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Tokyo's property market continues to demonstrate remarkable strength as of September 2025.
Property prices in central Tokyo have reached historic highs with new apartments averaging over ¥110 million, while rental yields remain stable at around 3.5% citywide. Foreign investment has surged 45% in the first half of 2025, driven by a weaker yen and Tokyo's global appeal as a financial hub.
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Tokyo's property market shows continued strength with prices rising 5-6% annually in 2025, though growth is moderating from 2024's 8% increases.
Central Tokyo apartments command premium prices of ¥1.1-1.5 million per square meter, while rental yields average 3.5% with low vacancy rates around 4-5% in prime areas.
| Market Indicator | Current Level (Sept 2025) | Year-on-Year Change |
|---|---|---|
| Average New Apartment Price (Central Tokyo) | ¥110+ million | +5-6% annually |
| Price per Square Meter (Central) | ¥1.1-1.5 million | +10.7% (Jan 2025) |
| Average Rental Yield | 3.5% citywide | Stable |
| Vacancy Rate (Central Areas) | 4-5% | Low and stable |
| Foreign Investment Share | 20-40% in premium areas | +45% increase |
| Bank of Japan Rate | 0.50% | +0.25% from 2024 |
| Mortgage Rates | 1.5-2.0% | Gradually rising |
What's the current average price per square meter for apartments in central Tokyo?
The average price per square meter for apartments in central Tokyo ranges from ¥1,100,000 to ¥1,500,000 for new properties as of September 2025.
Used apartments in central Tokyo typically cost between ¥800,000 and ¥1,000,000 per square meter, representing more accessible entry points for investors. Premium areas like Minato, Chiyoda, and Shibuya command the highest prices within this range.
Some luxury units in ultra-prime locations are fetching over ¥2,600,000 per square meter, driven by intense demand from wealthy domestic and foreign buyers. The price variation depends significantly on factors such as building age, exact location within central Tokyo, and proximity to major transport hubs.
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How do prices in Tokyo compare to other major Japanese cities like Osaka or Yokohama?
Tokyo's property prices significantly exceed those in other major Japanese cities, with central Tokyo commanding a 20-40% premium over Osaka and Yokohama.
In Osaka's city center, new apartments typically cost around ¥707,000-¥875,000 per square meter, while used properties range from ¥600,000-¥700,000 per square meter. Yokohama generally falls between ¥600,000-¥800,000 per square meter for new properties.
Despite lower absolute prices, Osaka has experienced stronger growth rates recently, with some areas seeing 14-32% annual increases in 2024. This reflects investor interest in secondary markets as Tokyo prices reach historical highs.
The price gap between Tokyo and other cities reflects Tokyo's unique position as Japan's primary financial center and its attraction to international investors and corporations.
What's the recent trend in Tokyo property prices over the past 12 to 24 months?
Tokyo property prices have maintained strong upward momentum over the past 24 months, with annual growth rates of 5-7% in 2025, moderating from the 8-10% increases seen in 2024.
The residential property price index in Tokyo Metropolitan Area rose 8.14% year-on-year in January 2025, though when adjusted for inflation, growth was more modest at 3.95%. New apartment prices hit historic peaks in March 2025 at ¥104.85 million before experiencing some volatility.
Used apartment prices have shown more consistent strength, with Tokyo's 23 wards recording a remarkable 28.3% year-on-year increase in April 2025 - the highest growth rate since data collection began. This reflects sustained demand pressure amid limited supply.
Market analysts expect continued price appreciation through 2025, though at a more sustainable pace of 3-6% annually as affordability constraints begin to impact buyer behavior.
What's the rental yield in the main Tokyo wards, and how has it changed recently?
| Tokyo Area | Rental Yield Range | Market Characteristics |
|---|---|---|
| Central Wards (Minato, Chiyoda, Shibuya) | 2-3% | Premium locations, capital appreciation focus |
| Urban Districts (Shinjuku, Toshima) | 3-4% | High demand, moderate yields |
| Mid-tier Wards (Setagaya, Katsushika) | 4.5-5.5% | Balanced investment profiles |
| Outer/Suburban Wards | 5-7% | Higher yields, family-oriented properties |
| Tokyo Citywide Average | 3.5% | Stable performance |
| National Japan Average | 4.2% | Regional cities offer higher yields |
| Comparison: Osaka | 4.47% | Better yields than Tokyo |
How high is the current vacancy rate in central and suburban Tokyo?
Tokyo's residential vacancy rates vary significantly between central and suburban areas, with overall rates averaging 9-11% across the metropolitan area.
Central Tokyo maintains remarkably low vacancy rates of 4-5% in premium wards like Minato, Chiyoda, and Shibuya, reflecting strong rental demand from professionals and expatriates. Some central areas experience occupancy rates as high as 96.6%.
Suburban areas typically see higher vacancy rates in the 5-7% range, though this remains relatively healthy compared to international standards. Toshima leads with 13% vacancy, followed by Minato at 12.4% and Chuo at 11.9%.
Family-oriented properties and larger apartments generally maintain lower vacancy rates than small studio units or premium luxury apartments, which face higher vacancy due to their narrow target market.
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What are the main drivers of demand for housing in Tokyo right now?
Tokyo benefits from unique demographic advantages as Japan's only prefecture still experiencing population growth, driven by continued urban migration and increasing foreign residents.
The return to office policies post-pandemic has increased demand for housing near centrally located offices, supported by meaningful wage growth among Japanese professionals. Companies scaling back remote work arrangements have reinforced demand for prime location properties.
Foreign investment represents a major demand driver, with overseas buyers accounting for 20-40% of luxury condo purchases in central Tokyo. Chinese investors alone represent 40% of customers at Tokyo real estate agencies as of 2023.
The combination of dual-income households, high-income professionals, and robust corporate relocations continues to sustain strong buyer interest across multiple price segments.
Tourism recovery has also boosted demand for short-term rental properties, with Japan welcoming an estimated 37 million overseas visitors in 2024, surpassing pre-pandemic levels.
How is Japan's interest rate policy influencing property affordability in Tokyo?
Japan's interest rate policy remains highly accommodative for real estate despite recent adjustments, with the Bank of Japan raising rates to 0.50% as of September 2025.
Mortgage rates stay near historically low levels, with Flat 35 home loan rates around 1.5-1.6% and variable rates approximately 0.4-0.5% for residential mortgages. Investment loan rates range from 1.3-1.9% for variable products.
Major banks including Mizuho and Sumitomo Mitsui Trust have announced gradual rate increases, with short-term prime rates rising to 1.875-2.125%. However, financing costs remain cheap by international standards, enabling buyers to manage higher property prices through lower monthly payments.
The gradual nature of rate increases and continued credit accessibility mean that monetary conditions continue supporting property demand, though future rate hikes could moderate buyer enthusiasm.
It's something we develop in our Japan property pack.
What new real estate developments or infrastructure projects are planned in Tokyo?
Tokyo is undergoing massive infrastructure transformation with several major projects scheduled for completion through 2025 and beyond.
The Shinagawa Development Project centers around Takanawa Gateway City, establishing the area as a dynamic global business and residential district. This mixed-use development features office towers, luxury residences, and commercial spaces designed to create an international gateway.
The Roppongi 5-chome West District project, known as the "Second Roppongi Hills," began construction in 2025 and will create a large-scale urban redevelopment directly connected to Roppongi Station, scheduled for completion in 2030.
Shibuya continues its transformation with expanded Scramble Square developments introducing substantial office space increases, while the waterfront areas see ongoing development of the former Olympic athletes' village into a 12,000-resident condominium complex.
A new subway system connecting waterfront areas is planned for 2040, with estimated costs of ¥420-510 billion, representing approximately 10% of Tokyo's annual revenue but expected to become profitable within 30 years.
What are the latest regulations or tax changes affecting property investors in Tokyo?
As of September 2025, Tokyo has not implemented major new property-specific taxes, though ongoing adjustments to foreign ownership rules and asset declarations continue to evolve.
New energy efficiency standards for newly built homes became mandatory in April 2025, with requirements set to gradually rise toward Net Zero Energy House (ZEH) criteria by 2030. Energy-efficient homes qualify for subsidies and tax incentives.
Political discussions around foreign capital restrictions have gained attention, with some parties emphasizing national security concerns and potential impacts on Japanese residents' housing affordability. However, no specific restrictions have been implemented.
Tokyo maintains a competitive property tax rate of approximately 1.4% of assessed value, which remains attractive compared to other major global cities like New York and London. Updated rent caps and stricter building codes in some wards ensure safety and quality standards.
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How is foreign investor activity in Tokyo's property market evolving?
Foreign investment in Tokyo's property market has reached unprecedented levels, with over $10 billion invested in 2025 representing a 45% increase from the previous year.
Chinese investors have become particularly dominant, representing 40% of customers at Tokyo real estate agencies and accounting for 20% of luxury condo purchases in prime areas like Toyosu Tower. Foreign buyers now comprise 15% of all high-end property purchases in Tokyo.
The weakened yen has made Tokyo properties comparatively attractive to international buyers, with $1 million purchasing roughly 64 square meters of prime Tokyo property - double what it would buy in Singapore.
Investment in residential properties rose 18% year-over-year to ¥740 billion, demonstrating sustained international interest. Foreign investment has become particularly concentrated in districts like Shibuya, Minato, and Chiyoda due to their proximity to international schools and business hubs.
It's something we develop in our Japan property pack.
What risks should buyers and investors watch for in Tokyo's market over the next 12 months?
The primary risk facing Tokyo property investors is the potential for interest rate increases to impact affordability and demand levels.
High vacancy rates in some wards, particularly Toshima at 13% and certain luxury segments, could pressure rental returns and property values. Oversupply in premium segments may create downward pressure on yields.
Political uncertainty around potential foreign ownership restrictions poses regulatory risk, especially for international investors heavily active in the luxury segment.
Construction cost inflation and labor shortages continue limiting new supply, but any sudden increase in completed projects could pressure prices in specific submarkets.
Market maturation and affordability constraints may slow the pace of price appreciation, potentially disappointing investors expecting continued double-digit returns seen in previous years.
What's the general forecast from analysts for Tokyo property prices and rental demand in the next two to three years?
Analysts forecast Tokyo property prices will continue rising at 3-6% annually through 2027, representing a moderation from recent years but maintaining positive momentum.
Mitsubishi UFJ Trust and Banking projects 5-6% annual price increases in 2025, with luxury properties over ¥60 million expected to see 6-7% value growth. This reflects continued strength in the high-end segment despite overall market moderation.
Rental demand is expected to remain robust with companies continuing to reduce remote work policies, supporting housing demand near central offices. Net migration continues hitting new highs, particularly from foreign nationals with higher propensity to rent rather than buy.
Supply constraints for new condominiums will likely shift additional demand to the rental market, supporting occupancy levels and rental growth. Analysts expect rental prices to increase by a few percent annually, outpacing general inflation.
The consensus among major financial institutions is for continued market strength without major corrections, characterized as "gentle cooling from 2024's heat" rather than any downturn scenario.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Tokyo's property market in 2025 demonstrates remarkable resilience with continued price appreciation, strong rental demand, and robust foreign investment activity.
While growth rates are moderating from 2024's peaks, the fundamental drivers of demand - urban migration, foreign investment, and infrastructure development - remain firmly in place, supporting a positive outlook for the next 2-3 years.
Sources
- Tokyo Portfolio - Japan's 2025 Real Estate Market Trends
- Tokyo Portfolio - Tokyo Real Estate Prices Q1 2025
- CNBC - Tokyo Property Price Surge
- Global Property Guide - Japan Residential Real Estate Analysis
- Japan Property - Tokyo Real Estate Market 2025
- Bamboo Routes - Tokyo Apartment Rent Analysis
- Statista - Tokyo Housing Vacancy Rate
- E-Housing - Tokyo 2025 Development Projects