Welcome to my blog about investing in Japan.
Japan is a wonderful country full of opportunists. It is a rich country that is home to a number of the worlds largest companies in the world. It is also home to a lot of smaller companies that can be great investments.
Investing in Japan can be a daunting task if you are unfamiliar with the tradition and cultures of the country. Rituals plays a lot larger role on Japanese society then they do in most western countries. In the west you risk offending someone if you do something that is consider less then proper but you are unlikely to lose the deal. When you invest in Japan you risk losing the deal altogether if you do not adhere to tradition. If you do not show the other parties due respect. Most Japanese people try to be tolerant of foreigners who commit a cultural faux pas but it still very important to do all that is possible to learn about and observe Japanese cultural traditions if you are going to do business in Japan.
Do not get discouraged if you at first find it hard to understand the culture and what is expected of you. I am born in Japan and has expat parents. I have been raised in a western household in Japan and have spent most of my life here in Japan. I can still find it hard to observe all customs i am expected to observe. The most important thing is not to get everything 100% right. It is to make it clear that you are trying and doing your best to learn, understand and observe local customs.
Hiring a consultant that know the local customs can be a very good idea and allow you to learn what you need to know a lot faster then you otherwise would. Most books contain information that is old or incorrect. A good consultant can tell you which customs are really observed in the area you want to invest in. Never trust what you can read in books or online 100%. That includes what you can read on this website.
Investing in Japanese stock
Buying and selling stock in large Japanese companies is easy. There are a number of different stock brokers that allows you the opportunity to buy and sell stock in Japanese companies listed on the NIKKEI. The Japanese stock market. Buy stock on the NIKKEI work exactly the same as buying stocks on the NASDAQ or Dow Jones. The fees associated with buying and selling Japanese stock can be different than those you pay when you buy US stock.
You do not need any in depth knowledge about the Japanese culture to be able to invest in Japanese stock.
Examples of Japanese companies you can buy stock in Canon, Sony Corporation and Rakuten Inc.
Daytrading Japanese stock
There are a number of different US and UK brokers that offer CFD:s and other financial instruments based on Japanese stocks. This makes it easy to day trade and make leveraged trades on the Japanese stock market. Day trading in Japan can extend the number of hours you can trade each day since the Japanese market is open during other times then the US and European markets. Extending the number of hours you can trade each day can dramatically improve your profits but can also cause you large loses if you trade for longer periods than you are able to stay alert. Never keep trading if you are too tired to make good choices.
Investing in Japanese options
Investing in options is very easy. The options are traded on the open market and you do not need to know anything about Japan to be able to invest in them. You can login to your broker account to buy and sell options directly on your computer. If you are looking to invest in binary options based on Japanese stock then you can do that through most European and American binary options brokers. Most brokers offer options based on a number of different large Japanese companies.
Investing in Local Businesses in Japan
Japan offers a unique and promising environment for investors, including foreign investors, who are looking to put their money into local businesses. With a stable economy, a strong work ethic, and government support for entrepreneurship, investing in Japan’s small and medium-sized enterprises (SMEs) can be a lucrative long-term strategy. Whether through direct investment, partnerships, or venture capital, supporting local businesses in Japan can provide both financial returns and cultural enrichment.
Why Invest in Japanese Local Businesses?
- Japan has a well-established business culture and many large corporations, but in recent years, the importance of small and medium-sized enterprises (SMEs) – including and startups – has been gaining more recognition in the country, as data shows how they are key drivers of a lot of innovation and growth. This has made the Japanese government more interested in providing a better environment for SMEs to flourish.
- Many traditional businesses in Japan, including those in hospitality, manufacturing, and retail, are today looking for investors to help expand or modernize. The government also offers subsidies and tax incentives to encourage investment in small businesses, particularly in regional areas that need economic revitalization.
- Japan’s aging population presents both challenges and opportunities. Many small business owners are nearing retirement without successors, creating opportunities for investors to buy or partner with established businesses at competitive valuations. This is particularly common in traditional industries such as sake brewing, craftsmanship, and specialty food production.
Ways to Invest in Local Businesses in Japan
One of the most common ways for a foreigner to invest in local businesses in Japan is by purchasing shares in a local company or forming a joint venture with a Japanese partner. Investors can also participate in Japan’s venture capital scene, supporting innovative startups in fields like technology, artificial intelligence, and sustainable energy. Crowdfunding platforms such as Makuake and Campfire offer another entry point, allowing investors to support smaller projects with high growth potential.
Real estate-linked businesses, such as ryokans (traditional inns), guesthouses, and local tourism ventures, are another sector attracting foreign investors. As Japan’s tourism industry continues to recover post-pandemic, businesses in Kyoto, Osaka, and rural areas offer significant long-term investment potential.
Challenges and Considerations
Language
While Japan is a great place for investment, there are hurdles that investors need to be aware of. The language barrier can be a challenge for foreigners who do not speak Japanese well, and it can become especially difficult when it is time fro negotiations and contracts. Hiring a local professional advisor can be necessary. Additionally, Japan’s business culture places a strong emphasis on relationships and trust, meaning that building long-term connections is often more important than quick financial gains, and this can also be problem for foreigners who come in with poor Japanese language skills.
Regulations
Regulations around foreign investment vary depending on the industry. Some sectors, such as telecommunications and agriculture, have restrictions on foreign ownership. Consulting with a legal or financial expert in Japan before making any major investment is strongly recommended.
The Tourism Industry in Japan
Many foreign investors who consider investing in Japan are interested in the tourism sector. Tourism is a major industry in Japan and contributes a lot to the Japanese economy. In 2019, before the Covid19 pandemic put a hamper on travelling, the tourism sector directly contributed 11 trillion yen to the Japanese economy, which was roughly eqvialent of 100 billion U.S. dollars.
Among tourists, Japan consistently ranks high for elements such as safety, health and hygiene, cultural experiences, nature experiences, and hotel quality.
In 2019, 31.88 million foreign tourists visited Japan. After the end of the Covid19 travel restrictions, tourism began to rebound, and in 2024, a record-breaking 36.9 million foreign tourists visited the country. Of them, over 6.46 million were South Koreans, over 5.24 millions were Chinese, over 4.58 million were Taiwanese, and over 1.97 million were from Hong Kong. This shows how important tourism from nearby Asian countries is for the Japanese foreign tourism sector. The first non-Asian country on the Top-10 the list, the United States, only accounted for 1.96 million visitors, and all other countries on the Top-10 list (both Asian and non-Asian) each accounted for less than 800,000 tourists.
In Japanese statistics, a foreign tourist who spends more than one million yen (per person) in Japan is defined as a high-value traveller. Recent data show that they make up roughly 1% of all foreign travellers, but account for circa 11.5% of the total expenditure.
It is important to remember that the total Japanese tourist sector also includes a lot of Japanese tourists, and this should be taken into account if you are considering investing in the Japanese tourism industry – it is considerably larger than just the foreign tourism sector. Examples of destinations in Japan that are popular among both foreign visitors and Japanese tourists are the major cities, including Tokyo and Osaka, the 25+ World Heritage Sites, ski resorts such as Niseko, and the hotspring network.
The surge in tourism has caused officials in some parts of Japan to introduce protective meassures to prevent overtourism. One notable example is the new cap which means that no more than 4,000 people are permitted to climb Mount Fuji each day, and there is now also an entrace fee of 2,000 yen.
Investing in Real Estate in Japan: Opportunities and Challenges
Japan has become an increasingly attractive destination for real estate investment, offering a stable economy, low interest rates, and a growing demand for both residential and commercial properties. Whether you’re looking for rental income, property appreciation, or business opportunities, Japan’s real estate market provides diverse options for investors, from bustling city centers like Tokyo and Osaka to rural areas with lower property costs. However, understanding the market trends, legal requirements, and potential risks is crucial before making an investment.
Why Invest in Japanese Real Estate?
One of the biggest advantages of investing in Japanese real estate is affordability compared to other major markets. Despite Japan’s status as the world’s third-largest economy, property prices—especially outside Tokyo—are relatively low when compared to cities like New York, London, or Hong Kong. Additionally, Japan offers low mortgage interest rates, making it easier for investors to finance properties.
Japan’s strong rental market is another key factor. Urban areas such as Tokyo, Yokohama, Osaka, and Fukuoka have a high demand for rental housing, driven by a large working population and an increasing number of foreign residents. Short-term rental markets, especially in tourist-heavy areas like Kyoto and Hokkaido, also present opportunities for investors looking to operate Airbnb-style vacation rentals, though Japan has strict regulations for short-term stays.
For long-term investors, Japan’s stable political and economic environment makes it a safe place to hold real estate assets. Property rights are well-protected, and there are no restrictions on foreign ownership of land or buildings, making it easier for international investors to buy property without needing Japanese residency.
Types of Real Estate Investments in Japan
Investors can choose from a variety of real estate options depending on their goals. Residential properties, including apartments and houses, are popular for rental income, particularly in major cities. Commercial properties, such as office buildings and retail spaces, are another avenue, especially in business districts where demand remains high. For those looking at hospitality, hotels, ryokans (traditional inns), and guesthouses can generate income from Japan’s strong tourism industry.
Inbound Tourists and the Rise of Land Prices
In the 21st century, the boost in foreign tourism has had an impact on land prices in certain locations within Japan. In March 2016, the Ministry of Land, Infrastructure, Transport and Tourism announced that the national land price average had increased for the first time in eight years, and that this was partly due to a rapid increase in foreign visitors.
Examples of places where land prices have increased:
- Ginza, an upscale part of Tokyo. It is famous for its shopping district, which includes a number of internationally renowned department stores and boutiques.
- Shinsaibashi, an upscale shopping district in Osaka, the third-largest city in Japan.
- Kutchan Town, home to the world-renowned ski resport Niseko.
- Yufi City in the Oita Prefecture, home to the Yufuin hot springs and bath facilities (onsen).
Real Estate Investment Trusts (REITs)
For a more hands-off approach, your can put your money into REITs (Real Estate Investment Trusts). This way, you can invest in Japanese real estate without directly owning and managing properties, and without shouldering the legal liabilities that come with direct ownership of property. REITs can be used to gain exposure to a variety of real estate – office buildings, shopping centers, apartment complexes, tourism real estate, and more.
It has been possible to establish REITs in Japan since December 2001, and Japanese law also permits the use of special purpose companies to securitize particular properties.
Buying and selling shares in Japanese REITs is not difficult, because many of them are exchange-traded, and you can for instance find many REITs at the Tokyo Stock Exchange, where they are known as J-REITs. Publicly listed REITs are strictly regulated under the Law Concerning Investment Trusts and Investment Companies (LITIC).
Challenges and Risks of Investing in Japanese Real Estate
Depreciation
While Japan’s real estate market has many benefits, there are also challenges to consider. One of the biggest concerns is depreciation—unlike in many Western countries where property values (in general) have apprecierad over time, Japanese residential properties show a history of losing value, especially in rural areas. Land value generally holds better than buildings, and investors should be mindful of this when buying in Japan.
Demographics
Japan’s aging population and rural depopulation pose risks for investors in real estate. While major cities continue to thrive, smaller towns are experiencing declining populations, leading to vacant properties that are difficult to sell or rent out. Investors should carefully research location trends to avoid areas with decreasing demand.
According to data from the United Nations, Japan´s population peaked at 128.5 million in 2010. Since then, the population has been decreasing, and as of January 2020, it was 126.4 million. Between 2018 and 2022, the fertility rate among Japanese women dropped from 1.4 children per woman to 1.2 children per woman. In 2023, the birthrate was 5.8 births per thousand people.
Data published in 2018 showed that despite the shrinking population, eight of Japan´s prefectures had an increase in population:
Okinawa (2.9%), Tokyo (2.7%), Aichi (1.0%), Saitama (1.0%),
Kanagawa (0.9%), Fukuoka (0.6%), Shiga (0.2%), and Chiba (0.1%).
Language and regulation
Another challenge is the language barrier and legal complexities. Real estate transactions, rental agreements, and property management services are often conducted in Japanese. Foreign investors may need to work with local real estate agents, legal professionals, property management companies, and professional translators to navigate the process smoothly.
This article was last updated on: March 14, 2025