Have you noticed that lately everyone is visiting Japan? Whenever you're scrolling through social media, it's all sakura shots and trendy food snaps. It's true. There's been a real Japan fever going on.

But this "Japan fever" isn't just driven by vacations anymore. It's being fuelled by macro drivers like FX movements, tourism rebound, and increasing global investor interest in Japanese real estate. In fact, real estate purchases by foreign investors are at an all time high right now.

It's pretty clear that this is more than just a travel trend. Perhaps the start of something bigger?

So why is Japan suddenly trending now, and not just for travel, but for property?

In general, Japanese properties are more affordable when you compare them to what we're used to paying in Singapore. In many cities, you can still find well-located apartments at prices that seem almost unreal to us, especially when we've been seeing million-dollar HDB headlines every other week.

With affordability looking attractive overseas, Singaporeans who are considering a second (or even third) property naturally start comparing options. After all, owning more than one home here means paying Additional Buyer's Stamp Duty (ABSD).

But beyond that, the real reason Japan is suddenly trending now comes down to...

Timing.

The Japanese yen has been weak for a while, and the Singdollar even reached a new high: about $1 to 120 yen. This gives Singaporeans more purchasing power, making Japan properties even more affordable for us. Not to mention the market has shifted towards a low interest rates policy, so borrowing costs are low.

Then there's tourism.

With Japan's tourism boom showing no signs of slowing, short-stay demand has been rising steadily too. International arrivals even crossed 20 million visitors in just the first half of the year.

This is why investors are particularly drawn to rental-friendly locations with strong tourism flows. And even though iconic districts in Tokyo like Ginza, Roppongi, Shibuya and Shinjuku will always draw interest, Singaporean buyers tend to prefer places like Osaka where the rental yields are higher (5% compared to Tokyo's 3%). Furthermore, property prices in Osaka are roughly 30% lower than Tokyo and there are fewer restrictions on short-term rental operations.

As a matter of fact, there aren't many restrictions on foreign buyers to begin with.

Foreigners can own land and buildings with the same rights as Japanese citizens. No special conditions, no additional restrictions, and no leasehold constraints. There is also no major extra "foreign buyer tax" like ABSD in Singapore. That makes the whole process significantly more straightforward, especially compared to other international markets.

As exciting as it sounds, it's also important to be clear about the drawbacks of investing in Japanese properties.

1. Japanese buildings depreciate quickly.

Unlike Singapore, where older condos can still hold strong resale demand, Japan homes depreciate very fast. Many properties lose most of their structural value within a few decades, and in some cases, owners may even have to pay for demolition before selling the land.

A big part of this comes down to their culture. New homes are prized, and being the first owner is often seen as a mark of success. Whereas older properties are seen as less appealing, especially if they are associated with death or bad luck, also known as 'jikobukken'. We also need to factor in wear and tear, earthquake exposure, and evolving safety standards. Even earthquake-resistant designs don't fully protect older buildings from becoming financial burdens over time.

2. Demographics are a real long-term concern.

Japan's ageing population and declining birth rate have created a long-term issue for housing demand. Yes, Singapore faces a similar problem, but the difference is: there are already over nine million vacant homes or 'akiya' across Japan. To put things into perspective, the entire Singapore population can each have one house and there'd still be three million empty homes left.

Even a major city like Osaka is already feeling the pressure. For investors, this means you need to be especially selective. The wrong location could leave you with a property that's hard to rent out and even harder to sell.

3. Costs can add up quickly.

Beyond the purchase price, taxes can amount to 6 - 7%, realtor fees hover around 3%, and consumption tax may apply. On top of that, you'll need to budget for permits, inspections and earthquake insurance, which isn't exactly optional in a country that experiences regular seismic activity.

4. Financing can be challenging for foreigners.

Despite the low mortgage rates, actually getting approved as a foreigner is not straightforward. Banks tend to favour borrowers with strong local ties and you'll need proof of stable income, clean tax records, and in some cases, even a guarantor. For Singaporeans with no established financial footprint in Japan, getting a loan can be a long and frustrating process.

Did you know that in Japan you can buy properties specifically for short stays like Airbnb? Some buildings are zoned and approved entirely for short-stay use under the Minpaku Law (or Private Lodging Business Act), which legalised short-stay operations nationwide from 2018 onwards. Basically, they were built, managed and operated with tourist rentals in mind.

On paper, they can look extremely attractive. Tourist demand is strong, occupancy is high during peak seasons, and nightly rates can be far more lucrative than long-term rental income. That being said, it's important to note that short-stay rules in Japan are strict.

For one, minpaku properties are capped at 180 rental days a year, and local governments can impose additional restrictions. For example, certain Tokyo wards restrict rentals to specific days or seasons, and certain areas in Kyoto may limit rentals to off-peak tourist seasons. Not to mention condominium management boards may have their own rules too.

On the flip side, "regular" residential units, as in the kind you typically rent out to locals, offer more predictable occupancy. Plus, you don't need to worry about seasonal dips, cleaning turnover, guest complaints, or neighbourhood zoning. Of course, the yields are usually lower than what a successful minpaku unit can achieve. But then again, it would be difficult to predict how much success a minpaku investment will actually deliver.

Ultimately, it depends on your goal and risk tolerance. If you're chasing high yield and don't mind dealing with operational demands, you might want to take a chance with a minpaku unit. But if you prefer something stable and hands-off, especially as an overseas investor, long-term rental units tend to be the safer option.

1. Know what you're actually buying.
   Japan has all sorts of property types, and not all of them make sense for foreign buyers. It would make more sense to stick to newer city units because older homes and akiya can come with major renovation costs. Make sure you understand the title, lease, age and upkeep before getting excited about the price.
2. Learn about rental rules
   Yes, tourism is booming, but Japan's short-stay rules are strict. Osaka is generally more flexible than Tokyo, but it still depends on the building and zoning. If your whole plan is rental income, double-check the fine print before you buy.
3. Consider long-term costs
   A cheap unit doesn't mean it's cheap to maintain. Between property taxes, management fees, sinking funds, insurance and agent fees, your yearly costs can stack up fast. If the yen strengthens later, your renovation or loan costs might also go up. Always calculate the full cost of holding the property, not just buying it.
4. Choose the right location
   Two stations apart can act like two entirely different markets. Look at population trends, rental demands, tourist flows, train lines, nearby schools or business hubs, and whether the building meets newer earthquake standards.
5. Visit the location and/or work with agents
   Many foreigners buy through agents, but visiting in person might give you an advantage. Photos don't always appear as they are and you can't tell noise levels from a picture. If you can afford the trip, it's worth seeing the unit for yourself. If not, work with an agent who is experienced with foreign buyers who can give you full transparency.
6. Be clear and realistic about your goals
   Japan is great for diversification. It's a good option if you want something stable, affordable and different from what we see here in Singapore, but you can't just expect fast and significant gains. This is why we always encourage our audience to learn about the Property Wealth System (PWS) framework. So you can compare different markets, be it Japan or Singapore, and figure out which one actually supports your long-term plans.
7. Expect surprises along the way.
   Even the best listings won't show you everything. You may not like your new neighbours or you might not get enough rental demand outside peak seasons. None of these are deal-breakers, but it's good to be prepared.

If you're feeling tempted to hop on the trend, I don't blame you. But don't just buy a Japan property simply because everyone else is doing it. Instead, you should study the market, know the risks, and set a clear goal.

Yes, when you compare the low entry prices, rental demand and borrowing costs to what we're used to back home, it's hard to resist. But, the challenges that come with navigating a foreign market are just as real. Besides, Japan is not the only overseas choice out there.

Malaysia (especially JB and KL), for instance, appeal to those looking for more affordable homes that are closer to Singapore. Cities like Manchester and Cambridge in the UK appeal to those looking for a steady rental income and capital appreciation. New Zealand and Australia have tax advantages and strong rental demand, especially in urban areas.

Ultimately, what matters most is having a strategy, not just a destination. So if you are interested in learning more about overseas investments, do consider attending our upcoming Property Wealth System (PWS) Seminar. Here's a short clip to give you a preview:

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