Tourism is expected to fuel Osaka real estate market
The Osaka market is recovering from the pandemic. It is expected to become even more active with the upcoming EXPO 2025 and Integrated Resort.
Breaking down investment volume in Greater Osaka by sector, hotel accounted for the highest share at 37%, followed by 34% for industrial, 21% for office, 4% for retail and 3% for residential. Hotel transactions were recorded in Osaka and Kyoto, both cities are prominent tourist destinations in Japan. A notable transaction is ‘The Rihga Royal Hotel’ acquired by Bentall-GreenOak from Royal Hotel in March, which is said to be more than JPY 50 billion. Hotel deals have become more common in anticipation of the tourism boom in Greater Osaka.
Figure 1: Direct Real Estate Investment – Greater Osaka
The Osaka economy is gradually recovering after the COVID-19 pandemic . According to the latest figures released by the Japan Tourism Agency, the total number of overnight guests in May 2023 was 103% (108% for Japanese guests and 96% for overseas guests) in Osaka and 101% in Greater Osaka (103% in Osaka, 106% in Hyogo, 98% in Kyoto and 83% in Nara). It is more than the total number of overnight guests recorded in May 2019, indicating a recovery to the pre-pandemic level.
Osaka is also accelerating its preparations for hosting EXPO 2025. In addition to the development of Yumeshima—the venue of the EXPO—many related projects are ongoing, including:
- Large-scale renovation of Kansai International Airport – the gateway of the air route to Osaka,
- Extension of the Osaka Metro – the land route from the centre of Osaka to Yumeshima, and
- Construction of the Hanshin Expressway – improving access to Osaka from the surrounding area.
Moreover, in Yumeshima, an Integrated Resort (IR) is planned to open in 2030. The development project for a super-large-scale multi-purpose facility is about to begin in earnest, with a total floor area of approximately 770,000 sqm, consisting of international conference halls, casinos, hotels, entertainment facilities, dining facilities and retail facilities. According to the official plan1, the construction phase is expected to create 116,000 jobs. In the third year after opening, 15,000 people can be employed at the IR facility, 19.87 million visitors are expected to the IR area and 123.35 million to the hinterland, which is Greater Osaka plus Wakayama, Shiga and Fukui prefectures.
With the EXPO and IR as tailwinds, Osaka will continue to attract more and more visitors from Japan and abroad. This is expected to contribute to the sustainable and stable economic growth of both Osaka city and the Greater Osaka area, leading to the revitalisation of the real estate market.