Millions of 'empty houses' in Japan are attracting foreign buyers, but experts caution about potential risks.

Despite a housing shortage in many parts of the world, Japan faces an oversupply of properties when it comes to buying a home.

According to government data, Japan had over 9 million vacant homes, or "akiyas," as of 2023, with some of these properties being sold for as little as $10,000.

Scattered across rural areas and big cities, these abandoned homes provide a unique opportunity for buyers with creative ideas.

Japan's 'akiyas' explained

The decline in Japan's fertility rate, which has fallen to a record low of 1.2 births per woman, is a significant factor in the increase of abandoned houses in the country. Additionally, the rise in death rates has surpassed birth rates, contributing to the growing elderly population in Japan.

Tetsuya Kaneko, head of research and consultancy at Savills Japan, stated that the akiya problem in Japan has been growing for many years and is linked to the country's post-war economic boom, which resulted in a significant increase in housing construction.

Japan's economic slowdown in the 1990s and ongoing demographic changes have intensified the issue, according to Kaneko.

The migration of young people from rural areas to cities for work is a significant factor in Japan's abandoned houses.

The children of elderly parents who inherit family homes are often reluctant to use or sell the property, resulting in more abandoned houses in the market, according to Kaneko.

According to Kaneko, a home that is over 30 years old is typically considered old, and locals tend to be concerned about safety issues, high renovation costs, and decay. Some people even associate these homes with superstition, believing they might be haunted or bring bad luck.

According to Michael, founder of Japan real estate blog Cheap Houses Japan, "many Japanese people view akiya as depreciating items that are more trouble than they're worth."

"The reason why the cheapest properties are located that way is either due to an undesirable location or the high cost of renovations exceeding the property's value," he stated.

Attracting foreign buyers

Japan's akiyas are gaining the attention of overseas buyers.

"There has been an increase in interest and purchases of akiyas from abroad," said Kaneko.

The surge in foreign demand for Japanese property can be attributed to the pandemic, the rise of remote work, and changing lifestyle priorities, according to Kaneko.

"Second homes, vacation properties, and renovation projects are increasingly popular among both young investors and retirees seeking a retreat," he stated.

Anton Wormann, a 32-year-old model from Sweden, fell in love with Japan after visiting it during a work trip. He had traveled all over the world during his 20s before relocating to the Asian country in 2018.

"I lived in New York for two years and then traveled extensively throughout Europe. As a result, I am familiar with the high costs of living in metropolitan areas. Therefore, I cannot afford to purchase a house in any of the places I have resided in."

Six years after discovering that Japan was selling homes for cheap, Wormann now owns seven akiyas and works as a full-time content creator and real estate investor in Japan.

He has finished renovations on three of his properties and is currently working on the remaining four. Today, a property that cost him a total of approximately $110,000 to purchase and renovate generates $11,000 in short-term rental revenue per month.

So, are 'akiyas' a good investment?

Wormann says "yes and no."

If he hadn't put in the time and effort to become properly acquainted with the Japanese culture, language, and people, his properties wouldn't be bringing in six-figures in revenue a year, he said.

"To succeed in Japan, it is crucial to establish a strong community and social network, as Wormann emphasized. However, simply throwing money at the project without understanding the culture and how Japan operates could result in a costly failure."

Wormann stated that if one wants to fit in and do it correctly, there is a significant opportunity, but more importantly, there is an opportunity to purchase inexpensive real estate to utilize personally.

Experts echo this sentiment.

Kaneko stated that Akiyas can be a beneficial investment for specific individuals, such as hobbyists, DIY renovators, or those looking for a peaceful countryside retreat.

He stated that while they may not be suitable for institutional investors or those seeking quick or substantial returns, high renovation costs and limited resale potential in certain areas can also limit scalability.

The home-buying process can be complex, especially if the house needs major structural work, and consider the language barrier and the need to navigate local authorities, Kaneko added.

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