Foreigners Are Investing in Japan's Hotels at an Above-Average Pace
Key Points
- Foreign investors are heavily investing in Japanese hotels, driven by the yen's weakness, lower interest rates, and a rebound in tourism.
- Overseas buyers accounted for 47% of the 494.3 billion yen invested in hotel deals in the past year, the highest since 2014.
- Japan aims to reach record levels of inbound tourism, targeting 60 million foreign visitors annually by 2025, supporting hotel pricing power.
Summary
Foreign investors are significantly investing in Japanese hotels due to the weak yen, favorable interest rates, and a rebound in international tourism. Overseas buyers contributed to nearly half of the 494.3 billion yen invested in hotel deals over the past year, marking the highest involvement since 2014. With Japan targeting 60 million foreign visitors per year by 2025, the country is poised to sustain hotel pricing power despite a predicted low supply of new hotels.
Overseas buyers have made up nearly half of the recent investment in Japanese hotels because of the yen's relative weakness to other currencies, Japan's lower interest rates compared to rates in many other major countries, and a rebound in international tourism.
Bloomberg News reported the following striking statement:
"Overseas buyers were responsible for 47% of the 494.3 billion yen ($3.7 billion) invested in hotel deals that closed in the past 12 months — the highest proportion since 2014, according to data at the end of March from research firm MSCI Real Assets."
Savills recently issued a report predicting low upcoming hotel supply, which will help hotels sustain pricing power. On the demand side, the country is making a concerted effort to reach record levels of inbound tourism, perhaps with a 60 million a year target for 2025.
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