Market Trends of Japan Residential Construction Industry
Foreign Investments in Japan is Driving the Market
Foreigners are permitted to own land and residences in Japan, one of the few Asian countries that allow it. Foreigners are permitted to buy as well as own freehold property in Japan. Foreigners have the same rights as Japanese when purchasing real estate in Japan, whether it's a house in Tokyo or an apartment in Osaka. This factor is driving tremendous foreign investments in the country.
Moreover, Japan's slowly but steadily rising house prices, excellent infrastructure for home construction, and an increase in resources and agencies for acquiring abandoned, often ultra-cheap homes have resulted in openness to foreign investors. Non-Japanese are entering the Japanese housing market to purchase real estate as a primary, secondary, or investment property.
Analysts predict that demand from overseas investors will remain strong during the forecast period, particularly for logistics and residential properties, where foreign groups may be more aggressive buyers than domestic investors. Overseas buyers are also likely to continue to participate in large-ticket transactions.
To promote inward foreign direct investment in Japan to enhance the growth potential of the Japanese economy and to revitalize regional economies, the government created the 'Strategy for Promoting Foreign Direct Investment in Japan,' which was adopted by the Council for Promotion of Foreign Direct Investment in Japan. It sets a new target to double the inward foreign direct investment stocks to JPY 80 trillion by 2030 and reach 12% of GDP, according to Invest Japan.
Rising Sales of Second-Hand Apartment is Driving the Renovation Sector in Japan
One of the factors driving the sales of second-hand homes in Japan is the Bank of Japan's ultra-low interest rate policy, which is, of course, a key driver of residential home sales. These ultra-low rates have made it much more viable for people considering the leap to home ownership. The Bank of Japan (BOJ) has also indicated that it plans to continue its negative interest rate policy after 2023. Other driving factors for second-hand home sales are high prices in the new condominium market and pent-up demand. In 2022, the number of pre-owned residential real estate sales in Japan accounted for about 174.85 thousand. Compared to the previous year, the number of existing properties sold decreased by 9.2%, according to MLIT (Japan).
The booming second-hand home sales market is an abandoned home sales market that has highly accelerated the need for renovation in Japan. As people get these houses at affordable rates, they pay more attention to renovating them to meet their requirements. Furthermore, renovation is considered important to maintain luxury and comfort in the residential sector.
