Is it time to back Japan?
Over the last year investment and investors have been pouring into Japan, after years of stagnation and unattractiveness. The nation has introduced corporate reforms and its economy is resurgent, increasing its appeal to investors around the world, many of whom still have a fondness for the Land of the Rising Sun after it's 1980s and '90s heyday. Robin Harris explores the ongoing economic revival and explains why Ocorian’s clients in Asia and globally are suddenly fixing their gaze eastwards once again.
The return of the land of the rising sun
Japan has been the investment world's paradox for years. The 1980s and early ’90s' economic sweetheart, it has passed most of the intervening years in limbo, stuck in stagnation, struggling with deflation and demography problems. However, over the last year, there has been a dramatic renewal of Japan's appeal as an investment destination. Asian and overseas investors are once again focusing on the world's third-largest economy, driven by sweeping corporate reforms, a revived market, and renewed confidence in Japan's growth potential.
Japan’s corporate overhaul
One of the key drivers of the country’s renewed appeal is its continuing corporate governance rebirth. Japanese firms were long criticised for being inefficient, insular, and averse to putting shareholder value first. But government and Tokyo Stock Exchange-led reforms in recent years have done much to correct those problems.
One of the more significant initiatives has been a call by the Tokyo Stock Exchange to companies to improve profitability margins. Firms have been urged to optimise capital deployment, increase transparency, and return more to shareholders. These actions have translated into higher share repurchases, higher dividend payouts, and more engagement with foreign investors, all significant signs of a matured and investor-friendly market.
The election of Shigeru Ishiba as Prime Minister in October 2024 has also helped to change perceptions, he placed economic recovery at the core of his policy agenda[1]. By vowing to boost the minimum wage, and enhance digitalisation and innovation in chosen sectors, his government is paving the way for a more dynamic and competitive economy.
A new-born opportunity for investors
Japan's economy, which for so long had become strained under weak growth and low inflation, is now showing distinct signs of life. The pandemic recovery has been propelled by increasing consumer spending, the re-emergence of tourism, and strong corporate earnings. Inflation, which for years had stubbornly remained below target levels, has returned in a controlled and manageable manner, heralding the demise of deflationary pressures.
The Bank of Japan (BOJ) has also been a primary driver of the investment landscape. While Japan remains one of the last developed nations maintaining ultra-low interest rates, there are indications that the BOJ will shift the direction of monetary policy. Any adjustment in interest rates would further bolster investor attitude, leading to additional capital inflows into Japanese fixed income and equities.
Moreover, Japan's economic prowess is underpinned by its strong manufacturing and technology sectors. Green energy initiatives, robotics, and semiconductor production are attracting significant foreign direct investment[2], and Japan is a central player in the rebalancing of global supply chains. As geopolitical risk pushes nations to diversify their industrial base, Japan's reputation for quality and innovation makes it a compelling investment location.
A boom in real estate assets
Besides equities and corporate assets, the Japanese real estate sector has also become a popular asset class for overseas investors. Tokyo, Osaka and Fukuoka are among the major cities where commercial and residential real estate demand is increasing[3] due to a recovering economy and urbanisation projects.
Japan’s low-interest-rate environment has been making real estate investment extremely appealing, with international real estate funds targeting the market at an aggressive pace.
Additionally, infrastructure developments like smart cities and green energy have unlocked new doors for investors looking for long-term stability and return in an otherwise highly volatile world.
Global investors rekindling their love for Japan
Many foreign investors who have an appreciation for Japan's economic past are returning en masse, as the country’s resurgence continues. In 2023, namely the month of May, Japan saw record-high inflows into its stock market as the Nikkei gained 28%, which only jumped higher in 2024 with a 17% increase[4], with institutional investors increasing their positions in big companies. One of whom is Warren Buffett, who increased stakes in several Japanese companies.
Buffett's increased investment in Japan's five large trading companies: Mitsubishi Corp, Mitsui & Co., Sumitomo Corp, Itochu Corp, and Marubeni Corp added further confidence to the renewed faith in the country's economic trajectory.
Additionally, private equity firms and asset managers are homing in on opportunities in Japan's undervalued corporate sector. Many Japanese companies have huge cash reserves and undervalued assets, presenting appealing prospects for restructuring and value creation.
Ocorian’s 2024 Family Office Regional Report for Asia identified that investors are pivoting towards investing in Japan equities, driven by second generation family members, who are playing a more active role in shaping the direction of family offices.
Japan’s investment renaissance is only just beginning
Japan's return as a major investment destination is a structural shift fuelled by corporate renewal and economic revamping. It is an age of rediscovery for investors, an opportunity to leverage a market that is undergoing change but remaining strong in its essential qualities of stability, creativity, and stamina.
With robust corporate governance, a transforming economic landscape, and high-pressure global investor interest, Japan is once again proving that its best days could still lie ahead. As capital surges into the country at record levels, investors who act now might be at the forefront of a historic economic renaissance.
Ocorian’s private client team delivers cross-border private client services for high-net-worth families and individuals across Asia and beyond, contact our private client team today.
[1] https://japan.kantei.go.jp/ongoingtopics/policies_kishida/newcapitalism.html
[2] https://tradecouncil.org/wp-content/uploads/2025/01/Investing-in-Japan.pdf
[3] https://hayinsights.com/real-estate-in-japan-investing-opportunities-2025/#:~:text=Despite%20an%20aging%20population%20and,both%20domestic%20and%20foreign%20investors.
[4] https://edition.cnn.com/2024/02/22/business/japan-nikkei-225-record-high-intl-hnk/index.html