Opportunities and challenges in Osaka’s residential market revealed

Demand is expected to be robust, but labour shortages will continue to trouble developers.

Overall, the Osaka residential market is in a positive state. According to a Savills report, strong demand has supported sound and sustained rental growth, while prices of for-sale condos continue to reach new highs.

“Osaka City has sound demographic fundamentals, with strong domestic net migration. Moreover, given the opportunities presented by various major redevelopment projects in Osaka, more foreign nationals will likely choose to migrate to Osaka, and comprise a growing source of residential demand moving forward.”

Here’s more from Savills:

At the same time, elevated construction costs and labour shortages will continue to trouble developers, limiting the supply of residential units, and putting upward pressure on prices. As such, potential buyers will continue to be priced out of the for-sale condo market, leading to a further expansion in demand in the rental market.

Moreover, while recent wage growth may not sufficiently keep up with for-sale residential unit prices, this may also underpin further rental growth, boosting the prospects of rental residential market moving forward.

Meanwhile, record inbound tourism demand has been a major driver of growth in the post pandemic, and Osaka will be in the spotlight from 2025, with the Expo 2025 and subsequent Integrated Resort development likely to attract a greater economic windfall for the wider region.

With the upcoming hotel supply set to drop significantly, especially at the budget end, more travellers may turn to minpaku when finding affordable places to stay in Osaka, which may further bolster demand for residential units to be used as minpaku, and further stimulate demand for residential units.