MIJ powerd by Japan-Property

Kumamoto's real estate market is buzzing with Taiwan's TSMC expansion, with factory-adjacent land seeing the highest increase in land prices nationwide in 2024.

Kumamoto Prefecture is known as the "Land of Fire" due to its renowned caldera, Aso, which boasts one of the world's largest. The majestic scenery of mountains and grasslands created by Aso's active volcano is truly breathtaking. Additionally, the pristine spring water formed by the volcanic layers of Aso is abundant throughout the prefecture, earning it the nickname "Land of Water."

When it comes to hot springs, while Beppu and Yufuin in neighboring Oita Prefecture are famous, Kumamoto is also recognized as a "hot spring paradise" alongside Oita. There are hot spring resorts like Yamaga Onsen, Tamana Onsen, and the popular Kurokawa Onsen nestled quietly in the mountains, cherished as healing retreats since ancient times.

Despite being a comfortable place to live, Kumamoto is currently experiencing an unprecedented surge in its real estate market. The prefecture topped the national charts for the highest increase in land prices in 2024, largely due to the construction of a new factory by Taiwan Semiconductor Manufacturing Company (TSMC).

In December 2021, TSMC from Taiwan, together with Sony Semiconductor Solutions (SSS), established a new company called Japan Advanced Semiconductor Manufacturing (JASM), later joined by Denso Corporation. This new company is set to build a new factory in Kikuyo Town, Kumamoto Prefecture, and commence operations by the end of 2024, with an investment of approximately 980 billion yen.

Tokyo Electron: Plans to establish a new semiconductor manufacturing equipment development building at its subsidiary, Tokyo Electron Kyushu Goshi Plant (Goshi City), located just 2 kilometers from the TSMC factory. The investment is approximately 30 billion yen, with completion scheduled for autumn 2024.

Japan Material is opening a facility in Otsu Town adjacent to Kikuyo Town, to design and process special gas supply pipes for semiconductor manufacturing, investing about 3 billion yen, planned for completion in January 2024.

FujiFilm is setting up production facilities for polishing agents used in semiconductor manufacturing within its subsidiary's FujiFilm Kyushu factory in Kikuyo Town, investing around 2 billion yen, scheduled to start operation in January 2024.

Tokyo Ohka Kogyo, boasting a world-class share in the field of high-performance chemical products called "photoresist" used in semiconductor manufacturing processes, is establishing a business site in Kikuchi City, Kumamoto Prefecture, with an investment of over 13 billion yen.

NRS, which handles the transportation and storage of chemicals, will establish a warehouse for various chemical materials related to semiconductors in Otsu Town, scheduled for completion in July 2023.

With the establishment and expansion of these facilities, many job opportunities will be created within the prefecture. It's estimated that JASM alone will employ 1,700 people (200 from TSMC, 300 from SSS, and 1,200 from local recruitment, outsourcing, and dispatch), with a total of 7,000 to 8,000 people expected when including related companies. Additionally, it's anticipated that the construction industry will see an increase from around 1,000 workers to 3,000 to 4,000 by 2023, as infrastructure expansions like road widening and new railway lines progress.

Furthermore, on February 6, 2024, the construction of a second factory to produce cutting-edge semiconductors with a size of 6 to 7 nanometers was announced. The combined investment for these two factories exceeds 20 billion dollars, and the economic impact on Kumamoto over the next 10 years is estimated to surpass 4 trillion yen.

Due to the influx of new employment opportunities and population growth, real estate prices continue to rise in Kumamoto. While land acquisition costs in Kikuyo Town were previously significantly lower than in Tokyo in 2020, with commercial land being about 14 times cheaper and industrial land about 20 times cheaper, the entry of TSMC has led to significant increases in land prices in Kikuyo Town, neighboring Otsu Town, and Koshi City, with Otsu Town topping the charts with a 32.4% increase in 2023, ranking first nationwide.

Timing for buying a house or investing in real estate in Kumamoto:

Currently, residential construction is rapidly progressing, and as infrastructure development continues within the region, sustained increases in real estate prices are expected. However, due to the imbalance between supply and demand, it may be challenging to determine whether the prices are fair. Therefore, it's advisable to consult with a trustworthy agent familiar with local conditions.

In addition, as the competition for land intensifies in Kikuyo Town, Otsu Town, and Koshi City, other municipalities in Kumamoto Prefecture are ramping up efforts to attract businesses. In Yatsushiro City, spurred by TSMC's entry into Kumamoto, efforts to attract businesses are intensifying, and improvements and developments around Shin-Yatsushiro Station, a station on the Kyushu Shinkansen, are underway. Consequently, the positive cycle in the real estate market due to TSMC's entry is expected to extend beyond Kikuyo Town, Otsu Town, and Koshi City to a broader area.

Expansion of commercial facilities is yet to come:

Furthermore, as business travelers from domestic and international locations visit Kumamoto, there will be a need for accommodation facilities, and with the increase in the local population, commercial facilities will also be required in the area. The increasing demand for commercial properties and the expansion of tenant companies are expected to become more prominent in the future, presenting abundant investment opportunities.

Given the dynamic nature of Kumamoto's real estate market, foreign investors considering purchasing homes or investing in real estate in Kumamoto are advised to consult with a reputable agent knowledgeable about local conditions.

Apr 10, 2024