Flash Note: A Study on the Possibility of Introducing Foreign-Resident Regulations on Tower Condominiums in Japan

Comparisons with Overseas Regulations and Analysis of Government Movements

Rising Concerns

Japan’s real estate market, especially in urban tower condominiums, has been drawing social attention due to soaring prices. In Tokyo’s 23 wards, for example, the average price of a new condominium exceeding ¥100 million has made it increasingly difficult for ordinary citizens to purchase homes—this is being recognized as a serious social issue. One of the major factors behind this price surge is pointed out to be property purchases by foreigners for investment purposes, sparking active domestic debate. In particular, the fact that Japan has almost no restrictions on real estate purchases by foreigners compared to other major global cities has fueled the discussion. In response to this situation, on May 28, 2025, the Ministry of Land, Infrastructure, Transport and Tourism announced that it would launch its first full-scale investigation to grasp the reality of investment purchases by foreigners in condominium price inflation. This groundbreaking attempt will analyze actual practices by using registry information and inferring foreign purchasers by their address entries. It becomes clear that Japan’s real estate market is being forced to adopt new policy responses amid the interplay between globalization and domestic housing issues.

Background and International Comparison

Until now, the Japanese government has adopted a policy of actively attracting foreign real estate investment, aiming for sustainable development in a declining-population society and strengthening international competitiveness in the real estate sector. In the “Real Estate Industry Vision 2030” issued by the Ministry of Land in the first year of the Reiwa era (2019), it is explicitly stated that “the real estate industry is expected to actively support creating an environment in which foreigners can live and work easily,” with measures to facilitate foreign real estate transactions and create a favorable investment environment. In Japan’s tax regime, property tax tends to be relatively low (around 1.4 % of assessed value as the standard rate), and the absence of restrictions on foreign purchasers has indeed attracted foreign investment under a “free market” environment. In Tokyo, not only commercial real estate but also residential properties such as condominiums in the central three wards (Shibuya, Minato, Chiyoda) have seen increasing purchases by wealthy foreigners, making them an influential buyer group by 2025. On the other hand, some view that the overheating risk, as seen in other cities, remains limited for now. However, if the trend continues, there is concern that Japan could eventually face similar problems.

In other major global cities, many examples exist of strict regulations on foreign ownership to curb real estate overheating. For example:

In Hong Kong, since 2012, a 15 % additional stamp duty has been imposed on foreigners (i.e., non–permanent residents) to suppress inflows of external capital. The rate was halved in 2022–2023 in response to market stagnation, but the regulation remains.

In Singapore, in April 2023, the Additional Buyer’s Stamp Duty (ABSD) rate for foreign buyers was doubled from 30 % to 60 %, effectively imposing harsh restrictions on speculative overseas purchases.

In London (UK), in 2021 a 2 % stamp duty surcharge was introduced for property purchases by non-residents, reinforcing measures against foreign capital inflow.

These international trends encourage reconsideration of Japan’s current unregulated posture.

Policy Debate and Possible Measures

This issue has also surfaced in domestic politics. On May 9, in the House of Representatives’ Committee on Land, Infrastructure, Transport and Tourism, Liberal Democratic Party member Koichi Tani remarked that “as a national policy, we should not leave this unattended, and should work on regulation or restraint of tower condominium purchases.” Further, in the 2025 LDP leadership election, “real estate purchase regulation” (including foreign buyers) became a hot topic in policy debates as reported by the Yomiuri Shimbun. This reflects growing public concern over how rising real estate prices affect everyday life.

As for concrete countermeasures, new institutional initiatives are already being discussed. For instance, Kobe City is considering introducing a “vacancy tax” on tower condominiums. This tax would target properties purchased for investment but not occupied, in order to deter speculative buying, address concerns about vacant units or future derelict buildings, and encourage effective housing supply. Such a vacancy tax is also expected to have an indirect effect in restraining investment purchases by foreigners.

However, there are voices cautioning against introducing foreign-resident regulations. As noted above, the Ministry of Land’s earlier “Real Estate Industry Vision 2030” viewed inbound and outbound capital flows as important to bringing new demand and vitalizing the real estate market. In a context of declining population, capturing such demand is still seen as essential. Excessive regulation might hinder the influx of foreign capital and dull the vitality of the real estate market.

Currently, the survey being undertaken by the Ministry is the first quantitative effort to ascertain the proportions and trends of foreign buyers—data that have been lacking to date—and it may form the foundation for future policy debate.

Outlook and Challenges

The possibility of introducing foreign-resident regulations on tower condominiums in Japan is now entering a turning point. Rising public dissatisfaction over housing scarcity and real estate price inflation, combined with international precedent, is prompting reflection on the “free market” approach. The outcomes of the LDP leadership race and the Ministry’s investigative results are likely to have major influence on future policymaking.

Nevertheless, the government and industry’s view of foreign investment as a growth driver remains strong, and the immediate adoption of stringent regulations like those in Hong Kong or Singapore appears to require careful deliberation under current conditions. In the near term, more incremental and diverse approaches may take precedence—such as strengthening guidelines for trouble prevention based on actual data, and considering vacancy taxes like that in Kobe. For example, heavier taxes on short-term resale or additional taxation on second homes may be explored to suppress speculative buying without undermining genuine housing demand or long-term investment.

In a Japan increasingly facing population decline, realizing a healthy real estate market and assuring people’s secure access to housing are urgent tasks. The balancing act between global financial capital mobility and domestic social needs will be key. The government, relevant ministries, and the real estate industry’s future responses will be closely watched.