Kyushu is the third largest island of the main four islands located in the southwest of Japan (Figure 1). It is called Kyushu (Nine Provinces) since it was once divided into nine countries, but now it comprises eight prefectures (Fukuoka, Kumamoto, Oita, Kagoshima, Miyazaki, Nagasaki, Saga and Okinawa Prefectures).
[Figure 1]
On the Kyushu Island, there are two locations you may want to focus on in terms of property investment, which are Fukuoka and Kumamoto. Let us look at them one by one, together with the reason why.
Fukuoka
Fukuoka City is the capital of Fukuoka Prefecture and the most populous city in Kyushu with approximately 1.65 million people, as the administrative, economic, and transportation center of the region. It is the fifth most populous city in Japan excluding the 23 wards of Tokyo, after Yokohama, Osaka, Nagoya, and Sapporo.
As the "Gateway to Asia”, Fukuoka City is one of the most accessible transportation hubs in Japan, with Fukuoka Airport, which boasts one of the largest number of departures and arrivals in Japan; Hakata Port, which has regular service to Busan, Korea and the largest number of cruise ship calls in Japan; and Hakata Station, which is the land gateway to Kyushu. (Figure 2)
[Figure 2] Fukuoka City and its Major Areas and Facilities
Fukuoka City is among the fastest-growing cities in Japan, and its economic scale is equivalent to a national capital or a Tier-1 city in a small to medium-sized country.
In the 2020 census, Fukuoka City had not only the largest population growth, but also the highest population growth rate among all ordinance-designated cities (*). The population growth rate was 4.9%, followed by Saitama City (4.8%), Kawasaki City (4.3%), Osaka City (2.4%), and Nagoya City (1.6%).
As of 2023, the population is still growing and is projected to continue growing until 2035 (Figure 3).
(*) An ordinance-designated city means a Japanese city that has a population greater than 500,000 and has been designated as such by order of the Cabinet of Japan under Article 252, Section 19, of the Local Autonomy Law. There are 20 ordinance-designated cities in Japan.
[Figure 3] Population Projection in Major Cities
Fukuoka City is also characterized by a large share of young people in their teens and twenties in its population among government-designated cities. According to the same census, Fukuoka City's youth population aged 15-29 was 17.6% of the total population, the highest among all major cities in Japan, including Tokyo 23 wards (16.9%). The ratio of female population to the youth population was 9.2%, also the highest rate among large cities in Japan.
Fukuoka City is home to many company offices, not only branch offices of listed companies but also head offices. The city government provides substantial support to encourage companies to locate in the city. More than 500 companies have established their offices in Fukuoka City in the 10 years through 2021. Against the backdrop of the young talent pool and comfortable living environment, some major companies have decided to relocate their offices to Fukuoka in recent years. Notable relocations include the merchandise marketing company Japanet Holdings relocating its head office functions and the fintech startup Money Forward opening a development base in Fukuoka. Support for startups and venture companies is also very generous, making Fukuoka City a place where many startups are located.
In addition, large-scale redevelopment projects such as "Tenjin Big Bang" and "Hakata Connected" are underway, and the supply of office space is increasing. The attractiveness of Fukuoka as a place to work is improving.
[Figure 4] Tenjin Big Bang
Furthermore, since land prices are lower, housing rents in Fukuoka City tend to be lower than in Tokyo (about 60% of those in Tokyo), making Fukuoka City an attractive place to live at a low cost.
This is reflected in the results of some surveys, which reveal that Fukuoka is one of the most popular government ordinance-designated cities to live in. Fukuoka City ranked 1st in Best Livable Places (Municipalities), 1st in Best Family-Friendly Government Ordinance-Designated Cities and 5th in Best Comfortable Places to Live in (Municipalities).
Higher Demand for Condominiums and High Price Appreciation
One of the reasons why real estate investment is unlikely to fail in Fukuoka City is its relatively high rate of price appreciation. According to the “Land Market Value Publication, 2024” released by MILT (Ministry of Land, Infrastructure, Transport and Tourism), both Fukuoka Prefecture and Fukuoka City are Fukuoka City ranked 1st nationwide in terms of commercial property appreciation rate for the 4th consecutive year (+12.6% y-o-y), and Fukuoka Prefecture ranked 2nd nationwide and Fukuoka City ranked 1st among the prefectural capitals in terms of residential property appreciation rate (+9.6% y-o-y).
According to the "Comparative Statistical Yearbook of Major Cities 2021," a survey conducted on the 23 wards of Tokyo and 20 ordinance-designated cities, Fukuoka City ranked 1st in the ratio of apartment buildings (condominiums and apartments) to the total number of houses. Compared to other cities, Fukuoka City shows higher demand for condominiums and apartments.
Housing prices in central Fukuoka City continue to rise. Condominium prices in particular have doubled in the past 15 years.
Kumamoto
With a population of approximately 740,000, Kumamoto is the 3rd largest city in Kyushu after Fukuoka City and Kitakyushu City. Kumamoto Castle, the icon of the city, is one of the "Three Best Castles” in Japan.
In March 2011, the Kyushu Shinkansen Kagoshima route became fully operational, and the number of tourists visiting Kumamoto has increased significantly.
Kumamoto is receiving further inflow of people and money. In 2021, Taiwanese semiconductor giant, TSMC announced opening of a manufacturing plant in Kikuyo Town, Kumamoto.
Since TSMC announced its expansion, new developments have occurred in a wide range of fields, including semiconductor industry, real estate, transportation, and education as economic ripple effects.
One of the effects may be seen in the official land prices (as of January, 2024) released by the Ministry of Land, Infrastructure, Transport and Tourism. Kumamoto towns dominated the top 2 in terms of official land price increase.
At the top of the list was Ozu Town, Kikuchi-gun, a commercial area in Kumamoto Prefecture. The rate of increase was 33.22%. The second was Kikuyo Town, Kikuchi-gun at an increase rate of 30.82%. According to the appraisal report, the land prices in these areas have been showing a steady upward trend due to an accelerated inflow of people in the area. The supply-demand environment is extremely tight. Since the land prices are expected to rise, some landowners are reluctant to sell their land now, and some transactions have been reported at much higher prices than the previous land price levels.
Kumamoto Airport is located in Kikuyo Town, offering good connectivity to major cities in Japan. There are 4 international flights (Seoul, Taipei, Kaohsiung (Taiwan), and Hong Kong). Access to Kumamoto City from Kikuyo Town is also excellent, about 25 minutes (Figure 5).
[Figure 5] Map of Kumamoto
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