OSAKA - Osaka's Nishinari Ward, long known as a working-class neighborhood that accepted people from diverse backgrounds, is being rapidly reshaped by Chinese-led property development and a surge in special-zone private lodgings, bringing new business and tourism while displacing some longtime elderly residents.
Nishinari is experiencing some of the fastest aging and population decline in Osaka city. About 40% of its residents are elderly, while roughly one in four homes is vacant.
Yu Yamada, head of a nonprofit organization involved in community development, has been conducting surveys in the Sanno district, where old streets and traditional housing remain.
Residents recalled a time when the neighborhood was filled with children and people routinely sat outside in the evenings talking with their neighbors. Footage from 1997 showed the everyday life of a densely connected downtown community.
Nearly 30 years later, children's voices have largely disappeared from the narrow streets.
Yamada said few members of younger generations want to settle in the area, resulting in residents leaving and homes being abandoned. Foreign buyers are increasingly purchasing those properties and converting them into private lodging facilities.
A major driver of the change is Osaka's special-zone private lodging system.
Ordinary private lodging businesses are generally limited to operating for up to 180 days a year, but special-zone lodging facilities are not subject to the same annual operating-day limit, making them potentially more profitable.
Osaka city began accepting applications in 2016 as part of efforts to accommodate the growing number of inbound tourists, with the system actively promoted by then-Mayor Hirofumi Yoshimura.
Osaka city now accounts for about 90% of all special-zone lodging facilities nationwide.
Nishinari Ward has more than any other ward in the city, with 2,435 facilities. Of those, 67% are operated by people from China or Chinese-affiliated corporations.
Yamada's research has also identified numerous cases in which properties bought by Japanese real estate businesses were subsequently resold to Chinese-affiliated companies.
Maps shown to residents illustrate how an increasing number of properties in parts of Sanno have become Chinese-owned lodging businesses.
Some residents expressed deep unease over the speed of the transformation, saying they fear Japanese residents could eventually become a small minority in parts of the neighborhood.
At the same time, investment has brought new activity to streets where aging homes and shuttered shops had been disappearing.
One businessman at the center of the transformation is a Chinese-born entrepreneur who operates a real estate company based in Nishinari.
He arrived in Nishinari from Fujian Province in 1997 and initially worked as a day laborer.
He later opened a restaurant, and after introducing karaoke at an izakaya in 2005, the business became popular.
After moving into real estate, he began buying vacant shops along local shopping streets, converting them into karaoke izakaya and renting them to other people from China.
He also taught Chinese-born tenants about Japanese customs and manners. At one such establishment, most customers are Japanese.
Karaoke izakaya have since multiplied beyond the businesses directly connected to him, with more than 250 now operating in Nishinari.
One local resident said Chinese investment has helped bring people back into the area, arguing that without it some shopping streets might have become almost entirely shuttered. The resident said Nishinari's former image as dark, dirty and dangerous has gradually been fading.
A place of worship dedicated to a deity associated with business prosperity was also established around three years ago for Chinese residents living in the area, with the businessman involved in the project.
His development activities have expanded into lodging.
In Sanno, he constructed a 10-story building containing 84 rooms, all of which are used as private lodging accommodations. Its occupancy rate has exceeded 90%.
Nearby, new black-walled houses developed by people associated with his business network stand where aging homes once existed.
For 85-year-old Okamoto, however, the redevelopment has meant losing the community where he spent much of his life.
About six years ago, the land beneath a cluster of old row houses where he lived was sold. Ownership passed to a real estate company run by a Chinese-born man, and redevelopment accelerated.
All residents eventually left, the row houses were demolished, and 19 new detached buildings used as special-zone lodging facilities were constructed.
Okamoto said residents of the former neighborhood had been close enough to travel together, but after redevelopment they were scattered.
He had bought his long-awaited home around 50 years earlier while leasing the land beneath it. He lived there with his wife and three daughters while working as a projectionist at a nearby movie theater.
After the landowner changed, however, the ground rent rose to more than four times its previous level.
Three years ago, Okamoto accepted compensation for leaving and moved with his wife into a rented apartment.
They paid 45,000 yen a month for the apartment.
Okamoto said losing contact with neighbors had left life lonely. There were fewer people to talk to and no children's voices nearby.
His wife also said their former house had been comparatively spacious and allowed her to keep flowers, while their apartment offered little room for such pleasures.
A check of the ownership of the 19 lodging facilities built on the site of the former row houses found that most of their owners live in China.
Chinese investors continue to show interest in Nishinari because of its relatively attractive potential returns and transportation access.
A Chinese-born real estate executive who helps people establish lodging businesses in Japan promotes Nishinari properties through social media.
He said the area has historically had a poor image in Osaka because of associations with homelessness and other social problems, but tourists are often less concerned about those perceptions and place greater importance on accessibility.
Chinese developers began focusing more heavily on the area around five or six years ago, he said.
On one occasion, a parent and child who run a small or midsize company in Jiangsu Province traveled from China to inspect Nishinari properties.
They already owned one property used for private lodging in the ward and were considering purchasing another renovated wooden house about 40 years old for approximately 42 million yen.
Although the property was close to a station, it stood in a densely packed residential area.
The prospective buyers were particularly interested in projected net returns after expenses.
Another factor behind demand has been the use of lodging businesses by some Chinese nationals seeking Japan's business manager residence status.
The growing number of people establishing private lodging operations partly for that purpose has contributed to the expansion of special-zone accommodations.
For Okamoto, the changes ultimately meant another move.
After leaving the home where he had lived for about 50 years and spending three years in an apartment, he and his wife decided to relocate again, this time to live near their daughter in Nagoya.
Their daughter had become concerned that her elderly parents were becoming increasingly isolated as neighborhood relationships disappeared.
She said most of the surrounding area had already become private lodging facilities and that it increasingly felt like a neighborhood dominated by Chinese businesses and residents.
Before leaving, Okamoto returned once more to see the site of his former home, now converted into lodging.
He said there was little he could do about what had happened and accepted that he was unlikely ever to see the place again.
The neighborhood where he and his wife raised their children and spent decades together will no longer be their home.
Osaka city acknowledges that special-zone lodging has contributed significantly to the regional economy and tourism, but growing complaints over issues such as garbage and noise have prompted authorities to stop accepting new applications.
The central government also tightened requirements for obtaining business manager residence status in October 2025.
A further shock followed in November after Prime Minister Sanae Takaichi's comments concerning a potential Taiwan contingency increased tensions between Japan and China.
The political strain quickly affected Nishinari's tourism businesses.
The Chinese-born real estate entrepreneur said cancellations increased among Chinese travelers as well as tour operators.
At lodging facilities he operates, Chinese tourists had previously accounted for roughly half of guests. Their cancellations contributed to a decline in occupancy, which remains about 20% below its peak.
The private lodging industry in Nishinari is therefore entering a period of significant uncertainty after years of rapid expansion.
Yamada's nonprofit is pursuing a different approach to the neighborhood's vacant properties.
Before traditional row houses become investment targets, the organization is attempting to take control of some buildings and put them to new uses, including renting them to university students.
Rather than simply demolishing aging homes, the group wants to preserve the area's history while creating places that connect longtime residents with younger generations.
Yamada said he hopes to build relationships with people who genuinely want to establish roots in the neighborhood and develop an attachment to the community, regardless of where they come from.
The transformation is particularly significant among younger residents. Foreign nationals now account for nearly half of Nishinari Ward residents in their 20s.
At the same time, barriers have emerged between some foreign residents and longtime locals.
Nishinari has historically been known for accepting diverse groups, and examples of everyday integration remain visible, including karaoke izakaya where Japanese customers and Chinese-born staff interact naturally.
Yet the rapid pace of demographic and economic change has also contributed to fear and division.
The challenge for Nishinari is therefore no longer simply whether foreign investment is economically beneficial, but how the city can balance tourism and redevelopment with the lives of existing residents and the integration of newcomers.
As aging, population decline, investment and international politics reshape the neighborhood simultaneously, Yamada continues to ask a fundamental question: who is the city being developed for?
Source: TBS
