Why Regional Real Estate Investment in Japan Is Gaining Attention

2025.09.15

As property prices continue to soar in Tokyo and other major cities, and rental yields decline, more investors are looking to regional Japan for profitable real estate opportunities. Areas like Hokkaido offer high potential for returns with lower initial investment requirements, making them increasingly attractive to both domestic and international investors.

5 Key Benefits of Investing in Regional Real Estate

1. Lower Entry Costs

Rural property prices are significantly more affordable than those in major cities. In some cases, you can purchase a similar-sized property in the countryside for just one-third the price of an urban unit. This makes it easier for new investors to enter the market with less capital and reduced financial risk.

2. Higher Yields

Because of the lower purchase price, the return on investment (ROI) in regional areas tends to be higher. For instance, Hokkaido’s average yield for rental buildings is around 5%, compared to only 3.8% in the Tokyo metropolitan area. In some cases, rental yields exceeding 10% are possible through whole-building or cottage-style rentals.

3. Less Competition

In urban areas, investor competition is fierce, often resulting in bidding wars. In contrast, regional real estate markets tend to have fewer investors, allowing for better negotiation on pricing and contract terms. This gives investors more flexibility and opportunity to secure favorable deals.

4. Lower Property Taxes

Due to lower land values, property taxes in regional areas are often more affordable. Some local governments also offer tax incentives to attract real estate investment, improving the overall profitability of owning property.

5. Strong Relationships with Local Management Companies

Local property managers are often more familiar with the area’s rental market and tenant expectations. They offer flexible, personalized services and can respond quickly to tenant issues. This local knowledge makes management smoother and more reliable, especially for overseas investors.

How to Choose the Right Area for Investment

To minimize risk and ensure long-term success, choosing the right region is critical. Here are some key criteria:

1. Areas with Stable or Growing Populations

Regions with a stable or increasing population—especially younger demographics—tend to have consistent rental demand and lower vacancy risk.

2. Good Transportation Access

Proximity to train stations and convenient access to major cities or tourist destinations increase both rental appeal and property value. Future infrastructure projects, like new stations or road expansions, can further enhance investment potential.

3. Consistent Rental Demand

Look for areas with multiple sources of rental demand, such as:

・Major employers or factories
・Universities
・Tourism and resort destinations
・Hospitals or medical centers
・Shopping and entertainment areas

Avoid relying on a single demand source; diversified demand leads to greater investment stability.

4. Future Urban Development Plans

Urban redevelopment, new commercial or residential projects, and infrastructure expansion signal potential for long-term capital appreciation. However, in some areas like Kutchan (Hokkaido), regulations may limit future development, so local policies must be reviewed carefully.

5. Low Natural Disaster Risk

Before investing, confirm the area’s risk of earthquakes, floods, or landslides via official hazard maps. Properties in low-risk zones and those with strong earthquake resistance are preferable.

6. Work with a Trusted Local Real Estate Partner

Local agents understand the market better than national platforms. They provide insights into neighborhood trends, regulations, and maintenance support—making them essential partners for remote investors.

Recommended Investment Areas in Hokkaido

Kutchan (Niseko Area)

Kutchan is home to the Hirafu ski resort and is expected to see rising property values with the 2030 Shinkansen extension. With many luxury hotels and international guests, it’s an ideal location for short-term and monthly rentals.

Furano (Kitanomine Area)

Furano has seen land prices rise faster than Hakuba. It offers four-season appeal: skiing in winter and lavender tourism in summer. It’s close to town, with easy access to restaurants and shopping. International hotel brands are actively investing in the area.

Biei Town

Famous for its rolling hills and scenic landscapes, Biei lies between Asahikawa and Furano. While traditionally a summer destination, winter tourism is also growing. With increasing tourist traffic and a shortage of local accommodations, Biei’s rental market is gaining traction.

Risks of Regional Property Investment

While regional properties offer strong advantages, they also come with unique risks:

・Lower population may make it harder to secure tenants.
・Properties are less liquid and may take longer to sell.
・Vacancy rates can be high if demand isn’t carefully assessed.

Conclusion: Regional Investment = High Return with Smart Planning

Regional real estate in Japan offers high returns and promising opportunities—but success depends on choosing the right area and managing the property effectively. Focus on growth potential, accessibility, and local partnerships.

Investing in Furano or Niseko? Trust JANKEN.

JANKEN is your trusted partner for real estate investment in Hokkaido. We provide one-stop support—from property selection and legal guidance to rental management and renovation. Whether you’re targeting vacation rentals or long-term tenants, we help you unlock the full potential of regional investment.

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