Data shows that Tokyo is the most popular Japanese city for Chinese real estate buyers, followed by Osaka and Kyoto. The reasons for Chinese buyers purchasing Japanese property generally fall into two categories: investment and immigration. So, which types of Japanese properties are favored by Chinese buyers? Let's take a look together.
Types of Japanese Real Estate
Small Studio Apartments
In terms of investment amount, simplicity, and yield, investing in small studio apartments offers the best cost-performance ratio. In particular, the number of single office workers living in the 23 wards of Tokyo continues to grow, and the demand for studio apartments is constantly increasing. As long as the property is in a good location, there is no need to worry about it being unrentable. Rental income remains stable, market prices do not fluctuate significantly, and small studio apartments offer strong tax-saving benefits. If you purchase multiple units, it will be much simpler to handle asset inheritance and distribution for your children in the future.
If you are looking for a property that combines high yield, quick liquidity, and strong tax-saving potential, small studio apartments are the premier choice. What are the types of real estate available for purchase in Japan?
Large Residential Apartments
There are quite a few large residential investment properties in Japan, but very few are available for rent to foreigners. If we can purchase several large apartments for investment, it is actually a highly profitable venture, and there is no need to worry about them being unrentable. Large properties purchased can first be used for rental, and then sold at a high price while there are tenants. Alternatively, after the tenants move out, they can be sold at a high price as standard family-style apartments. This method of repeated buying and selling is considered a diversified strategy for investing in Japanese real estate.
Entire Buildings (Wooden or Steel-Reinforced Concrete)
Japanese apartment buildings are divided into three types: 2-3 story wooden apartments without elevators; 4-5 story steel-reinforced concrete apartments without elevators (some 5-story buildings may have elevators); and the third type, which consists of high-end steel-reinforced concrete buildings of 5 stories or more with elevators.
Many investors purchase an entire building at once for investment. Since the market is well-established, when building wooden or steel-reinforced concrete apartments, one can compare quotes from large housing manufacturers, making it easy to place an order. Large housing manufacturers also provide one-stop leasing services after construction, offering comprehensive simulations for various scenarios. Therefore, there is no need to worry about management. Alternatively, you can directly purchase an entire building that has already been constructed and is already occupied by tenants, which is actually more time-saving and convenient.
Commercial Buildings
Those who own commercial land are often troubled by how to utilize it effectively. Of course, this excludes prime locations within the 23 wards of Tokyo.
Although commercial tenants pay higher unit rents than residential ones and offer higher profitability, the risk of them moving out is high, and finding the next tenant can be difficult (except in bustling areas with high population mobility). Therefore, it is very difficult to attract tenants for commercial buildings, making them less suitable for novice investors.
Detached Houses (Iko-date)
A detached house is a residence for a single family, so its yield is lower compared to apartment buildings with multiple units. Comparing the simulated yields of a detached house versus an entire wooden apartment building, the latter is superior, so detached houses are generally not the first choice for investment. However, some people purchase detached houses to use as dormitories or vacation rentals (minpaku), and the income can be substantial; in particular, using them as vacation rentals allows for a very fast return on investment. The management of vacation rentals can also be directly entrusted to a management company; you only need to pay them 15%-25% of the revenue, and you can sit back and collect the earnings.