With Japan imposing higher visa fees for tourists from July while moving away from an ultra-loose monetary policy, foreign investors must prepare themselves for both direct and indirect impacts on their real estate assets, according to agents and analysts.
There is a dearth of data on the total number of homes bought by non-residents in Japan, but agents said the two main reasons for purchasing were to either use them as a primary base while they explored the country’s tourist destinations, or as an investment to be rented out on short- and long-term leases.
For now, rising interest rates in Japan could have a bigger impact on investors, as it applies to individuals in the residential property sector as well as institutional investors in commercial real estate.
The Bank of Japan (BOJ) raised interest rates to 1 per cent on June 16, with analysts forecasting that a next round of increases may be in the offing in October due to inflation pressures.
Kohei Kawai, a research senior director at Colliers International Japan, said that BOJ’s effort to normalise its monetary policy by raising interest rates had narrowed the advantage of a wide yield gap – the spread between property yields and borrowing costs.
The tightening monetary policy also comes amid the government’s closer scrutiny of foreign investment in property.