Read before you invest into Japan Property

💹 Comparatively Affordable

Compared to other global markets, Japanese properties offer significant value. After the economic bubble of the late 1980s, prices saw a sharp correction. While there have been periods of recovery, particularly since the implementation of ‘Abenomics’, Tokyo’s commercial real estate has recovered to around 60% of its post-Lehman collapse peak, unlike London and New York which are near 80%. This indicates substantial room for growth, positioning Japan as an attractive market for international investors.

📊 Stable Demand

• Second Largest Market: Japan’s real estate investment market is the world’s second-largest, following the US.
• Economic Powerhouse: It is the world’s third-largest economy with a population of 130 million.
• Mega-Metropolis: The Greater Tokyo area is the world’s biggest metropolitan city, with a population over 34 million and a GDP larger than Australia’s.
• Urban Growth: While Japan’s overall population is declining, major cities like Tokyo continue to experience steady population growth.

⚖️ Political Stability & Legal Security

Japan offers a low-risk environment for real estate investment. Its mature legal system rigorously protects property sales and ownership. Since 1997, restrictions on foreign ownership have been lifted, allowing easy acquisition. The nation is politically stable, with extremely low risks of coups or terrorist attacks. Renowned for its safety and low crime rates, Japan provides a secure foundation for significant assets like real estate.

🏗️ Quality Construction

Situated on the Pacific Ring of Fire, Japan enforces some of the world’s strictest building codes. Standards are continuously updated after major earthquakes. The 1981 ‘Shin-Taishin’ standard introduced concepts of structural flexibility to dissipate seismic energy. Buildings constructed under these modern codes demonstrated remarkable resilience, with almost none collapsing during the 2011 Great East Japan Earthquake, ensuring the safety and durability of your investment.

📏 Floor Area Calculation

Japan uses net floor area, which measures only the interior usable space. This is unlike regions like Hong Kong where the gross floor area (including common hallways and facilities) is displayed, providing a more accurate representation of the living space.

🚗 Parking Lots

In residential buildings, parking lots are typically not sold with units. Instead, they are available for rent separately. The price of a property does not include a parking space, which is a different practice from many other countries.

🛋️ Interior & Furnishings

Units are usually handed over in move-in condition, requiring only furniture and air conditioning. For rentals, tenants in Japan typically bring their own furniture, including appliances like refrigerators and washing machines, simplifying the process for landlords.

🎁 Key Money (Reikin)

In addition to a security deposit, landlords can receive ‘key money’ (reikin). This is a non-refundable one-time payment, usually equal to 1-2 months’ rent, given to the landlord as a gift upon signing the lease. This practice is unique to Japan.

Real Estate Acquisition Tax

Levied on property acquisition (excluding inheritance).
Rate: 3% of the property’s assessed value (4% for non-residential buildings).

Registration & License Tax

Required to legally claim ownership.
Rate: Varies by registration type, typically 0.4% to 2.0% of the assessed value for ownership transfer.

Consumption Tax

Levied on the purchase of buildings, but not on land.
Current Rate: 10%.

Fixed Asset Tax (Property Tax)

A municipal tax levied on the registered owner as of Jan 1st each year.
Rate: 1.4% of the assessed property value.

City Planning Tax

A municipal tax on property within designated urbanization areas.
Rate: Varies by area, typically 0.2% to 0.3% of the assessed value.