Low rates attract investors to japan property market

BOJ's low-interest rate policy boosts real estate appeal, particularly in Osaka.

Japan has become a hot spot for property investors, driven by its favourable exchange rates and low interest rate. With a current rate of just 0.1%, the BOJ shows no immediate plans to raise rates, making Japanese real estate increasingly attractive.

"The interest rate remains very low, and the BOJ doesn't really have plans to increase the interest rates any time soon, possibly just by a little bit in the coming July meeting," said Samantha Foo, Senior Manager for Sales & Marketing, International Residential Sales at Savills Singapore. This stable and low-interest environment has made Japan a prime target for global investors, including those from Singapore.

One of the key areas seeing heightened interest is Osaka. "We see a lot of interest now in Osaka, particularly because of the integrated resort that was approved last year, and that will be constructed by 2029," Foo noted. This development is expected to significantly boost the local economy and employment, attracting workers from other parts of Japan to Osaka. As a result, the rental market in Osaka is projected to strengthen.

In addition to low-interest rates, Japan's favourable tax policies make it more attractive compared to traditional markets like the UK and Australia. "The answer is simple. The straight foreign answer is tax and interest rates, because tax in Japan remains very low for any investors, there's no difference in taxes for investors locally or from overseas, so you don't pay a difference," explained Foo.  

She pointed out that the additional stamp duties in the UK and Australia increase the cost of purchasing property, making Japan a more cost-effective option. Furthermore, Japan's low-interest rates significantly reduce borrowing costs compared to other global markets.

Despite these favorable conditions, Foo mentioned that Japan's property market is characterized by slow and steady growth. "Japan remains to be quite a slow-growing market in terms of property. You don't have to don't expect to see great movements in capital appreciation," she said. 

However, for investors seeking stable growth, Japan offers a reliable option with good rental yields, especially when the right locations and property types are chosen. "It also provides very good rental yields, especially when you are able to pick up the right locations and the right property types," Foo added.