Japan Real Estate Market Report by Property (Residential, Commercial, Industrial, Land), Business (Sales, Rental), Mode (Online, Offline), and Region 2025-2033

The Japan real estate market size reached USD 436.0 Billion in 2024. Looking forward, IMARC Group expects the market to reach USD 557.0 Billion by 2033, exhibiting a growth rate (CAGR) of 2.76% during 2025-2033. The growing number of residential and commercial properties, along with the rising international investment trends, are propelling the market across the country.

Japan Real Estate Market Analysis:

• Major Market Drivers: The increasing urban development initiatives by government bodies are bolstering the market across the country. Additionally, they are offering favorable tax incentives and revitalization programs, which are strengthening the market.
• Key Market Trends: The rising affordable and smaller housing options are among the emerging trends propelling the market. Besides this, foreign exchange rates, as well as cultural preferences and lifestyle choices, are also acting as significant growth-inducing factors.
• Challenges and Opportunities: One of the primary challenges hindering the market is the elevating number of vacant homes. However, key players across the country are focusing on promoting urban redevelopment and implementing policies to encourage immigration and support younger families, which will continue to fuel the market in the coming years.

Japan Real Estate Market Trends:

Demand for Senior Housing

The increasing geriatric population across the country is stimulating the market. According to the National Institute of Population and Social Security Research, in Japan, those aged over 65 are anticipated to account for 34.8% of the population by 2040. Moreover, the declining birth rate is resulting in changes in housing demand. The Prime Minister of Japan, Fumio Kishida, said in January 2023 that his country is on the brink of not being able to function as a society because of its declining birth rate. As a result, there is an escalating requirement for adapting communities and properties to cater to the needs of an aging population, including the launch of senior housing and healthcare facilities. This is one of the real estate market trends in Japan. The Ministry of Land in Japan provides subsidies for the private sector and local governments to build daycare centers or housing for elderly people. Additionally, the growing popularity of assisted living complexes is also propelling the market. For example, in November 2023, AXA IM Alts purchased two senior housing properties in Hokkaido, Japan, from an affiliate of Goldman Sachs for approximately €34 Million. Apart from this, Gakken Cocofump is one of the companies in Japan that develops and operates elderly welfare as well as nursing care across the country. In an initiative to enrich and improve the quality of life of old-age residents, they entered into a collaborative agreement with Nintendo in November 2023 to launch Nintendo Switch software and consoles in assisted living facilities in Japan.

Smarty City Initiatives

The widespread adoption of smart building technologies is revolutionizing Japan's real estate growth, as they aid in improving safety, energy efficiency, and convenience in both residential and commercial properties. For example, in March 2024, Toyota invested £8 billion in its smart city project called Woven City. Set just miles away from Mount Fuji on Honshu Island, Japan, it is powered by hydrogen and specifically designed to minimize emissions levels. Furthermore, Toyota also partnered with Pattaya City to develop the city as an electric tourism hub, utilizing sustainable energy to reduce costs, enhance service efficiency, minimize the ecological impact of the city's operations, etc. Additionally, the escalating demand for sustainable practices, which involves the use of renewable energy resources, energy-efficient building materials, green roofs, etc., is also contributing to the overall market growth. For instance, in March 2024, Spatial Pleasure, one of the startups in Japan, built a software platform, Digital, Measurement, Reporting, and Verification (DMRV), which certifies and measures carbon credits for transportation operators contributing to the decarbonization of an area. Besides this, key companies across the country are leveraging sensor networks, AI, and other advanced technologies to alleviate traffic congestion, which is bolstering the market. For instance, in June 2023, SoftBank Corp. and TOKYU LAND CORPORATION announced their plan to expand their joint "Smart City Takeshiba" project in Tokyo's Takeshiba district. By adopting a data exchange platform that enables numerous businesses in Japan to access real-time data collected in the area, they aim to enhance disaster prevention measures and improve urban navigation. In addition, TOKYU LAND and SoftBank further collaborated with operators of alternative mobility services, including OpenStreet Co., Ltd., to display availability on digital signage.

Growing Tourism Impact

The increasing number of tourists across the country is elevating the requirement for vacation rentals, hotels, service apartments, etc., which is positively influencing the Japan real estate outlook. As per the Japan National Tourism Organization, arrivals of tourists across the country increased by around 6% in 2024 when compared to 2019. Additionally, Accor, one of the international hotel chains, believes that the country will continue to attract more inbound tourists, with the government setting a goal of attracting about 60 million foreign visitors annually by 2030. As a result, there is a rising popularity of retail spaces, entertainment venues, restaurants, etc., to serve tourists. For instance, in November 2023, Arcadia Resort Miyakojima opened on Irabu Island as part of the city of Miyakojima, Japan. The hotel consists of 14 luxury suites with ocean views. Besides this, one of the travel agencies in Japan, JTB, expanded its inbound travel route offerings to less-known destinations, including Kanazawa, since the country reopened its border in 2022. Furthermore, according to Asian Investor, Japan emerged as the top destination for cross-border investments within the country, attracting US$9.3 Billion. According to MSCI Real Assets, foreign investors, including KKR & Co., Goldman Sachs Group Inc., Blackstone Inc., etc., spent a combined US$2 Billion on hotel deals in Japan so far in 2023, the most compared with any other sector in Asian commercial property. These investments not only improve property values but also foster urban development, which is expected to fuel the market in the coming years.

Japan Real Estate Market Segmentation

Breakup by Property:

• Residential
• Commercial
• Industrial
• Land

The real estate market in Japan encompasses diverse segments, including residential, commercial, industrial, and land properties, each contributing uniquely to the nation's economy. Residential properties, particularly in major cities, remain in high demand due to urbanization and population density, driving the development of high-rise apartments and suburban housing projects. In November 2023, Invesco and Alyssa Partners collaborated to build around 15 multifamily properties located in Osaka, Tokyo, Nagoya, and Fukuoka. Commercial properties are equally significant. Based on the data from CBRE, the World Property Journal reported that investments in Japan's commercial real estate industry for the first quarter of 2024 surged by 7% year-over-year, which accounted for approximately JPY1.439 trillion. Additionally, land properties offer significant opportunities, particularly in rural and suburban areas, where land for agricultural use, new developments, or future urban expansion is highly sought after.

Breakup by Business:

• Sales
• Rental

The sales of residential properties in the country are rising, as local families and international investors are seeking stable and appreciating assets. The rental options are equally gaining traction, supported by a significant expatriate population, students, and domestic workers who prefer renting due to high property prices or the flexibility it offers. Residential rentals range from compact city apartments to larger suburban homes, while the commercial rental market includes office spaces, retail outlets, and co-working spaces, catering to diverse business needs. As per the Japan real estate analysis, the country's well-established legal framework, efficient public transportation, and high living standards further enhance the attractiveness of its real estate market for both sales and rentals, fostering continuous growth and investment opportunities. For example, in February 2024, the land ministry in Japan took various steps to make it easier for rental housing owners to lease their properties to elderly individuals by certifying rental housing equipped with services to watch over tenants.

Breakup by Mode:

• Online
• Offline

The offline real estate remains strong, with traditional real estate agencies providing personalized services, in-depth local knowledge, and face-to-face consultations. These agencies often host open houses, property tours, and in-person meetings to guide buyers and renters through the process. On the other hand, the online real estate market is rapidly expanding, driven by the country's high internet penetration and tech-savvy population. In January 2024, GA Technologies Co., Ltd., headquartered in Tokyo, Japan, announced the acquisition of the equity of RW OpCo, LLC to expand its online real estate business across the country. Numerous online platforms and apps offer comprehensive property listings, virtual tours, and digital transaction services, making it easier for users to search for and secure properties from anywhere. This, in turn, is escalating the Japan real estate demand.

Competitive Landscape:

The report has also provided a comprehensive analysis of the competitive landscape in the market. Competitive Japan real estate analysis, such as market structure, market share by key players, player positioning, top winning strategies, competitive dashboard, and company evaluation quadrant has been covered in the report. Also, detailed profiles of all major companies have been provided.

Japan Real Estate Market Recent Developments:

• May 2024: Bain Capital unveiled its plan to bolster its real estate team in Japan, making it one of the foreign investment firms seeking to capitalize on opportunities offered by commercial properties across the country.
• April 2024: Gaw Capital Partners expanded its multifamily real estate portfolio in Japan by adding 29 residential properties in Tokyo via a partnership with Alyssa Partners.
• January 2024: GA Technologies Co., Ltd., headquartered in Tokyo, Japan, acquired the equity of RW OpCo, LLC to expand its online real estate business across the country.

Key Questions Answered in This Report:

• How has the Japan real estate market performed so far and how will it perform in the coming years?
• What has been the impact of COVID-19 on the Japan real estate market?
• What is the breakup of the Japan real estate market on the basis of property?
• What is the breakup of the Japan real estate market on the basis of business?
• What is the breakup of the Japan real estate market on the basis of mode?
• What are the various stages in the value chain of the Japan real estate market?
• What are the key driving factors and challenges in the Japan real estate market?
• What is the structure of the Japan real estate market and who are the key players?
• What is the degree of competition in the Japan real estate market?