A small local bank is helping international buyers tap into Japan’s thriving property market. Tokyo Star Bank has started offering accounts and loans to nonresidents looking to invest in real estate, a service that has seen rapid growth since its launch last year.
With the yen's weakness and low interest rates, foreign interest in Japanese properties has surged, driving prices higher. "We needed to find a niche to stay competitive," explained Akimasa Tanimura, the executive officer overseeing cross-border business at Tokyo Star. "We've noticed increasing requests from clients in various Asian countries."
Since establishing this division, the bank has added "several hundred" clients, primarily affluent individuals from Taiwan, mainland China, Hong Kong, and Singapore. Tanimura anticipates that the loan balance for high-net-worth clients will triple in the latter half of this year compared to the first half.
Tokyo Star, which has ¥2.3 trillion ($16 billion) in assets, is among Japan's smaller city banks, trailing many regional lenders. Owned by CTBC Financial Holding, Taiwan's third-largest financial group, it made history as the first foreign bank to acquire a Japanese lender eleven years ago.
Tanimura believes Tokyo Star is one of the few Japanese banks offering accounts to nonresidents, facing competition mainly from the Japan branches of Taiwanese and Chinese banks. The support from CTBC enables Tokyo Star to provide accounts and loans to international clients—something many Japanese banks typically avoid due to stringent customer verification practices. The bank can leverage its parent company’s extensive network across Asia for these checks.
Foreign clients have accessed loans ranging from ¥20 million to several billion yen, which have been used to purchase everything from single apartments to entire buildings and hotels. Recently, the bank financed a unit in Azabudai Hills, one of Tokyo's most expensive new residential developments, where some units have sold for over $100 million.
"We're receiving inquiries from across Asia, including investors who previously bought properties outright because they couldn't secure bank loans," Tanimura noted. "Now they see we can provide financing, allowing them to leverage their investments."
Tokyo Star’s growth reflects a broader trend of foreign investment in Japan’s real estate market, which lacks comprehensive transaction data. In 2023, average prices for newly built condominiums in Tokyo reached record highs for the third consecutive year, driven by low interest rates, a supply shortage, and limited construction workers, along with increased foreign demand.
"Asian buyers, particularly from Taiwan, Hong Kong, and Singapore, dominate the Japanese market," said Christine Li, head of Asia-Pacific research at Knight Frank, in a May report. "The rise of private investment is significant, with family offices increasingly directing capital into Japan amid regional uncertainties."
Tokyo Star aims to make cross-border banking a key part of its business within five years, focusing on wealthy Chinese clients across Asia for future growth. The division has expanded by hiring around 20 employees in the past year, with half of its 40 staff members speaking Mandarin.
While the bank did not disclose specific loan rates for international customers, it stated that its rates are competitive with those for local residents—around 2% for property investments. Typically, the bank finances about half of the purchase price.
Tanimura, fresh from meetings with potential clients in Hong Kong, emphasized that interest in Japanese real estate remains strong, despite the yen's recent gains and potential rate hikes from the Bank of Japan. "Yen appreciation may impact investor interest, but we haven't observed significant effects yet. Tokyo real estate still offers relative affordability compared to other global markets."
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