Japan's economy is barely growing, its population is falling and wages have long been stagnant, but investors both inside and outside the country see surprisingly big opportunities in its property market.
"It has become difficult for general households to keep up with rising housing prices while employment and income are stagnating," Deutsche Bank said in a June note, citing data showing Tokyo condos cost more than nine times annual household income.
"In demographic terms, we expect the nationwide housing demand to remain weak," it said, citing the steady decline of people in the 25-44 year-old age bracket.
But that hasn't stopped property prices from marching higher. Japan's residential property price index for March rose 1.5 percent from a year earlier, while the Tokyo index was up 4.7 percent. Tokyo condominium prices were up 8.9 percent over the same period.
The Tokyo condo prices may be getting at least some of their boost from an aging Japanese population, particularly as inheritance taxes have been increasing.
"There are many high-net-worth individuals who invested in expensive city center condos (particularly tower condos) as a tax-saving measure," Deutsche Bank said. "Investment in rental apartments has been also increasing. We view this to be the result of inheritance tax countermeasures."