Articles Property Buyer Guide Real Estate Highlight: Tokyo, Japan

Real Estate Highlight: Tokyo, Japan

One of the most highly urbanized and technologically advanced cities in Asia, investors keep coming back to Tokyo especially for its real estate scene.

A quick search on Tokyo's real estate scene almost always automatically leads you to extremely popular and luxurious properties that anyone would want to get their hands on — including homeowners, investors, realtors, and developers.

Notable figures in business, politics, and even big movie, TV, and music stars – be they locals or non-Japanese – make major purchases and acquire real estate investments such as residential and commercial properties in Tokyo, which makes it a highly in-demand city for property investments consistently through the years.

With the given current global trends as well as predictions from real estate experts, myriad insights on Tokyo's real estate scene must be discussed and disseminated, especially to those looking to invest in the city. Know more about Tokyo, Japan and its real estate forecasts for 2024 here.

Welcome to Tokyo: The Heart of Japan

Known and loved around the world as the capital of Japan, Tokyo seamlessly blends traditional culture with modern innovation. Tourists of different backgrounds continue to be captivated by the city's diverse attractions, such as its historic temples and shrines like Senso-ji in Asakusa to cutting-edge technology hubs like Akihabara Electric Town.

Filled with modernized anti-seismic skyscrapers and establishments, hole in the wall restaurants and stalls offering authentic Japanese food, an efficient public transportation system that makes it easy to navigate between neighborhoods like Shibuya, Shinjuku, and Roppongi, Tokyo offers a unique blend of old-world charm and futuristic energy that leaves travelers in awe of its beauty and complexity, and keeps them coming back for yearly trips.

A vibrant and dynamic metropolis, Tokyo is renowned for its advanced infrastructure, booming economy, and diverse real estate market. As the largest city in Japan and one of the most populous urban areas in the world, Tokyo offers a plethora of investment opportunities for real estate investors looking to capitalize on its strong rental yields and potential for long-term appreciation.

Within the city are a wide range of property types – modern high-rise apartments and traditional townhouses which all cater to various investor preferences. Through the years, Tokyo has had a stable political climate, low crime rates, and a well-established legal framework safeguarding property rights. Overall, the city provides a secure and thriving environment for investors in real estate.

With its robust tourism industry and established international business presence, a high demand for rental properties is inevitable, making it a highly attractive destination for investors seeking capital growth and steady rental income.

Being the world's fourth-largest economy, Tokyo proves its consistent desirability for investors due to the stability and rental income potential when it comes to residential developments. Generally, property prices in Tokyo are bound to go up yearly by 8%, with a little room for nuances between residential and commercial properties, among other types of real estate investments.

For specificities, residential properties in Tokyo are projected to continue rising. According to Mitsubishi UFJ Trust and Banking, prices for new condominiums in Tokyo's 23 wards are expected to see a 7% boost annually. Meanwhile, Central Tokyo is expected to experience a significant price hike, which is partly due to the interest rate hike in the United States last 2023. If we were to recall, this led to corporate performance fluctuations in the city, and the depreciation of the Japanese yen as well.

In the realm of luxury properties, both surges and increases in value are expected – those that are priced over 60 million yen have a projected 8% value decrease, while those below 60 million yen have a projected 7.7% value increase. This is indicative of an increasing preference for luxurious residential properties like apartments and condominiums.

For this year, Japan is said to gain the upper hand when it comes to attracting foreign investments despite the Bank of Japan's (BOJ) potential rate hike of about 0.1 to 0.2% after ending an 8-year policy for negative interest rates for commercial real estate investments.

As per Statista, commercial real estate in Tokyo is still expected to grow by 1.6% in 2024. And when it comes to countries outside of Japan, the United States is slated to generate the highest value in the real estate sector with a projected worth of US$25,370.00bn in 2024.

A decline in demand is anticipated in the commercial real estate market, specifically among office buildings. This is mostly because of alternative setups like hybrid and remote work, which was said to cause around a 40% drop (1.08 trillion yen) in investments. This has been the lowest level since 2012.

This decline can also be attributed to multinational corporations and their expansion in other areas in Japan. Nonetheless, the overall projected value of the commercial real estate market market in Japan is anticipated to reach ¥US$11.42tn this year.

Here are some pieces of information that may be of help if you're looking to purchase properties, develop areas, or rent a place in residential or commercial areas in Tokyo:

•  Average price of a property: ¥59.8 million or US$550,000 (as of 2019)

•  Necessary taxes for purchasing properties: registration tax, stamp duty, and real estate acquisition tax

•  Requirements for foreigners wanting to get a mortgage: Japanese guarantor or permanent residency visa

•  Most popular real estate investments: apartments, office buildings, and hotels

•  Areas you can invest in: Shibuya, Shinjuku, and Roppongi

Deals for Foreign Investors in Tokyo for 2024

As mentioned earlier, there is a huge possibility of reduced interest from foreign investors. Last year, the total transaction volume surged 3% to around 3.8 trillion yen. Foreign investors now account for 26% of the total transaction volume in real estate, which fell from more than 30% in each year before 2024.

Nevertheless, the weakened yen and the marginal cost of debt set by the BOJ are still driving forces to encourage more foreign investments in real estate – after all, major cities prove time and again on a general scale to allow their local real estate scenes to flourish despite economic, political, and social changes.

If you're looking to purchase or invest in real estate in Tokyo, Property Access Japan is where you should get started. Know more here.