Why focus your real estate investments in Tokyo


According to the Statistics Bureau of the Ministry of Internal Affairs and Communications, Japan’s population has been decreasing since around 2005. After a short recovery period, it has been continuously decreasing since 2011. This is a national phenomenon, but on a local level, the population inflow from rural areas to metropolitan areas, especially Tokyo, continues. The gap between the population density in the Tokyo area compared to other areas is growing every year.

Looking at population migration in 2018, the population of Tokyo increased by more than 130,000 people. This influx of citizens moved to the Tokyo area from all the remaining 43 prefectures.

Rising land and real estate prices in the Tokyo area

As a result, land prices and real estate prices have risen in the Tokyo area, where demand is strong, and the population density gap between Tokyo and other areas has widened year by year. For example, according to the Ministry of Land, Infrastructure, Transport and Tourism’s survey of the average land price in residential areas in 2019, the rate of increase in the Tokyo area was 1.3%, but the national average was only 0.6%. In other areas, the rate of increase was as low as 0.2%.

With regard to land prices, the average price of commercial land in the Tokyo metropolitan area rose by 4.7%, while in rural areas it rose just 1.0%. As the population concentration in the Tokyo area increases, the difference in land prices between the Tokyo area and other areas is widening. Moreover, even in the Tokyo area, the gap between central Tokyo and the suburbs is widening.

According to official land prices, Tokyo’s average residential land price in 2019 rose 3.0% from the previous year, while that of Tokyo’s 23 wards rose 4.8%. In particular, land prices in the eight wards of central Tokyo rose by 6.0%. The rate of increase in the Tama area outside of the 23 wards was only 1.0%. The rate of increase was 0.7% in Kanagawa prefecture excluding Tokyo, 0.3% in Saitama prefecture and 0.8% in Chiba prefecture.

Even in the Tokyo area, there is a large gap in the rate of increase between the central and suburban areas

Population density in the city centre of Tokyo is increasing, this is also true of real estate prices.

For example, according to the Real Estate Economic Institute’s Tokyo Metropolitan Area Condominium Market Trends FY 2018, the average price of new condominiums in the Tokyo metropolitan area in the fiscal year 2018 was 59.27 million yen. The average in 2012 was 45.63 million yen, so it increased by 29.9% in 6 years.

The lowest average price among one capital and three prefectures in the Tokyo metropolitan area, Chiba Prefecture, was 42.54 million yen in fiscal 2018, compared to 36.09 million yen in fiscal 2012. The rate of increase here was only 17.9%. However, in the Tokyo Metropolitan area alone, the average property price in 2018 is 73.2 million yen. This is a 37.1% increase from the 53.39 million average of 2012.

The rate of increase in inner-city Tokyo was 7.2 points higher than the Tokyo Metropolitan area average of 29.9% and 12.0 points higher than the Chiba prefecture average.

In the Tokyo metropolitan area, where population concentration is increasing, land prices and real estate prices are rising more and more. In other regions, the rate of increase is low, and the gap is growing more and more.

Invest in popular areas where it is easy to buy

When considering real estate investment, properties in popular areas in the centre of the city would be the most advantageous, but unfortunately, properties in such areas are expensive and are not easily accessible in many cases.

However, there are some city centre areas where you can buy property at a relatively reasonable price because they are not very popular yet. Compare the unit price for second-hand condos in popular areas such as Roppongi, Omotesando and Meguro, which exceeds 5 million yen for 3.3 square metres to those in the inner-city areas such as Iwamoto-cho, Bakuro-cho and Monzen-naka-cho. Property here can be purchased for around 3 million yen.

Because these locales have not received much attention so far, you can buy there at a relatively reasonable price.