The real estate market in Osaka, Japan, is undergoing a significant transformation, primarily fueled by the tourism sector. This transformation is not an isolated phenomenon but is closely interlinked with several other sectors and upcoming mega-events like EXPO 2025 and the Integrated Resort (IR) project. This article aims to provide an in-depth analysis of the various factors contributing to this change, breaking down investment volumes, and discussing the economic implications for both Osaka and the Greater Osaka area.
Investment in the Greater Osaka region is diversified across multiple sectors. Hotels lead the investment volume with a 37% share, followed by the industrial sector at 34%, offices at 21%, retail at 4%, and residential properties at 3%. A case in point is the acquisition of ‘The Rihga Royal Hotel’ by Bentall-GreenOak from Royal Hotel in March, a transaction valued at over JPY 50 billion. This trend indicates a growing focus on the hotel industry, largely in anticipation of a tourism surge in the region.
The Osaka economy is showing promising signs of recovery from the COVID-19 pandemic. According to data from the Japan Tourism Agency, the total number of overnight guests in May 2023 was 103% in Osaka and 101% in Greater Osaka, compared to May 2019 levels. These figures further break down to 108% for Japanese guests and 96% for overseas guests in Osaka, demonstrating a return to pre-pandemic levels.
Osaka is in the advanced stages of preparing for EXPO 2025. Several infrastructure projects are underway, including a large-scale renovation of the Kansai International Airport, extension of the Osaka Metro, and construction of the Hanshin Expressway. These projects aim to improve accessibility and are expected to play a pivotal role in the success of the EXPO.
Another significant development is the planned Integrated Resort (IR) in Yumeshima, slated to open in 2030. The IR will be a multi-purpose facility with a total floor area of approximately 770,000 square meters. It will feature international conference halls, casinos, hotels, entertainment and dining facilities, and retail spaces. According to official projections, the construction phase will create 116,000 jobs, and upon completion, the IR is expected to employ 15,000 people.
Both the EXPO 2025 and the IR project are expected to serve as catalysts for economic growth in Osaka and the Greater Osaka area. The IR alone is projected to attract 19.87 million visitors to its immediate vicinity and 123.35 million to the hinterland, which includes Greater Osaka plus Wakayama, Shiga, and Fukui prefectures.
The real estate market in Osaka is poised for significant growth, driven by a combination of factors such as tourism, infrastructure development, and mega-events like EXPO 2025 and the Integrated Resort project. These developments are not only expected to revitalize the real estate market but also contribute to sustainable and stable economic growth for Osaka and the Greater Osaka area.