High-end Realty Specialist

The Future of Japan’s Real Estate Market Through the Lens of Foreign Resident Policy, Interest Rates, and Population Decline

“Won’t land prices in Japan fall as the population declines?”

Many people may assume so. Yet looking at the current real estate market, population decline does not necessarily translate directly into falling land prices.

According to Japan’s 2026 Official Land Price Survey, average residential and commercial land prices nationwide rose for the fifth consecutive year. In the Tokyo metropolitan area, residential land prices increased 5.1% year-on-year, while commercial land prices rose 9.8%. At the same time, Japan’s overall population continues to decline.

So why are land prices rising even as the population falls?

Population is only one of many factors that influence land values. GDP, income levels, interest rates, construction costs, corporate investment, tourism demand, exchange rates, and investment capital from both Japan and overseas all play a role.

For example, in regions where corporate investment is expanding, demand grows not only for factories and offices, but also for housing, restaurants, hotels, logistics facilities, and other services used by the people who work there. Semiconductor-related investment in Kumamoto Prefecture is a representative example.

Another important factor when considering the future of Japan’s property market is government policy toward foreign nationals.

At the end of 2025, the number of foreign residents in Japan reached a record 4,125,395. As foreign nationals work and live in Japan, they generate local demand for rental housing, shopping, dining, transportation, and other everyday services. International tourists also influence the real estate market through demand for hotels and commercial facilities, while overseas investors affect the market through investments in condominiums, hotels, and other properties.

At the same time, the Takaichi administration has emphasized the goal of building an “orderly society of coexistence with foreign nationals,” while pursuing both the acceptance of necessary foreign human resources and the proper management of systems and rules. Rules governing land acquisitions by foreign nationals are also under review, raising the possibility that future policy may simultaneously support housing demand from foreign residents while tightening oversight of property acquisitions by overseas investors.

Interest rates are another major factor. Rising rates increase the burden of mortgages and real estate financing, while higher construction costs, a weaker yen, and inbound tourism demand can push property prices higher in certain markets.

Taken together, these trends suggest that Japan’s future land market cannot be explained simply in terms of “rising or falling prices,” or even a straightforward two-way divide between winners and losers.

Instead, the market may become increasingly multipolarized, with different regions following very different trajectories.

Central Tokyo, the urban cores of Osaka and Fukuoka, tourism destinations, regions attracting corporate investment in industries such as semiconductors and data centers, and highly convenient areas around major railway stations may continue to see strong demand.

At the same time, suburban and depopulated areas experiencing continued population outflows may face very different conditions.

The key question going forward, therefore, is not simply:

“Will land prices in Japan rise?”

It is:

“Will there still be people and businesses that need this land ten years from now?”

So how, specifically, could the Takaichi administration’s policies toward foreign nationals and rules governing land acquisition affect the real estate market? And when interest rates, GDP, population decline, the weak yen, inbound tourism, and overseas investment are considered together, which regions are likely to be chosen in the years ahead?

In the full blog article, we take a closer look at the latest data and policy developments to explain the factors that may shape land prices in Japan—and the characteristics of land that is likely to remain in demand well into the future.

▶ Read the full article: “How Will Land Prices in Japan Change Under the Current Administration?”

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