[Super Rich] Record Low Yen and Ultra-Low Interest Rates... 'Big Spenders' Shopping for High-End Homes in Japan

Overseas Wealthy Class, Tokyo Real Estate Investment Boom
Yen Weakness and Ultra-Low Interest Rates Draw Attention as Alternative Investment Destination to China

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Global billionaires have started shopping for luxury homes in Japan. Due to the weak yen and ultra-low interest rate policies, funds from overseas asset holders are flowing into the Japanese real estate market.

According to Bloomberg on the 10th (local time), the penthouse of Tokyo Azabudai Hills, Japan's tallest building, was recently sold for 20 billion yen (approximately 184 billion KRW). This is the highest price ever recorded for an apartment sale in Japan.

The penthouse of "The Kita," designed by Kengo Kuma, a master of modern architecture and a professor at the University of Tokyo, was sold last week for 50 million USD (approximately 65 billion KRW). In February this year, Mitsui Fudosan, Japan's largest real estate developer, sold 1,002 three-bedroom apartments at Mita Garden Hills in Tokyo for 590 million yen (approximately 5.5 billion KRW) each, doubling the price of newly built apartments in central Tokyo in March compared to a year ago (100%). Tetsuya Kaneko, Head of Research at global real estate services firm Savills, analyzed, "This market currently has a severe shortage of supply, so (relatively) strong demand exists," adding, "(The) influx of inbound visitors and the full reopening of borders are also driving demand expansion."

The main demand for high-priced homes comes from Japanese asset holders in their 40s and 50s and wealthy foreigners. Especially due to the weak yen, foreigners can buy Japanese real estate at bargain prices, and more and more foreigners are joining the Japanese real estate market. Currently, the yen is trading at around 140 yen per dollar, down more than 20% compared to early January 2022 (around 115 yen). Notably, unlike Singapore and others, Japan has almost no restrictions on foreign real estate acquisition.

Joy Yang, Director at Post Lintel Investment Management, a Japanese real estate company, explained, "High-net-worth individuals from Hong Kong, Singapore, and Taiwan are seeking safe havens amid rising geopolitical tensions surrounding China." Transactions of luxury residential real estate by this company, which mainly serves foreign clients, have increased by 40% over the past two years. Joe Ward, CEO of Japan Real Estate Central KK, also analyzed, "The yen has become cheaper and remains so," adding, "The political conditions in China and Hong Kong are causing many people to move their money elsewhere."