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."
That's because properties get taxed at the government's assessed valuation, which is generally lower than the purchase price, while cash would be taxed at the full value, noted Ku Swee Yong, an international property advisor at Century 21 Singapore.
"They will buy at full price," Ku said, noting he's had clients lose out on transactions because they were competing with buyers who weren't seeking discounts.
Despite the competition for deals and a 10-20 percent rise in prices over the past two years, he still sees the market as a good one for foreign investors, noting the increases have come after more than 20 years of declines.
For one thing, the yen's circa-18 percent drop against the dollar since the beginning of 2014 makes properties in Japan better value for foreign investors. Ku also noted that Japan's rental yields remain competitive, and rental cash flow is likely to remain positive even as interest rates normalize because of the country's long history of low rates.
Ku is also positive on the government's moves to relax rules on employment passes, allowing in more foreign workers, as well as offering long-term visas for potential retirees over the age of 60.
"My colleagues in Hong Kong are pushing Japan properties," Ku noted. "Rich Chinese buyers … are coming in to shop for properties too."
Investors in Taiwan, formerly a Japanese colony, are also interested in Japan property. Taiwan's own property market has cooled recently and rental yields there have fallen, Cliff So, executive director at REPro Knight Frank, a property agency in Taiwan, told CNBC in May.
In addition to cultural ties -- with many Taiwanese speaking Japanese -- investors there are also interested in Japan property because of the exchange rate. The Taiwan dollar hasn't lost a lot of ground against the U.S. dollar - it's down around 2.7 percent so far this year - but some analysts expect it to fall further in the year ahead. That compares with some analysts' expectations for the yen to remain relatively rangebound.
"In addition to rental yield and capital appreciation, [Taiwanese investors] look at whether they can get profit from a strong currency when disposing of a [property]," So said. He also noted Taiwan investors tend to prefer mature property markets when venturing overseas.
That lines up with one of the attractions of investing in Japan property that Ku highlighted: the costs in Japan tend to be transparent and well documented.
To be sure, not everyone sees an investment case for residential property in Japan.
"Top locations for residential investment are probably reasonably safe for rental returns," said Alexander Karolik Shlaen, an economist and CEO of Panache Management, a luxury brands and real estate investment adviser.
"But everything else is probably to forget about it, because there's no real demand coming from the local market. There's no population growth. There's population reduction," he said. "If you are looking for the yield, it could be interesting. If you invest for capital growth, then I would say don't expect much."
But Shlaen, who said he lived in Japan for more than 10 years, added that he's looking at investments related to tourism and hospitality to take advantage of the uptick in tourism.
But has the interest in Japan property inflated a bubble? Not yet, according to Century 21's Ku.
"We don't have a lot of credit going into the property market," he said. "The banking system is still very closed off to foreigners," with just two banks in Tokyo willing to lend and then usually only around half the purchase price, Ku noted.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1