Osaka-Driven Commercial Real Estate Investment Market in Japan Hits a Record-High in 2024, Exceeding One Trillion Yen

Osaka’s commercial real estate investment market has exceeded previous record-highs of one trillion yen in 2024, since JLL conducted the survey in 2008. Japan is one of the world's most vibrant real estate investment market, and it can be safely said that the Greater Osaka area has become the primary drivers of this strong market performance. This article analyzes the factors behind Osaka's significant investment growth and the continuity of this upward trend.

Figure 1 shows the commercial real estate investment trend in Japan. In 2024, the investment amount reached 5.5 trillion yen, a 63% increase compared to the previous year. This is the first time since 2015 that the investment amount has exceeded five trillion yen, marking the largest investment volume since the COVID-19 pandemic.

Figure 1: Japan’s Commercial Real Estate Investment Trend Note: The graph excludes land transactions and investments in development projects. Source: JLL

Figure 2-(1) ~ (4) explains Where, Who, and What was invested in the Japanese market.

Looking at the breakdown by area (Figure 2 - (1)), in 2024, the region that experienced the most investment was the Greater Tokyo area at 56%, followed by the Greater Osaka area at 22%. The Tokyo and Osaka areas combined accounted for 78% of the total, indicating that real estate investment in Japan in 2024 was primarily concentrated in major urban areas.

While such major urban areas remain the focus of investment, the Greater Tokyo area’s share has significantly dropped from 79% in 2014 to 56% in 2024.

Investor Types 1 (Figure 2-(2)) shows as follows:

• Investors (excluding J-REITs) at 33%
• Developers and general contractors at 32%
• J-REITs at 23%

These areas have been and will continue to be the main players in the investment landscape.

Figure 2-(1), 2-(2): Japan Investment share by area and investor types. Source JLL

Investor Types 2 (Figure 2-(3)) shows the ratio of acquisition by domestic investors to acquisition by foreign investors. The proportion of foreign investors was unchanged at 17% in both 2014 and 2023-2024. However, the ratio in 2015-2022 reached a record-high level of 24% in Japan, and 29% in Osaka – in other words, foreign investors accounted for about one-third of the acquisitions in the Greater Osaka area. In 2023-2024, although the global market saw suppressed investments by foreign investors due to external changes such as global interest rate hikes, this does not mean that most foreign investors have turned negative towards Japanese real estate.

In fact, in 2024, there were several cases where foreign investors put prime properties on the market, and domestic investors actively acquired them.

Investment by Sector (Figure 2-(4)) shows Offices at 36%, Industrial & Logistics at 24%, and Hotels & Hospitality at 19% of the higher ratio in 2024. Offices, being the most traditional and typical commercial real estate investment, makes up the highest share. However, the office share has decreased from 55% (2014) to 36% (2024) due to foreign investors treading more carefully within the office sector in the context of the general sluggishness in overseas office markets.

Regarding Industrial & Logistics, they have seen continued growth in demand for high-function, large-scale facilities since the latter half of the 2010s, and they remain popular in the

investment market as well.

Also, Hotels & Hospitality, the third-largest sector, has rapidly gained prominence in recent years. Inbound demand has already recovered beyond pre-COVID levels and is expanding further, attracting extremely high interest from investors.

Overall, domestic investors are actively acquiring offices, logistics facilities, and hotels in the Greater Tokyo and Greater Osaka areas. The following section will delve deeper into the particularly flourishing Osaka (as well as Greater Osaka) market.

Figure2-(3), 2-(4): The Japan investment share by foreign investors and sector. Source: JLL

In this section, we will compare the investment market trend in Greater Osaka with Greater Tokyo.

Figures 3-(1) and 3-(2) compares the commercial real estate investment trends in Greater Osaka and Greater Tokyo. In 2024, Osaka's investment volume reached a record high of 1.2 trillion yen since JLL began collecting data in 2008, which was an 107% increase YoY and the first time the 1 trillion-yen threshold was surpassed. 

Given Japan's world-renowned Tokyo-centric investment market, it is unsurprising that the Greater Tokyo area dominates in investment volume.

Yet, Osaka's growth is more noteworthy. In 2014, when national investment peaked at 5.6 trillion-yen, the Greater Tokyo area accounted for over 4 trillion yen (about 80%), while the share of Greater Osaka was less than 400 billion yen (under 10% of Tokyo's volume).

However, by 2024, Tokyo's investment volume decreased by 32% to 3.0 trillion yen compared to 2014, while Osaka's increased by 120% to 1.2 trillion yen. This shift expanded Osaka's market size from only one-tenth of Tokyo's volume a decade ago to almost one-third in 2024. This result demonstrates that the market growth of Greater Osaka has driven Japan's overall market growth.

Figure2-(3), 2-(4): The Japan investment share by foreign investors and sector. Source: JLL

So, what factors contributed to Osaka's investment surge? We consider Osaka's unique strengths in comparison to Tokyo below:

Driver 1: the presence of foreign Investors

Figures 4-(1) and 4-(2) show the proportion of foreign and domestic investors in Osaka and Tokyo. From 2014-2024, foreign investors accounted for 28% in Osaka versus 19% in Tokyo – suggesting foreign investors' preference for Osaka over Tokyo. Furthermore, the ratio in Greater Osaka was nine points higher than the ratio in Greater Tokyo. Although the gap narrowed in 2023-2024 due to cautious foreign investment, Osaka still maintains an edge. Stable and substantial demand from foreign investors is the competitive strength of Greater Osaka.

Higher investment performance is one of the factors why foreign investors prefer investment in the Osaka area. After the bubble economy's collapse, domestic investors long overlooked opportunities in regional cities like Osaka, perceiving them as high-risk markets due to long-term economic decline. On the other hand, foreign investors steadily built their portfolios with risk-appropriate yields, reaping significant returns. This success established Osaka's reputation as a high-performing market among foreign investors.

Strong Inbound Tourism can be raised as another factors. Osaka's strong

inbound tourism attracts foreign investors more than domestic ones. This is due to the Kansai region's rich tourism resources, as well as the presence of the Osaka-Kansai Expo and IR development plans. Foreign investors tend to view these large development projects more positively than domestic investors.

In recent years, these foreign investors increasingly heighten their sentiment of investment for Greater Osaka area. This positive outlook is shared by both Asian and Western investors. Asian investors have particularly been making their presence known, with players ranging from institutional investors to wealthy individuals breaking into the investment market. The upward trend in offshore investor interest is likely to continue.

Figure 4-(1), (2): Investment share by foreign investors in G.Osaka and G.Tokyo. Source: JLL

Driver 2: The strength of the Hotel Sector

Additionally, the hotel sector’s impact on Osaka's investment market cannot be ignored.

Figure 5 shows the sector breakdown for Greater Osaka and Greater Tokyo. From 2014-2024, hotels accounted for 16% of investments in Osaka compared to 6% in Tokyo. The inbound tourism boom, starting around 2015 with the “bakugai” (explosive buying) phenomenon, established Osaka's Minami area as a prime destination. This trend spread throughout the broader Osaka area as well, turning it into one of Japan's top tourist spots.

Consequently, Osaka's hotel sector has consistently outperformed Tokyo's by ten percentage points over the past decade. This lead persists - in 2023, as inbound tourism recovered post-pandemic, hotels accounted for 28% of Osaka's investments (vs. 8% in Tokyo), rising to 34% in 2024 (vs. 10% in Tokyo) as tourism transitioned from recovery to growth.

This trend is likely to continue in the future. In the foreseeable future, the Osaka-Kansai Expo draws in both domestic and inbound tourists. Considering the progressing IR plans for 2030, hotel investment market conditions in Greater Osaka are likely to overwhelm those in Greater Tokyo in the long term as well.

According to the results of JLL Japan’s Fall 2024 survey, as well as the large amount of domestic and foreign investors visiting Osaka to meet with the author, Osaka’s investor appetite is expected to remain strong.

Rather, there is an increase in investors seeking out new investment opportunities in the Osaka area. Even Osaka-based investors, who had missed investment opportunities due to their prior perceptions of the market are positively shifting their views. Therefore, we believe that the Osaka investment will continue to prosper.

However, regarding where Osaka’s current commercial real estate investment is headed, we must acknowledge the reality: Osaka’s 2025 investment volume is expected to decrease significantly.

Although there must be more property sales to increase investment, it is undeniable that ultra-large properties (over 30 billion yen) have been exhausted from the 2024 market. Even during the COVID-19 pandemic (2020-2021), Osaka’s large property transactions remained strong. However, investment decreased significantly despite strong investor appetites. The market had few large properties to sell, and 2025 will likely be similar.

Meanwhile, the Osaka area’s investment market assets and investor appetites are imbalanced, with strong demand and insufficient supply. Underlying this situation is a widening gap between buyer’s and seller’s price expectations, and a consequent decline in transactions. Regarding price expectation adjustments, there is a higher likelihood that buyers, rather than sellers, will shift their expectations upward.

This article covered the Osaka area’s investment market. In recent years, the prices in urban areas have been continuously rising, with no sign of slowing down. In the case that real estate value is determined by earning ability, the price increases are reasonable with recent solid asset performance in Osaka - and it is not a bubble economy.

Furthermore, 2024’s large-scale redevelopments, such as Grand Green Osaka, have significantly transformed Umeda and Osaka as a whole. Additionally, the Osaka-Kansai Expo, which has been taking place since April 13th, 2025, will increase Osaka’s appeal domestically and internationally more than ever before.

With these positive indicators, we expect the Osaka investment market to revitalize even further.

Note: This document is an English translation of the “日本の不動産投資市場をけん引する大阪（関西） - 2024年の商業用不動産投資額は過去最多、初の1兆円超え”. In the event of any discrepancies between this translation and the original text, the original text shall take precedence.

Original Author: Takeshi Yamaguchi, Research Director of JLL Japan Kansai Branch.

Translated by Yuki Matsumoto and Ahmed Hibah, JLL Japan Research