TOKYO -- As more foreign people, including remote workers, are staying in Japan for medium to long-term visits, new rentals targeting them with furnished apartments are gaining attention, and one U.S.-based realty tech company seeks to fill the gap between hotels too expensive for extended stays and long-term rentals with complicated contracts.

'Japan's market is growing': US tech company CEO

According to real estate tech company Blueground Holdings' CEO and co-founder Alex Chatzieleftheriou, the rental homes in Japan are of "very high quality, (and) beautiful design." He made the remarks during a visit to Japan on Oct. 1, and indicated that his business would continue to expand here, showing his confidence in the growth of the furnished apartment market in Japan.

Chatzieleftheriou's New York-based company operates over 18,000 rentals worldwide, catering to travelers staying for a month or more.

Greece-born Chatzieleftheriou landed upon the idea for the startup while working for McKinsey & Company, which took him to 15 cities in different countries on business trips. Living in hotels, he found the costs added up, but regular apartments were generally not furnished, and many owners were reluctant to allow tenancies of several months. He started Blueground in 2013 with the idea of enabling people to live freely in cities around the world. In the roughly decade since, it has grown into a global venture.

What sets the company apart is its level of digital integration. Aside from move-in reservations, on-site support during stays is also handled through a dedicated app. Rents are set using dynamic pricing, according to demand. Chatzieleftheriou indicated that the latest system allows for the prices of 200,000 rentals to be adjusted per week.

In December 2023, the company entered an exclusive contract with Mitsubishi Estate Co., and opened its first Japan property this May in the Mita district of Tokyo's Minato Ward. It currently manages 35 apartments in the capital, and aims to increase this 100-fold to around 3,500 by the year 2030.

Move in with just the clothes on your back

Chatzieleftheriou said that the company's offerings have to meet certain criteria, and the company aims to provide a consistent level of quality no matter where the traveler sets foot. The designs are unified throughout, down to the artwork adorning the walls.

Blueground's rentals are geared toward the wealthy, with monthly charges in the range of 400,000 yen to 1 million yen (around $2,600 to $6,600). For example, rents range from 500,000 to 800,000 yen for the company's suites in the upscale Azabu Juban district of Minato Ward, with the most expensive approximately 66-square-meter apartment with two rooms in addition to a living, dining and kitchen area offering a window-framed view of Tokyo Tower.

Everything from application to contract signing is handled online, and apartments have all the utilities and Wi-Fi set up and ready to use. There is also an assortment of household goods, from cutlery to towels, so all the traveler needs to bring is their smile. While the remote controls for things like TV and air conditioners have buttons labeled in Japanese, the Blueground app provides usage instructions for these devices in English.

Rising demand from digital nomads

What's driving demand for rentals like these is the rise of so-called digital nomads: remote workers who are not necessarily tied to any particular place or country. Some data indicates their number in North America grew by roughly 2.3 times between 2019 and 2022, hitting 16.9 million. Their lifestyle typically involves working while sightseeing in place to place, country to country for several months at a time. As such, there is rising demand for easy residential services in foreign languages.

The number of visitors to Japan in 2024 is on pace to top the previous peak of 2019's 31.88 million, and the national government aims for this to climb to 60 million in 2030, bringing in some 15 trillion yen (about $98.6 billion as of October 2024) to the economy. Adaptive infrastructure to accommodate the needs of digital nomads is also essential for this.

Also catering to mid- to long-term visitors are what's known as serviced apartments, which offer hotel features like concierges, breakfasts and cleaning and laundry services. Blueground seeks to differentiate from these by focusing on guests' sense of privacy. Another point is striking a balance between room size and price, in contrast to hotels and serviced apartments which are said to be relatively pricey on a square meter basis.

Chatzieleftheriou believes the Japan market will expand, driven by growth in overseas talent and global ventures.

Aside from Blueground, since 2019 Mitsubishi Estate has also been dealing mid- to long-term rentals through the Hmlet brand, a joint venture with a Singapore-based startup. This brand is aimed at young people and solo travelers, and offers rooms in the more accessible 200,000- to 400,000-yen (approx. $1,320 to $2,640) range. Currently, the brand manages 1,028 rooms in central Tokyo.

Going forward, the two brands will expand in major cities such as Osaka and Fukuoka. The goal is to surpass 10,000 rooms and revenues of at least 30 billion yen (around $197 million as of October 2024) in 2030.

"We believe this will gain steam in the market as a new way of living. We have just begun, but wish to nurture our two brands," said Tomohisa Suzuki, head of Mitsubishi Estate's housing business planning department.

(Japanese original by Kazuki Sakuma, Business News Department)