Vacation Real Estate News
Japan Lifts Foreign Inbound Covid Travel Restrictions in October
Implications for Japan's real estate market are positive
The country of Japan is significantly loosening Covid-19 border restrictions that are expected to drive increased inbound travel demand, says global property consultant CBRE.
Starting on October 11th, 2022, border restrictions that limit 50,000 overseas entrants per day were abolished. In conjunction with the long-term weakening of the yen, expectations are high that the lifting of these restrictions will serve as a catalyst to reinvigorate inbound tourist demand.
A comparison of the entry limits and the actual numbers of foreign nationals entering Japan, however, reveals that as of August, the number of entrants still lagged far below the maximum allowed levels. For this reason, some market observers remain skeptical that the abolition of these limits will be effective.
The most significant aspect of the latest round of border measure changes is permitting the entry of Foreign Individual Travelers (FITs). In 2019, prior to the onset of the pandemic, FITs comprised 76.6% of all foreign visitors to Japan. This means that until October 11th, Japan's borders have only been open to just over 20% of all potential foreign tourists. When viewed in this context, the fact that visitor numbers are well below the daily limit is no surprise.
Prior to the pandemic, 86% of foreign visitors to Japan were from Asia Pacific. In comparison to Europe, a greater number of countries in this region continue to impose strict border controls. For this reason, the planned lifting of border restrictions is unlikely to result in the immediate return of visitor numbers to pre-pandemic levels. With the FIT ratio in excess of 60% for all countries and regions (FIGURE 4), however, the volume of latent demand unlocked by the lifting of FIT restrictions is extremely significant.
The impact of lifting restrictions on FIT visitors is expected to be extremely consequential and should act as a catalyst to trigger the full-scale recovery of the inbound tourist market. The most significant real-estate related impact will be observed in the hotel and retail sectors. Urban areas, previously heavily reliant on inbound tourist demand, have been particularly slow to recover from measures to contain the pandemic. The lifting of FIT restrictions should kickstart the recovery of demand in these still struggling areas. Combined with foreign tourists' increased spending power as a result of the weak yen, CBRE expects to see a spike in demand, particularly in the high-end bracket of the hotel and retail sectors.
