In 2025, purchases of Japanese real estate by foreign investors reached a new record high. The discussion has moved a step beyond the period when the common explanation was that Japanese real estate was being bought simply because the yen was weak, and the net-buying trend continues even now that exchange rates have stabilized. Why has this flow not stopped? By organizing the latest statistical data and the structural background, we can see important perspectives for Japanese real estate owners as they consider future holding and sale decisions.
Net buying of Japanese real estate by foreign investors reaches a record high in 2025
According to JLL, total real estate investment in Japan reached approximately 6.218 trillion yen in 2025, marking a record high. Foreign investors accounted for 39% of that total, far above the 34% recorded during the 2007 bubble period. In particular, in the first half of 2025 alone, purchases by foreign capital amounted to approximately 1.14 trillion yen, reportedly about double the level of the same period a year earlier.
Net buying refers to a situation in which a given market participant purchases more than it sells over a specific period. The fact that foreign investors continue to purchase Japanese real estate on a net basis is not merely a temporary boom. It indicates an ongoing change in the structure of demand. Analysis by NLI Research Institute also confirms that in 2025, overseas investors, alongside business corporations, were among the main net buyers.
Why are investors around the world turning to Tokyo? Real estate investment strategies for 2025 and beyond, not just a weak yenprovides a broader explanation of why investors are moving toward Tokyo. This article focuses in particular on the paradoxical question of why net buying continues even now that the weak yen has eased.Why does buying continue even now that the weak yen has "stabilized"?
One of the direct reasons foreign investors rushed into Japanese real estate in 2023 and 2024 was the weak yen. From the perspective of the U.S. dollar and the euro, the Japanese yen had become significantly cheaper, making Japanese real estate appear to be a bargain. However, from 2025 onward, the yen began to appreciate as the Bank of Japan raised its policy rate. Even so, foreign investors' appetite for purchases has not weakened.
JLL characterizes this change as a greater sophistication in investment decision-making. In the past, the main motivation was the sense of discount created by the weak yen. Today, however, foreign investors are evaluating properties based on whether the investment still works even if exchange rates fluctuate. In other words, they judge that Tokyo offers enough underlying support for investment returns even if the foreign-exchange advantage narrows.
Behind that judgment is the fact that Tokyo office rents remain inexpensive by international standards. According to data reported by Nikkei in September 2025, Tokyo office rents are still lower than those in Hong Kong, Singapore, New York, and London. That relative affordability in rent levels is said to support buying interest from overseas institutional investors. When assessed on the fundamentals of yields and rent levels, Tokyo still appears inexpensive on a global basis.
What are investors buying? The reality by sector
According to JLL, the main sectors targeted by foreign investors are offices (42%) and rental housing (27%). However, since 2025, investment in logistics facilities and hotels has also expanded, making it increasingly clear that investors are increasing their exposure to the Japanese market while diversifying concentration risk in any single sector.
In the residential sector, an important primary source is the survey on newly built condominium transactions first published by the Ministry of Land, Infrastructure, Transport and Tourism in November 2025. According to that survey, the acquisition rate by overseas residents for newly built condominiums in Tokyo's 23 wards was 3.5% in January to June 2025. In the six central wards alone (Chiyoda, Chuo, Minato, Shinjuku, Shibuya, and Bunkyo), the figure reached 7.5%, a sharp increase in just over a year compared with the 1.6% rate for all of 2024.
By nationality, Taiwan accounted for the largest number at 192 units, or more than 60% of the total, followed by China and Western institutional investors. Among Taiwanese investors, acquisitions of mid-sized and large-scale properties by institutional investors are also increasing, not only purchases by wealthy individuals. In other words, a structural investment flow is emerging that goes beyond simple home purchases by individual foreign investors.
What is the structure behind overseas capital inflows that does not break down even in a rising-rate environment?
The Bank of Japan has been raising its policy rate in stages from 2025 into 2026, and some expect it to reach around 1% during 2026. For domestic real estate investors, higher borrowing costs are a direct risk. Many foreign institutional investors, however, take an equity-based investment stance centered on their own capital, which makes them less sensitive to rising interest rates.
In addition, Japan's interest rates remain low compared with Europe and the United States, and from the perspective of global capital, Japan's position as a low-interest, low-risk market has not fundamentally changed. JLL's analysis concludes that even if the policy rate reaches 1%, investment yields for Tokyo offices and rental housing would remain at adequate levels compared with major Western cities.
Investment in Japan's luxury real estate by wealthy foreign investors is accelerating: the background to rising tower condominium prices and investment strategiesalso discusses this in detail, but the inflow of foreign investors brings not only benefits but risks as well. It is important to view the market from multiple angles, including scenarios in which they withdraw from it.Impact and outlook for Japanese real estate owners
The net-buying trend among foreign investors has several important implications for Japanese real estate owners. First, the inflow of overseas money is functioning as upward pressure on land prices and rents. Especially in central urban areas and locations with strong transportation access, foreign investors are willing to acquire assets at high prices, helping to preserve a favorable domestic selling environment.
Second, decisions about whether to sell or hold now include a new perspective: the depth of buyer demand. In addition to domestic corporations and individual investors, there is a major demand layer in the form of foreign institutional investors. This increases liquidity for large properties and assets in prime locations, and it broadens the range of options for choosing the right time to sell.
At the same time, there are also points that require caution. Debate is emerging in Japan and abroad over tighter regulation of foreign real estate acquisitions. At present, the Japanese government has not implemented additional restrictions, but the risk of policy change should always be kept in mind. From a long-term perspective, it is wise for real estate owners to consider both the valuation of their holdings and their exit strategy.
How international politics and exchange-rate movements shape real estate investment: a thorough explanation of geopolitical risk and the impact of a weaker or stronger yenexplains in greater detail how changes in the external environment affect real estate values.INA&Associates' View
What I feel when I look at this series of data is that the underlying logic guiding foreign investors is changing in a fundamental way. The focus is shifting from capturing foreign-exchange benefits to evaluating the structural value of Tokyo as a city. If the weak yen were the main reason, investors should retreat once the yen strengthens. In reality, however, money has continued to flow in even after the weak yen paused, showing that Tokyo's intrinsic value beyond exchange rates is being reassessed globally.
The structural advantages of Japan's real estate market, including a transparent legal system, stability as one of the world's leading metropolitan areas, and relatively affordable rent levels, cannot be erased by exchange-rate movements. That is precisely why buying continues even as interest rates rise and the sense of discount fades. What matters for owners is to use this change in external demand as a tailwind while maintaining a holding strategy that does not rely excessively on outside factors. At INA&Associates, we are always available to discuss asset strategies grounded in international market trends.
Summary
- Foreign real estate investment by overseas capital reached a record high of approximately 6.218 trillion yen in 2025, with overseas investors accounting for 39% (JLL)
- Even after the weak yen eased, net buying has continued because Tokyo still offers structural affordability and strong fundamentals
- In its first survey, the Ministry of Land, Infrastructure, Transport and Tourism found that overseas residents acquired 7.5% of newly built condominiums in Tokyo's six central wards in the first half of 2025
- Investment has centered on offices (42%) and rental housing (27%), while also expanding into logistics and hotels
- Even in a rising-rate environment, many foreign institutional investors are equity-led and therefore less affected
- While foreign net buying supports land prices and rents, the risk of tighter regulation also warrants close attention
- It is important for owners to use external demand as a tailwind while adopting a holding strategy that avoids excessive dependence on outside factors
Frequently Asked Questions (FAQ)
Q1. Is it reasonable to expect foreign investors to continue buying Japanese real estate going forward?
A. Based on the current data and market structure, we believe there is a strong possibility that this trend will continue in the short term. However, risks include tighter regulation of foreign real estate acquisitions, yield compression caused by rising Japanese interest rates, and a rapid appreciation of the yen. We cannot say with certainty that it will continue indefinitely. We recommend preparing for multiple scenarios from a long-term perspective.
Q2. Which areas and property types are foreign investors buying most actively?
A. According to the Ministry of Land, Infrastructure, Transport and Tourism, acquisitions of newly built condominiums by overseas residents are concentrated in Tokyo's six central wards (Chiyoda, Chuo, Minato, Shinjuku, Shibuya, and Bunkyo), where the acquisition rate reached 7.5% in the first half of 2025. Institutional investors mainly target offices and large rental housing, and properties near the city center and major stations tend to be common targets.
Q3. Is there demand from foreign investors for the property I own?
A. It varies greatly depending on the property's location, scale, and age. Large, high-quality properties in central urban areas or locations with strong transportation access may become targets for foreign institutional investors. By contrast, small properties in suburban areas tend to rely primarily on domestic demand, so foreign investor trends are less likely to have a direct impact. Please consult us regarding your individual property.
Q4. If net buying by foreign investors continues, will the asset value of my property rise?
A. The inflow of foreign money is exerting upward pressure, particularly on land prices and rents in central Tokyo. However, that does not mean asset values will necessarily rise. Future price and income projections depend on many different factors, so we cannot provide a definitive outlook. For the current value of your holdings and your exit strategy, we recommend an individual consultation based on market conditions.
Further Reading
Citations and references
- Ministry of Land, Infrastructure, Transport and Tourism, "Publication of survey results on newly built condominium transactions using real estate registration information" (published in November 2025)
- Ministry of Land, Infrastructure, Transport and Tourism, "Study on responses to the internationalization of the real estate market"
- JLL, "Outlook for Japan's real estate investment market in 2025 and review of 2024"
- JLL, "Trends among overseas investors in Japan's real estate market in a rising interest-rate environment"
- JLL, "Why overseas investors have returned to Japan's domestic real estate investment market"
- NLI Research Institute, "Trends in purchases and sales by investor category (2025): Business corporations and overseas investors were net buyers in 2025"
- Nikkei, "Foreign purchases of real estate hit a record high: 1.1 trillion yen in January to June, doubling on expectations of rent increases" (August 2025)
- Nikkei, "Tokyo office rents are still inexpensive, attracting foreign money as benchmark land prices rise" (September 2025)
