Singapore became the biggest investor in Japan’s real estate sector this year, lured by the yen’s weakness and growing demand in logistics and hospitality industries. Inflows from the city-state totaled almost $3 billion so far in 2023, followed by investors from the US, Canada, and the United Arab Emirates.

A Tokyo-listed REIT sponsored by property giant Mitsui Fudosan has acquired a portfolio of three hotels in Japan for JPY 3.1 billion ($21.2 million). The J-REIT picked up the three-asset portfolio’s highest-valued property, the 128-room Smile Hotel Okinawa Naha, the 97-room Smile Hotel Matsuyama on Shikoku, and the 106-room Smile Hotel Nishi-Akashi west of Kobe.

Mitsubishi Estate was chosen by Yokohama City as the developer of the theme park in the city of Yokohama, that will rival the size of Tokyo Disneyland. It is scheduled to open around 2031, with an expected annual visitor count of 12 million people. 

Japan's akiya problem has evolved into an unexpected opportunity. The country's aging and diminishing population have led to a surge in abandoned houses, enticing foreign buyers drawn to Japanese culture and unable to afford similar properties in their home countries due to soaring prices and inflation.

Robust demand for lodging by visitors and rising prices create an ideal scenario for investment. In fact, foreign investors have spent US$2 billion on hotel deals in Japan so far in 2023, the most compared with any other sector in Asian commercial property, according to MSCI Real Assets.

Other travellers have also transitioned from being mere tourists to becoming proud holiday home owners. In this article, we’ll focus on the most popular ski resort locations - namely Niseko, Hakuba and Myoko, where many foreigners have been purchasing holiday homes in recent years.

In this article, Alex Lipson draws from the experience of a Japanese individual investor to explain the paradoxical attraction of low-yielding investment properties.