I am Gotanda, Representative of Multiface Co., Ltd.
This time, I will talk about
“The difficulty of real estate investment has risen a notch in 2026, the difference between those who start and those who don’t.”
I will discuss this topic.
It has been reported that the Bank of Japan has firmed up a policy to raise the policy interest rate from around 1.0% to around 1.25% at its Monetary Policy Meeting on September 17-18, 2026.
This will be an additional rate hike at a three-month pace following the December 2025 hike, and this level is the highest in 31 years since 1995.
Meanwhile, the average price of new condominiums in the Tokyo metropolitan area rose by 17.2% year-on-year to 91.82 million yen for the full year of 2025.
Due to the rise in import prices caused by the weak yen for construction materials and the soaring labor costs due to labor shortages in the construction industry, property prices are expected to remain high for the time being.
Interest rates are rising, properties are expensive, and repair costs are piling up.
Amidst this “triple hardship,” real estate investment has undoubtedly become more difficult than it was a few years ago.
However, that is precisely why this is a phase where a clear difference will emerge between those who start now and those who do not.
Point 1: The reality that it has become “structurally harder to win” amidst the triple hardship of rising interest rates, soaring property prices, and increased repair costs.
First, what I must tell you frankly is the fact that the market environment itself is becoming severe.
The reason is clear: all three elements that support the profit structure of investment are becoming headwinds.
Rising interest rates push up loan repayments and squeeze cash flow.
Soaring property prices lower the gross yield.
And the surge in construction and labor costs also affects running costs during ownership in the form of increased repair and renovation costs.
For example, even for a property with the same 5% yield, the repayment amount changes between a 1.0% and 1.25% interest rate, creating a difference in remaining cash flow.
If you judge that “it is still okay” by looking only at the numbers, you may end up with an unexpected burden in a few years.
That is why it is essential now to conduct simulations in advance that incorporate not only superficial yields but also interest rate fluctuation scenarios and repair plans. You should consider that the era of making decisions based solely on optimistic assumptions is over.
Point 2:
A paradoxical entry opportunity where “properties from exiting investors hit the market” precisely because it is a difficult market
A harsh market environment has
another side to it.
The reason is that the tougher the environment becomes,
the more investors who entered without sufficient preparation,
or those who can no longer withstand rising interest rates,
are forced to exit the market.
Properties from exiting investors
can sometimes hit the market with better conditions than the current market average.
For example, it is expected that there will be an increase in owners
who were operating with tight cash flow while borrowing at variable interest rates
considering selling due to the increased burden of repayments.
It is a fact that such properties often have room for price negotiation
because there are circumstances requiring a quick sale.
Therefore, precisely when the market is tough,
it can be a great opportunity for investors with financial strength and a keen eye
to selectively acquire assets.
It is worth keeping in mind the paradox that
competition is fiercer when market conditions are good,
but opportunities come to calm investors when conditions are bad.
Point 3:
The essential reason why “only those with knowledge and preparation can win”
precisely because the difficulty level has increased
The last thing I want to convey is that
this phase has become an “essential test”
that sifts through investors.
The reason is that during periods when interest rates and prices were moderate and the entire market
was on an upward trend, even minor judgment errors
were covered by rising prices, but
now those tailwinds have disappeared,
and the difference in knowledge and preparation has come to directly translate
into a difference in profitability.
For example, the accuracy of loan simulations,
the ability to evaluate properties, the design of exit strategies,
and the basics such as drafting repair plans
allow investors who have carefully built these up to continue stable operations
even during periods of rising interest rates.
Conversely, investors who purchased properties based only on momentum
will be unable to withstand environmental changes and will be forced to exit.
In other words, the current market, where the difficulty level has increased,
can be said to be a market where true ability is fairly evaluated
for those who have accumulated knowledge and preparation.
Rather than entering in a rush,
learning first, repeating simulations,
and solidifying your preparations before acting is the winning strategy for the coming era.
In summary.
Due to the triple hardship of rising interest rates, soaring property prices, and increased repair costs,
the difficulty of real estate investment has certainly risen a notch.
However, behind that,
an opportunity is also being born as properties from exiting investors hit the market.
What is being questioned in this phase is
how much knowledge and preparation you have accumulated.
Precisely because the environment is tough, let’s proceed with the preparations we can make now
carefully, one by one.
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