- Extreme levels of previous success allowed Japan to resist change for very long, but the country no longer has room to maintain its provisionally comfortable but stagnated status quo.
- Japan has many successful and competitive companies, high quality human capital, and comparable productivity to other major developed countries, but its resources do not appear to have been effectively utilised.
- Robust wage growth is a positive sign of progress towards normalisation, while the Japanese stock market, backed by strong corporate profits demonstrate the conviction for normalisation in Japan.
- Japan has successfully attracted large amounts of FDI in recent years, particularly in cutting-edge, high growth industries such as semiconductors and data centres, and should continue to be a popular destination for foreign capital.
- Japan will remain among the most populous countries in the world, and Tokyo is projected to still have one of the largest metropolitan populations for the coming decades. Japan also has capacity for more immigration, which should ease the demographic decline for a while.
- Notable game changing developments include the Osaka Integrated Resort (IR), and subsequent IR developments should follow this success.
- Luxury residences/hotels/ryokan will keep attracting UHNWIs from neighbouring nations, bringing substantial wealth and capital to Japan. Together with IRs, the development of high-end products will transform Japan into a global luxury destination.
- Overall, Japan’s economy should fare well, which should support a stable real estate sector.
Bright prospects through normalisation following decades of stagnation
As recently as three decades ago, Japan was extremely successful, but its recent performance has become rather subdued. The declining population, and the abruptly weakened currency in recent years have raised some concerns regarding the prospects of the economy and real estate market. Nevertheless, looking ahead at the next ten years, Japan looks poised to normalise itself, and the economy and real estate market are likely to fare well in turn.
Savills Research & Consultancy