Is is possible to make a commercial argument for buying a residential property in Japan as a foreign investor?

No -

Even assuming it was legally possible, property prices in Japan are still astronomical

It's no so long ago the Emperors Palace in Tokyo was 'valued' higher that the entire State of California USA - Prices were highest in Tokyo's Ginza district in 1989, with some fetching over US$1.5 million per square meter ($139,000 per square foot), and was only slightly less in other areas of Tokyo.

By 2004, prime "A" property in Tokyo's financial districts were less than 1/100th of their peak, and Tokyo's residential homes were 1/10th of their peak, but are still listed as the most expensive real estate in the world.

1997 to 2006, house prices rose 196% in Britain, 173% in Spain, 135% in Australia, and 102% in the US - in Japan prices fell by 32 percent.

As of March 2007 - according to the Corcoran Group, the top ten most expensive cities in the world, by price per square foot, are:
Toyko, Japan ($1,271 per square foot)
Hong Kong, China ($1,220)
London, England ($1,101)
Singapore ($906)
New York ($890)
Kobe, Japan ($884)
Sydney, Australia ($839)
Stockholm, Sweden ($753)
Paris, France ($700)
Zurich, Switzerland ($667).