% = 20.42%).

What is considered a lot of money in Japan? ›

About 953,000 households, or 1.8% of Japan's total, can be classified as affluent—with savings, property and other assets valued at ¥100–500 million.

Japan's 5 Year Rule & Overseas Asset Reporting (OAR)

Those living in Japan for 5 years out of the last 10 are required to submit an annual report to the tax office by March 15th, stating the value of said assets as of December 31st the preceding year.

In Japan, unlike other countries, there are no restrictions for foreigners based on whether or not they have permanent resident status, Japanese nationality, or based on their visa type. This means that foreigners are allowed to own both land and buildings in Japan as real estate properties.

Living in Japan costs about three times as much as living in the United States! Even Japanese people understand that prices in Japan are higher than in many countries.

Countries Natixis ranked as secure retirement locations are mostly concentrated in Europe but also include New Zealand and Australia. The top three countries in the rankings are Norway, Switzerland and Iceland, all of which have life expectancies of 83 years, compared to 77 in the U.S. and the world average of 72.

Although the retirement age is 60 in Japan, many continue to work, commonly rehired by the same company as a contract worker. A survey of 1,100 people in Japan in their sixties, past the retirement age of 60, found that 66% were still working.

The average employee pension in Japan is about 150,000 yen ($1,350.01) a month, lower than government's target of 60 percent of the pre-retirement income for salaried workers, which would be 220,000 yen on average.

The price remained almost flat but was rising little by little after 2020. In 2022, it has started to decline a bit from the first quarter. In Tokyo including suburbs the price has seen -12% (comparison between the first and second quarter of 2022), and in Three Major Metropolitan Areas the price has seen -5.1%.

That being said, Japanese houses are mostly built to last 20–30 years and after that age their value pretty much falls to the value of the land they sit on. Actually at 30+ years they detract from the value of the property as they must be torn down and the materials disposed of which costs money.

How high are property taxes in Japan? ›

This is an annual tax payable by property owners in Japan. The amount of tax is based on the property's appraised value as of January 1st of each year. The tax rate can vary depending on the location, but it is typically around 1.4% of the appraised value.

Though many municipalities have put new taxes in place to incentivize owners to either demolish or maintain homes, a decreasing Japanese population has left many akiyas unclaimed. When this happens, the government takes ownership and looks to auction off or sell the home, often for little money.

Just like renting a space, buying a home in Japan requires a good deal of money and savings. Japan's house prices start around 25,000,000 JPY (230,000 USD) and go up from there. The overall national average for buying a house is 35,760,000 JPY (337,000 USD).

The actual lifespan will be affected by construction methods and maintenance. Some buildings last for less than 20 years before being demolished, while others might be around for 500 years before being redeveloped (yes, there was a case of that in Kyoto recently).

The notion that Japanese houses self-destruct after three decades is a function of the government's plan to keep the economy humming with a constant need for residential construction, since it was the the Land Ministry that concocted the 30-year time limit.

In short, the 2022 real estate transaction market in Japan was favorable in terms of both prices and transaction volume. The average real economic growth rate forecast by 37 economic research organizations for 2023 is 1.07%.

In the US, the average price per square foot to buy a residence in the city center is around $335, whereas in Japan a comparable figure is $760. This is an approximate 57% increase. However, on the whole, house prices are generally lower in Japan than the US, especially since the Covid pandemic.

If you want to stay longer than 90 days, you will have to gain a working visa or a spouse visa. This means you must either work in Japan or marry a Japanese citizen. The final way to get a permanent resident visa takes many years. First, you must stay in the country for three years on one-year visas.