Japanese investors,despite a booming home real estate market,are eyeing opportunities abroad. In 2022,they made up 28% of direct investment in Asia-Pacific commercial real estate, says MSCI. Japan has deep,safe property market here,with Tokyo's grade A office vacancy at just 0.7% in first quarter. Rents have risen for nine straight quarters,up 13.2% annually last quarter .
Corporate strength drives leasing demand,but supply tight due to rising construction costs,labor shortages. In residential sector,Tokyo's new flat prices jumped 58.5% last year,fastest growth among 100 luxury housing markets tracked by Knight Frank. Last five years,prime residential prices there surged nearly 160%,second only to Dubai.
Even hotels thriving,despite 55% fewer visitors from mainland China first four months this year. Inbound tourism surge,thanks partly to weaker yen,offsets this drop. Arrivals from South Korea,Taiwan up 22% and 24% respectively,providing boost amid diplomatic tensions with Beijing.
But why are Japanese investors looking overseas when domestic market seems strong? Colliers data shows big jump in Japan's share of global cross-border commercial property investment last year,beating five-year average. Japanese investment in Australian real estate past two years matches total from previous 22 years.
Australia's residential sector a main draw for Japanese investors,attracted by its well-managed rental housing market. Aligns with their comfort in income-generating residential assets,as noted in 2025 Japan-Australia Investment Report by Herbert Smith Freehills Kramer and Australian National University.
As Japan's property sector stays strong,outbound investment trend raises questions about long-term domestic growth sustainability...and allure of international markets.
