Real Estate in Tokyo is Booming (and this is why)
Tokyo’s real estate is booming. There are many contributing factors to this. But before that, a little bit of background.
I am Ofir Bar. I have over two decades of experience in real estate investments, with a soft spot in my heart for young startups and innovations. It’s only natural that my attention gravitates towards regions where real estate activity blooms. This time, it just so happens to be Tokyo — the advanced Japanese capital.
Basics about Tokyo’s Real Estate Market
Tokyo has been a pretty expensive place to live in for quite a while now. A large number of foreigners flock the city, even today with COVID-19 overshadowing tourism and immigration. It also attracts merchants and industrialists from all walks of life. Affordable rented apartment deals are not rare, however, in contrast to permanent residences.
The average cost of a wood-framed house in Tokyo runs up to 200,000 yen per sq. meter. This comes to about $170 per sq. foot. Of course, design, finish, and luxury builds will fluctuate the costs. In the costliest boroughs of New York, for the sake of comparison, the cost would be around $300 per sq. ft.
As you can see Tokyo real estate is not cheap, and the primary reason behind that is the rising land value.
It’s the most populated city in Japan. The roughly 37.4 million people residing in the Greater Tokyo Area make up nearly 30% of the total Japanese population — all this is within a 5,200 sq. mile area. This density is one of the highest in the world, and also precisely what contributes to the spiking real estate prices of the metropolitan area.
The Current Real Estate Market of Tokyo
Tokyo’s real estate market is brimming with economic activity. It’s only fair that the most populous metropolitan area in the world has the most active real estate activity. New condo listings have been surging for a while now.
The prices continue to soar in the urbanized parts of the area. However, what surprises me the most is the stark decline in real estate prices when moving a bit away from the city center. In the suburbs, especially, the prices are many times much lower for the same quality of life.
Advantages of the Tokyo Real Estate Market
The Japanese real estate market has many advantages. Here are two of them:
Lower Prices Within the Tokyo Metropolitan Area
As stated above, the prices are much lower in the suburbs. However, the metropolitan area is itself full of surprises.
There are two key factors here:
- The older the house, the cheaper it costs. Sounds normal, doesn’t it? It’s not that simple. Older houses here don’t mean 5-year-old ones, but rather just a year or two. And the price difference between them and new houses is extremely wide.
- The further away you move from a train station, the lower the prices get, even within the costliest conurbation area. This is very important because increasing your walking distance to a station by as little as 10 minutes can have a great influence on the price of the house.
Olympic Village Presents Attractive Housing Options
The recent Olympics certainly had a disruptive effect on the city. The Olympic Village is a high-end waterside location that housed thousands of athletes during the games. It has self-driving cars, state-of-the-art restaurants, and a great view. This village will soon turn into attractive housing options, though. This makes the Tokyo real estate market very magnetic to new real estate developers and property dealers, so if you’re thinking of it, remember that the early bird catches the worm.
Bottom line
If you’ve been contemplating an investment in real estate, you may want to take a look toward the east — the far east, that is. Of course, Tokyo has its disadvantages, such as the fact that houses there are generally smaller than in other countries or that some areas can get very noisy, but it is certainly worth checking out right now.
