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The 2020 Olympics being held in Tokyo has placed a premium on properties with views or near famous landmarks. Here, officials and athletes wave as the organizing committee unveils Tokyo 2020 emblems in July.ISSEI KATO/Reuters

This story is part of an ongoing series on global property that examines the shifts and trends in the housing market on the international stage.

Vancouver is used to buyers from China swooping in to buy real estate, driving up prices in the process.

But Lotus Land has nothing on the Japanese capital when it comes to voracious demand.

Consider a new high-rise residential development near the Meguro railway station in Tokyo. Slated for completion in December, 2017, the two-tower, 940-unit project requires interested buyers to submit applications during the sales periods, with lucky buyers selected via a lottery system. Units range in size from about 323 to 1,615 square feet and cost approximately ¥50-million to ¥460-million, or about $550,000 (Canadian) to $5-million.

It is one of several developments that have resorted to a lottery-type system for sales on oversubscribed projects in central Tokyo and that is seeing people from Singapore, Taiwan and in particular China eager to get in.

"You can put in your name for a one-in-20 chance of being lucky enough to be picked to buy a $12-million, 200-square-metre [2,153-square-foot] apartment," says Toronto native Kenneth Arbour, managing director of Tokyo's Century 21 Sky Realty Inc.

"Most of the buying is by the Chinese. Most of the Chinese people I sell to are cash buyers. And they're buying very high-end, multimillion-dollar apartments in the highest calibre buildings on the top floors."

Demand for Tokyo real estate has escalated ever since Prime Minister Shinzo Abe came to power in 2012. Known as "Abenomics," his reflationary policies centre on increasing public infrastructure spending, devaluation of the yen, and aggressive quantitative easing by the Bank of Japan. Interest rates are low. Five of Japan's mega-banks reduced interest rates on home loans in early September due to increased competition and a relatively low long-term government bond yield.

Potential effects of the Olympics and Paralympic Games being held in Tokyo in 2020 have also triggered interest, with the market placing a premium on properties with views or near famous landmarks. Infrastructure improvements are currently under way, such as the enhancement and redevelopment of the central and bay areas, and with the Games there is an expectation that Tokyo will be reborn into an even more attractive international city.

Tokyo also appeals because of its status as a gateway to Asia, with stable returns and low levels of perceived risk. Then there's the lifestyle: Tokyo is safe and clean, its citizens punctual and polite, and it's a haven for food lovers, with more three-star Michelin restaurants than any other city in the world.

"The market right now is extremely hot in Tokyo," says Brantford, Ont.-born Adam German, marketing director and sales consultant for Housing Japan, who predicts the market will rise by at least 5 per cent a year until the Olympics. "Appetite in Tokyo for property has never been this hungry among resident and non-resident buyers."

Tokyo proved to be the investor favourite by a wide margin in the investment prospects survey of PricewaterhouseCoopers LLP's Emerging Trends in Real Estate Asia Pacific 2015 report. Condo sales in Tokyo rose 16 per cent in 2013 from a year earlier, according to Land Institute of Japan.

Prices are rising accordingly.

In 2014, the average price of a resale condo in Greater Tokyo was ¥27,890,000, or about $306,860 (Canadian) at today's exchange rate, a 36.3-per-cent increase compared to the average price in 2004, according to Real Estate Japan. This is the highest price point in the past 10 years.

While few Canadians may be able to hand over cash for an investment property in Japan, Tokyo real estate is considered by many to be a bargain.

"When you compare Tokyo to other cities like London, it's far cheaper," says Mr. German.

In terms of luxury property, $1-million (U.S.) buys about 926 square feet in Tokyo, compared to 366 in New York, 226 in London, and 215 in Hong Kong, according to Knight Frank's 2015 Wealth Report.

Although Japanese and foreign banks are becoming more aggressive in the lending market, onshore financing is typically difficult for non-Japanese citizens to obtain.

"The banks are not co-operative here to people who are not residents," Mr. Arbour says. "You have to be a resident for two or three years and you have to produce tax returns to justify a housing loan."

Another challenge facing investors in Tokyo is that local real estate investment trusts have raised large amounts of cash over the past two years and have been buying as many new assets as they can, according to PWC's 2015 report. Their lower cost of debt makes them tough competition.

That is why those who can procure their own financing are taking full advantage of the Tokyo market right now.

Last year, individuals and companies from China bought approximately $230-million (U.S.) in real estate, more than triple the amount from 2013, according Jones Lang LaSalle. As a result, Chinese buyers are seeing more services catering to them specifically.

Chinese-speaking real-estate agencies, which were unheard of in the past, are becoming more common. Realty agencies in Beijing are organizing regular tours to Tokyo as well as Osaka, where dozens of Chinese at a time come for three-day property-shopping trips.

"Chinese buyers have been purchasing property in Tokyo from three years back, and they are very aggressive," says Zakari Tylski, international sales and investments representative with Marimo, a property developer. "This made property fairly scarce, but the demand has in turn created appreciation, Chinese-speaking consultant jobs, a new market for Chinese buyers, and quite a bit of money coming into Tokyo.

"Since two years ago, the market has been increasing rapidly, and I am confident that it will continue to grow for reasons other than just the 2020 Olympics," Mr. Tylski says. "Right now because of the increase in construction costs and land prices, Tokyo is already hitting capital appreciation in major areas."

Mr. Arbour's advice to Canadians contemplating a property purchase in Tokyo is this: "Bring cash. … People look upon Tokyo as a kind of an urban resort."

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