High-end Realty Specialist

Global Market Divergence: How Should Investors Discern the Path Forward?

At the halfway point of 2025, the global real estate market reveals a striking divergence. Despite challenges such as tariffs, high interest rates, and slowing growth, various investment opportunities are unfolding in different countries.

This report focuses on three major markets—the United States, China, and Japan—analyzing their current conditions and outlooks while discussing strategies to help investors decide “where” and “how” to act. To start, let us overview the current state of the real estate market.

US: Select Markets Offer Short-Term Investment Opportunities

Housing prices are beginning to fall in some U.S. Cities, creating “bottom-fishing” opportunities for buyers. Nevertheless, the US housing market remains weak as high mortgage rates suppress demand. By the end of July 2025, several cities began to show shifts in property prices:

• Oakland (California): -6.8%
• West Palm Beach (Florida): -4.9%
• Austin (Texas): -2.9%
• Houston (Texas): -2.8%

Oakland Bay Bridge View At California

According to Business Insider, home prices declined monthly in 39 of the 50 most populous U.S. metropolitan areas, the highest figure since 2012. For short-term investors, entry opportunities are evident, particularly in southern states and in metropolitan areas experiencing a deceleration in the technology sector.

However, with interest rates remaining elevated, overall fluidity is limited. Investors should proceed cautiously, focusing on select regions and sectors. Broad-based entry into the U.S. market is not advisable.

China: Decline Slowing, Vigilance Still Warranted

In China’s first-tier cities (Beijing, Shanghai, Guangzhou, and Shenzhen), the year-on-year decline in commercial residential property sales prices had started to moderate, suggesting a potential path towards stabilization. Meanwhile, in tier-two and tier-three cities, the pace of price decreases has also eased somewhat, though the overall downward trajectory remains intact, underscoring lingering weakness across broader segments of the market, leaving little room for investment in the short term. According to China’s National Bureau of Statistics, Sales Prices of Commercial Residential Buildings in August 2025 were as follows:

• Beijing: -3.5%
• Shanghai: +5.9%
• Guangzhou (Guangdong): -4.3%
• Shenzhen (Guangdong): -1.7%

Guangzhou City Street

In August, price declines slowed, representing an improvement over 2024’s sharp downturn. Nevertheless, 60 out of the 70 major cities continued to fall. While core areas in first-tier cities may be near a bottom, purchases should be for personal use rather than investment. Risks in tier-two and tier-three cities remain high, and further policies are needed before recovery. Overall, China’s housing market is shifting from an investment-driven to a residential-use focus, reducing its appeal for investors.

Japan Market: Steady Growth, A Premier Choice for Long-Term Investment

Compared with the U.S. and China, Japan’s market has shown consistent stability. Japan’s real estate market continues its steady growth, attracting foreign investment and holding property values at a high level. It represents a premier long-term investment for investors prioritizing steady and secure returns.
The specific growth figures of residential properties are set out below:

• Nationwide Average Land Price: +2.7% year-on-year (prices continue rising for the 4th consecutive year)
• Tokyo: +8% to +10%
• Osaka: +8% to +10%
• Nagoya: +3% to +5%
• Fukuoka: +9%

(Source: Ministry of Land, Infrastructure, Transport and Tourism, Japan)

In 2024, the supply of new condominiums in the Tokyo area fell by 17% year-on-year, reaching its lowest level since records began in 1973. The supply-demand imbalance remains, and with the yen still weak, the market continues to attract foreign capital. During the Covid-19,  real estate policies in mainland China pushed many high-net-worth individuals (HNWIs) to invest overseas, with Japan as the main beneficiary. So far,  there are no signs of this capital returning.

Tokyo Urban Skyline

In 2024, Japan’s total investment volume reaches JPY 5 trillion, and in the first half of 2025, foreign investment rose approximately 31% year-on-year, bringing total transaction volume to JPY 2.87 trillion. (Source: JLL and CBRE Japan data)

For long-term investors, senior housing, logistics facilities, and data centers offer strong growth potential and deserve careful consideration. Although entry costs remain high, steady growth and foreign investment makes Japan a premier option for long-term investment.

Impact of Federal Reserve Rate Cuts on the Yen’s Outlook

On September 17, 2025, the Federal Reserve cut the key U.S. interest rate by 0.25% to boost the economy.

Since March 2022, the Federal Reserve has raised interest rates to curb inflation and prevent the economy from overheating. After an additional 0.25% hike in July 2023, core inflation eased to more reasonable levels. As a result, the Federal Reserve paused further increases from mid-2023 and kept rates unchanged from July 31, 2024. To stimulate the economy and reduce unemployment, the Federal Reserve announced a 0.5% cut on September 18, 2024, marking the start of a rate-cut cycle. Following additional cuts in November and December, Chair Jerome Powell stated that the pace of reductions would slow, and could even pause, to preserve flexibility in monetary policy.

Federal Reserve System headquarters

The Federal Reserve’s recent rate cut is aimed at improving employment conditions and boosting economic activity, thereby supporting overall economic growth. While rate cuts can help stimulate the economy, cutting too much or too often may increase inflation pressures. This is because lower rates means putting more money into the market, and when the money supply grows too quickly, it can weaken the currency, forcing consumers to pay higher prices for goods, adding to inflation.

Some U.S. experts also noted that the Federal Reserve move may have been influenced by political pressure rather than economic factors, which could raise risks for stocks, bonds, and the dollar.

However, Chair Jerome Powell reaffirmed the Federal Reserve’s independence, stressing that data-driven decision-making remains central to its culture and that no non-economic factors are ever taken into account. 

At the press conference, speaking about the housing market, Powell said that the cut might not have a major effect, since “Most analysts think it would take a bigger change in interest rates to impact the housing market.” For U.S. market investors, the performance of economic data in the next two months will be key to judge whether the Federal Reserve will cut rates again in October and December.

The Bank of Japan

In theory, a U.S. rate cut lowering dollar interest rates will reduce the attractiveness of dollar assets, prompt capital outflows, and weaken the dollar. At the same time, as the U.S.–Japan interest rate differential narrows, the appeal of carry trades declines, potentially prompting some capital to flow back into the Japan’s yen market. Since the yen is regarded as a safe-haven currency, investors often assume: When the Federal Reserve cuts rates, the dollar weakens and the yen strengthens.

Even if the U.S. cuts rates, the Bank of Japan should consider the domestic economic status, thus limiting the space of raising its rates.  This time, the Bank of Japan (BOJ) maintained its policy interest rate at 0.5% after its September 18–19, 2025, Policy Board meeting. This would maintain the U.S.-Japan rate gap, negatively impacting Japan’s exports and the yen. Even if markets expect the Federal Reserve to cut rates again in 2025, the key driver of the yen’s outlook depends on whether the Bank of Japan will raise policy rates to above 1%.

Our members-only blog offers a detailed analysis of the effects of U.S. rate cuts on the global market, along with insights into short- medium-, and long-term investment strategies for markets in the United States, China, and Japan.

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