Japan

What You Need to Know About the Property Market in Osaka

If you’ve been following our work, then you know that the Japanese property market is looking bright. Our previous articles have covered the reasons why we’re optimistic, which is why this article will focus on one particular city that’s caught our eye: Osaka.

The port city of Osaka stands out as a prime location for property investment, and since it pays to be informed, have a look at the following must-know details about the area. If you’re interested in growing your assets, you might want to take some notes.

The Exceptional Growth of Osaka Real Estate

Let’s get the most important point out of the way first: the Osaka real estate market is experiencing growth at a stellar rate. Commercial real estate investment grew to the tune of over 35% from 2016 to 2017, and is projected to continue to grow for at least the next two years.

There are a handful of contributing factors that continue to drive this growth. First are the numerous government developments in the region, such as the Umekita project centered around Osaka’s rail station, and the 390 hectare, man-made island called Yumeshima, which is situated near the port of Osaka and is planned to host a fully integrated resort once finished.

Second is the shift of investors’ focus from the established and saturated Tokyo market to Osaka’s up-and-coming regional market. In 2017, Osaka’s share of investments coming into Japan increased to 16%, while Tokyo’s remained steady. Credit for this must go to Osaka’s land becoming more and more profitable. According to the 2017 ,annual government land survey, land prices in Osaka increased by 4.7%, whereas Tokyo only rose by 3.7%. In fact, the average commercial land prices in Osaka are the second highest in Japan, only falling behind (you guessed it) the country’s capital city.

picture1.jpgImage from Inside Osaka

Finally, there is a huge demand for land within Osaka itself. Due to its limited office supply and land area, Osaka is the 2nd most densely populated region in Japan (again only being beaten by Tokyo). Despite this, Osaka contains over 200 thousand foreign residents beating out over 40 other prefectures in terms of immigrant population.

All of these factors have manifested in the costs city’s cost of living. Osaka ranks 49th out of 447 cities in the world in terms of cost of living, with the average cost to rent an apartment ranging from around 51,846 to 131,250 yen (460 – 1164 USD) depending on location with respect to the city center and the number of bedrooms. Likewise, the cost to own an apartment unit ranges from 400,000 to 500,000 yen per square meter (3546 – 4432 USD).

Neighborhoods on the Rise

While Osaka as a whole continues to reach greater heights, here are some of the notable neighborhoods that are getting there faster than the rest.

Umekita

As previously mentioned, the Japanese government’s Umekita project is currently underway. It aims to make the area a “collective center of knowledge, uniting global technology and awareness to create new value.”

Located in the heart of Osaka, this area is expected to become a hub for tourists and locals alike, featuring convention centers, hotels, offices, and more. Being centered around Osaka’s rail station, Umekita is particularly attractive to local and foreign entrepreneurs given its designation as a special zone by the government which entails a plethora of support and potential tax incentives to businesses that meet certain conditions.

It is also planned to be a green area, with approximately 8 hectares allotted for urban greenery. The Japanese government’s plans to combine nature with innovation is expected to turn the Umekita area into a playground for researchers and corporations both local and foreign.

picture2.jpgImage from Cafe Company

Nakanoshima

Currently being redeveloped, Nakanoshima is projected to become a meeting point for art, culture, science, and technology. An island measuring 3 kilometers east to west with approximately 50 hectares worth of area, Nakanoshima is the heart of politics, business, and culture within Osaka.

Once its redevelopment is completed, the island hopes to house a museum-complex zone as well as a global communication zone. These futuristic zones perfectly complement the numerous convention and cultural facilities already present in Nakanoshima, making it a sector that tourists and foreign businessmen will adore.

Entering the Osaka Real Estate Market

We’re sure that obtaining land in Osaka is a very tempting prospect. Luckily for smaller investors, it’s not that difficult to enter –you don’t need the weight of a whole investment firm to join in on the action.

Japan has no restrictions regarding real estate ownership, be it land or a building. This means that any foreigner (regardless of their visa status) has the right to purchase property in Japan, so the only real hurdles you’ll face when trying to buy land are financial ones. These purchases however do not entitle foreigners to special rights or visas, so if you’re planning to live in Osaka you’ll still have to settle those papers.

In the event that you do manage to buy real estate in Osaka, you will have to submit a notification form containing your full name and the cost of your acquisition to the Minister of Finance through the Bank of Japan within 20 days of your purchase.

This report isn’t necessary however if:

  • You acquired real estate with the intent of you or your relatives living in it
  • You run a non-profit in Japan and you acquired real estate for business activities
  • You plan to use the real estate for your own business’ office
  • You purchased the real estate from another non-resident.

The notification form is formally known as Report Format Style 22, and is one of the requirements presented in the Foreign Exchange and Foreign Trade Control Act, Article 55-3

Conclusion

Osaka is a shining example of why investors are confident in Japan’s real estate market. Short-term investors have the possibility of liquidating with a significant profit margin, and longer-term investors with the sense to buy into quality office and residential structures are likely to collect dividends from rent for quite a while.

Any venture is risky, but if you’re looking to diversify your personal finances and earn from the world’s rising stars, bet on Osaka.

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