The Kansai region (Osaka, Kyoto, Hyogo, Shiga, Nara, and Wakayama prefectures), with Osaka in its center, has more than 20 million people living in an area that roughly fits into a circle with a radius of about 100 km, forming one of the largest metropolitan areas in the world.
Osaka Prefecture (Figure 1) has 43 municipalities including Osaka City and a population of approximately 8.8 million (the 3rd largest among all prefectures in Japan). Meanwhile, with an area of approximately 1,905 square kilometers, Osaka Prefecture is the second smallest prefecture in Japan.
Osaka has a well-developed airport, port, and other infrastructure connecting it to Asian countries and other cities around the world, and the prefecture is becoming increasingly internationalized, with many international tourists and residents.
The capital of Osaka Prefecture is Osaka City. With a sizable population (2.77 million) living in a compact area (approx. 221 square kilometers), Osaka City is a metropolis second only to Tokyo. Osaka is also popular as a tourist destination with major attractions such as Osaka Castle, Umeda Sky Building, Shinsaibashi, Dōtonbori, and Tsūtenkaku (Figure 2).
In addition to the existing attractiveness of Osaka as a tourist destination, there is exciting news about Osaka. In 2025, World Expo “Expo 2025, Osaka, Kansai” will take place in Osaka, which is expected to boost the tourism in this area further. The expo will be held for 184 days, starting on April 13th through October 13th, 2024 on Yumeshima, a man-made island in Osaka Bay, close to Universal Studios Japan (USJ) and Tempozan and Osaka Aquarium. Next to the site for the Expo, at the northern coast of the island of Yumeshima, Osaka IR (Integrated Resort) project is underway.
Osaka Property Market
The Osaka market is recovering from the Covid-19 pandemic and expected to be further revitalized in the future, driven by the Expo and the IR project.
Looking back at 2023, real estate investment in the Osaka metropolitan area increased 52% y-o-y to 297.3 billion yen in the first half of 2023, and accounted for 14% of total domestic investment, remained at the same level as the same period of the year before. The market fell sharply in 2022 but has been improving rapidly, supported by economic recovery and low interest rates.
Hotel sector accounted for the largest share of the investment at 37%, followed by logistics (34%), office (21%), retail (4%), and rental housing (3%). Several hotel transactions were seen in Osaka and Kyoto, two of Japan's leading tourist cities. In the Osaka metropolitan area, hotel transactions have been active in anticipation of post-pandemic recovery.
With the full-fledged post-covid era on the horizon, Osaka is beginning to come back to life. According to the Japan Tourism Agency, the total number of lodgers in May 2023 recovered to 103% (Japanese-108%, international-96%) in Osaka Prefecture and 101% (Osaka 103%, Hyogo 106%, Kyoto 98%, Nara 83%) in the Osaka metropolitan area, compared to the same month before the pandemic (2019).
Preparations to host the 2025 Expo Osaka, Kansai are accelerating. In addition to the development of the venue named “Yumeshima”, many projects (including large-scale renovation of Kansai International Airport, which will serve as the gateway for air traffic; extension of the Osaka Metro line, which will provide a land route from the Osaka city center to Yumeshima; and development of the Hanshin Expressway, which will enhance access to Osaka from surrounding areas) are in progress.
Furthermore, the Integrated Resort (IR) is planned to open also in Yumeshima in 2030. This project aims to build a world-class Integrated Resort with a total floor area of 770,000 sqm, which includes casino, entertainment, hotel, large-scale MICE facilities, F&B establishments, and merchandise sales facilities and more.
Knight Frank’s Global Residential Cities Index shows that in the third quarter of 2023, Osaka ranks 20 out of 100 cities in the world in terms of the change in mainstream housing prices in the city.
[Figure 3] The Knight Frank Global Residential Cities Index (2023 Q3)
As for the secondary market, the number of units sold in Osaka City increased 14.6% year-on-year, and the unit price per square meter of the sold units also increased 14.0%, indicating a steady increase in prices.
Where are the Hot Areas for Property Investment in Osaka?
Let us take a closer look at Osaka City. Osaka City comprises 24 ward or 区(ku). There are wards/area that are worth your attention, namely (1) Kita-ku, (2) Chuo-ku, (3) Fukushima-ku, (4) Nishi-ku, and (5) Naniwa-ku and (6) Ikuno Korea Town in Ikuno-ku shown in Figure 4.
In these wards, especially those centrally located ones, the population is expected to grow until around 2040. And the housing prices continue to rise.
[Figure 4] Osaka City Map of 5 Hot Areas for Investment
1. Kita-ku – expected to thrive further with the ongoing redevelopment
Kita-ku is expected to thrive further with the ongoing redevelopment. This area is home to Osaka's major stations such as Umeda Station and Osaka Station, and comprising corporate office areas and commercial areas. A redevelopment project called Umekita Project, is underway. Development of the 17ha Umekita 2nd phase area is progressing with an anticipated soft-opening in 2024.
2. Chuo-ku – sought-after area for rentals
This area is the administrative, economic, and financial center of the city, with government offices and the Osaka Stock Exchange. Due to a high concentration of office buildings and commercial facilities, there are few residential areas in the area, but recently new high-rise condominiums have been built, making this area popular with increasing rental demand. The famous Osaka Castle is also nearby.
3. Fukushima-ku – where the modern and the traditional blend
Fukushima-ku is a popular area where you can enjoy the modern and the traditional. Due to its proximity to Umeda, this area is preferred for residential and commercial developments. With large apartment complexes and high-rise condominiums built one after another in the area recently, and the once-declining population is rapidly increasing.
4. Nishi-ku – popular among young people
Nishi-ku has a large youth population and the lowest percentage of people aged 65 and over, compared to other areas in the city. The Horie area, for example, is a hotspot among young people for its fashionable cafes, clothing and health and beauty retailers. Amerika-mura, where stores for young hipsters are concentrated, is located in this area.
5. Naniwa-ku – home to famous Dotonbori and Shinsekai (known for Tsutenkaku Tower)
Naniwa-ku is a popular area with high demand for rentals from singles and foreigners. In recent years, the area has been redeveloped and condominiums have been built, and the population is increasing. The main driver of the demand here is from young male singles and also foreigners from Asia and Europe.
6. Ikuno Korea Town (Tsuruhashi)
In Osaka Korea Town in Tsuruhashi, stores and restaurants run by Koreans and other retailers such as cosmetics etc. are clustered around a shopping street, exuding an exotic atmosphere just as if you were in Korea. With the recent popularity of Korea, the number of fashionable stores is rapidly increasing.
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