CNBC's Lin Lin talks to Squawk Box Asia's anchor Martin Soong about rising property prices in Japan's mega cities, as foreign buyers swoop in, fueling anti-immigration sentiment.

Tokyo

Tokyo has seen property prices reach record highs, particularly in sought-after areas such as Shibuya and Minato Ward. This surge is attributed to a combination of factors, including increased foreign investment, higher construction and labor costs, and broader economic trends. The issue has become a point of political contention, with opposition parties calling for reforms and linking the situation to rising nationalism and anti-immigration sentiment.

However, experts note that there is limited data on the nationality of property buyers, making it difficult to determine the exact impact of foreign ownership. While foreign buyers are a factor, domestic investors also play a significant role in driving prices up. The debate is further fueled by concerns over income and wealth disparity, cost of living, and economic stagnation, all of which have influenced recent election outcomes in Japan.

Rising property prices in Tokyo fuels anti-immigration sentiment

After a point you know it can get a little uncomfortable when you've got foreigners buying up all your land or well houses and apartments. Often there is not just public but also sometimes political backlash and there are signs that are starting to happen even in always polite Japan. CNBC's Lin Lin what is going on there? Yeah hey Marty and maybe we are on the precipice of some sort of change in terms of Japan's real estate market but it isn't that cut-and-dry is it and there's a number of factors in the mix here. We have seen since the elections last month that there's been a rise in nationalism and then at the same time when we think about some of the major cities like in Tokyo and really the blue chip areas like Shibuya or Minato Ward we're seeing prices at record highs as well. You add into that mix as you were kind of saying there there's a level of foreign ownership or foreign buying happening and rising costs from labor as well as from construction costs and that has of course flown through in terms of the political sphere. We saw that at the upper house elections last month and then we have some of these key opposition parties like the Democratic Party for the People as well as the populist Japan first son Sato. They've been talking about these issues and looking at potential reform because when we look at Japan versus some of the other Asia-Pacific countries as well and we have a wall which we can show our viewers, it's very open when it comes to foreign capital both in terms of residential property as well as commercial property. But it is worth noting as well that we don't really have the data to know who is actually buying. There is a bit of a void in terms of collection by nationality for example and I got a chance to speak with a senior property researcher in Tokyo about the situation and let's take a listen to how he characterized it. Foreigners buying is one reason but it's not only the reason. Also domestic investors or residents are also buying so that's not the only reason. So what I think why they're not happy with this situation is that disparity in Japan is increasing. I think in terms of income disparity it is one of the most smallest country in the world. However as we experienced increase in stock price and real estate price increase since the economics disparity in what I say asset or wealth is increasing in Japan. So those kind of disparity is making some of the nation unhappy which make this loss in election for LDP and Komeito in this last election. And I think the other thing to note is that we can't separate this issue around foreign ownership of property away from the broader issues being discussed in Japan around immigration but also as we saw at the elections as well cost of living and just broader concerns around economic stagnation as well. Yeah I think you know historical perspective is pretty important here because Japan for many many many many years has been let's say not so open to foreigners right almost xenophobic in some senses right and where property is concerned I think we need to spell it out. Let's get back to our beautiful wall Lin which you commissioned right. The difference is this in places like Oz where you're from Lin and also in Singapore where you know that we're based here at the SGX right. There have been crackdowns right and I can say this we can say this because we're both Chinese right ethnically. Chinese buyers have been very very noticeable in both countries and it's become not just taken economic but it's become a political problem as well. Not quite so in Japan yet and we don't have the the hard evidence but anecdotally obviously because of what some of these parties are saying there is noticeable pushback now.

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