Is Japan’s Property Market Near A Peak? It Depends What You’re Buying

A new survey from Mitsubishi Estate Real Estate Services suggests that a growing number of people working directly in the market think it might be. But the detail behind the headline is considerably more nuanced, with hotels in particular continuing to attract very strong buying interest.

The company surveyed its own sales staff in June, receiving 265 responses on the property sales market. Just over half, or 50.9%, described current conditions as being at a peak. More significantly, the share believing the market had already passed its peak and entered a declining phase jumped to 27.9%, up 16.3 percentage points from the previous survey.

Expectations for the next three months were a little softer again. The proportion expecting the market still to be at its peak fell to 44.9%, while 34% expected it to have entered a declining phase. Respondents cited higher interest rates making some investments harder to justify and elevated construction costs making development sites more difficult to acquire.

On the surface, that sounds like a fairly clear warning that Japan’s long property upswing is losing momentum. The asset-level responses suggest something more selective is happening instead.

Hotels Remain The Standout

Among developers and real estate companies, 89.8% described their purchasing stance towards hotels as either bullish or moderately bullish. Offices and residential assets also retained relatively strong interest, although sentiment towards residential property weakened as higher construction costs made development economics more difficult. Professional investors, meanwhile, continued to show strong appetite across residences, offices and hotels.

This is an important distinction for anyone trying to understand the Japanese market through a single national headline. Higher financing costs and expensive construction can reduce the viability of one project while simultaneously increasing the scarcity value of another. A developer may decide that a marginal residential site no longer works at current land and construction prices, while investors continue competing aggressively for an operating hotel with growing revenues.

The result is a market where fewer opportunities may meet investment criteria even though capital has not disappeared.

Peak Does Not Necessarily Mean Falling Prices

There is also an important question around what respondents mean when they say a market is at its peak. A peak can precede falling prices, but it can also describe a period where rapid growth gives way to slower activity, longer negotiations and greater differentiation between assets. Japan’s current combination of higher interest rates, expensive construction, limited prime supply and strong tourism demand makes a uniform correction across all property types unlikely.

Recent residential data has already shown something similar. New-build prices remain under pressure from land and construction costs, while parts of the secondary market are showing more buyer resistance. Both trends can exist at the same time because the forces setting prices are different.

Hotels provide an even clearer contrast. Japan’s inbound tourism boom has strengthened revenue expectations for hospitality assets, while the difficulty and cost of adding new supply can make good operating properties more attractive rather than less.

For Uchi Insights readers, this is particularly relevant to Japan’s resort markets. A well-located hotel, finished chalet or professionally operated residence in a destination with established demand does not carry the same risk profile as a development site whose value depends on years of future construction, financing and sales assumptions.

A Market Becoming More Selective

The most sensible interpretation of the survey is therefore not that Japan’s property market has reached some universal ceiling.

It suggests that the easy part of the cycle may be becoming harder. Higher rates are forcing investors to pay more attention to income and yield, while construction inflation is making speculative development less forgiving. At the same time, capital remains willing to pursue assets where the operating story, scarcity or future income potential is strong enough.

This should widen the gap between properties that can justify their pricing and those relying mainly on the assumption that the wider market will continue lifting everything around them.

For resort investors, that makes due diligence on individual assets increasingly important. Strong tourism growth or rising destination prices can support the wider market, but they cannot remove construction risk, weak management, poor access or an unrealistic acquisition price.

Japan’s property market may indeed be close to a peak in some areas. In others, particularly hospitality, investors still appear willing to compete. The more appropriate discussion is therefore not whether the market as a whole has peaked, but which assets still have enough demand, income and scarcity to keep moving after the broader cycle becomes less forgiving.

Sources
- Mitsubishi Estate Real Estate Services, FY2026 Q1 Real Estate Market Survey Report, June 2026 survey.
- R.E.port, “Mitsubishi Estate Real Sales Survey: More Than Half Say Sales Market Is At Peak”, 18 August 2026.