Buying real estate in Japan?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

The real estate market in Tokyo: 2024 forecast

Last updated on 

property investment Tokyo

Yes, the analysis of Tokyo's property market is included in our pack

As we step into the year 2024, the real estate landscape in Tokyo continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Tokyo's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our property pack for Japan. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Tokyo specifically.

How's the Japanese economy doing?

Current state

The real estate market in Tokyo, and more broadly in Japan, is influenced by a unique blend of economic stability, cultural factors, and government policies.

Japan's economy, known for its resilience and technological advancements, has a significant impact on its real estate trends. Historically, Japan has been characterized by economic stability, although it has faced challenges like the asset price bubble in the late 1980s and the subsequent "Lost Decade" in the 1990s.

These events deeply influenced the real estate market, leading to fluctuating property values and changes in investment patterns.

Focusing on the real estate market in Tokyo, it's a mix of modernity and tradition. The market is segmented into residential, commercial, and industrial properties.

Residential properties in Tokyo are diverse, ranging from traditional single-family homes to modern high-rise apartments. The demand for housing in Tokyo has been consistently high due to its status as a major economic and cultural hub.

Government policies have played a crucial role in shaping the real estate landscape. Historically, the Japanese government has implemented policies to stimulate the housing market, especially during economic downturns.

These policies often aim to make housing more affordable and accessible, especially for young families and first-time buyers. In recent years, there have been initiatives to address the issue of "akiya" or vacant homes, which is a growing concern in many parts of Japan, including Tokyo.

A significant aspect of the Tokyo real estate market is its appeal to investors. Tokyo, being a global city, attracts both local and foreign real estate investment.

The areas most sought after are central districts like Shibuya, Shinjuku, and Minato, known for their commercial and cultural significance. Properties in these areas are highly valued due to their location, amenities, and potential for appreciation.

For foreign investors, there are specific incentives and drawbacks to consider. Japan's stable economy and political environment make it an attractive destination for real estate investment.

However, foreign investors often face challenges such as language barriers, differences in legal and business practices, and in some cases, restrictions on property ownership. \

It's essential for foreign investors to understand these nuances and work with local experts to navigate the market effectively.

Comparatively, real estate prices in Tokyo tend to be higher than in neighboring Asian cities, reflecting Tokyo's status as one of the world's leading financial centers.

However, this is balanced by the high quality of life and advanced infrastructure the city offers.

Lastly, the legal framework surrounding real estate investment in Japan is generally stable and transparent. Japan has a well-developed legal system that provides a secure environment for property transactions.

However, it's important to note that the legal processes and requirements can be quite intricate, and seeking local legal advice is always recommended for those unfamiliar with the system.

Outlook and forecast

Tokyo's real estate market has several unique factors that distinguish it from others.

One of the key aspects is its high population density, leading to a significant demand for housing and a unique approach to space utilization. Tokyo is known for its efficient use of space, with compact living spaces and multifunctional buildings.

Another unique factor is the city's susceptibility to natural disasters, like earthquakes, which impacts building codes and insurance policies.

Additionally, Tokyo's cultural emphasis on newness often leads to buildings being considered outdated after just a few decades, influencing the turnover rate of real estate properties.

Forecasting Tokyo's economy and real estate market stability requires consideration of these unique factors, along with broader economic trends.

Given Tokyo's role as a financial and technological hub, coupled with Japan's focus on innovation and strong economic policies, the forecast is moderately positive. The city is likely to continue experiencing steady growth, though perhaps not as rapid as some emerging markets.

Tokyo's economy tends to be more stable and less prone to dramatic swings than other regions, reflecting Japan's overall economic policies and the city's diversified economic base.

In terms of government policies, Japan has historically focused on policies that encourage sustainable growth and stability in the real estate market.

Potential areas for policy changes could include further incentives for dealing with the aging population and the vacant home issue, or adjustments in property tax laws to stimulate the market.

Such policies, if enacted, could lead to increased investment in certain sectors of the real estate market, like residential care facilities or redevelopment of older properties.

Specific factors suggesting improvements in Tokyo's real estate market include ongoing infrastructure developments, such as transportation upgrades and the preparation for major events that can boost the city's global appeal.

These developments typically lead to increased property values in the affected areas and can attract both domestic and international investors.

However, potential risks should not be overlooked. These include the city's demographic challenges, like an aging population, which could lead to decreased demand in certain real estate sectors.

Moreover, the risk of natural disasters remains a constant concern, which can impact insurance costs and investor sentiment. If such risks materialize, they could lead to a cooling of the real estate market or shifts in investment towards safer or more innovative property types, such as disaster-resistant constructions.

Make a profitable investment in Tokyo

Better information leads to better decisions. Save time and money. Download our guide.

buying property in Tokyo

What about housing prices in Tokyo?

If you want to know the last prices, rents and yields in Tokyo, we have prepared everything you need in our property pack for Japan.

Current state

In Tokyo, the real estate market has exhibited some distinct trends over the past few years.

Generally, real estate prices in Tokyo have been on an upward trajectory, although the rate of growth varies by property type and location.

This increase in prices can be attributed to several factors, including the city's status as a major economic hub, ongoing urban development, and a stable political environment.

Historically, Tokyo's real estate prices have shown resilience in the face of economic crises. For example, during the global financial crisis of 2008, Tokyo experienced a dip in property values

But the market recovered relatively quickly compared to other global cities. This resilience is partly due to the robustness of the Japanese economy and effective government interventions.

On the other hand, during economic booms, such as the one experienced in Japan in the late 1980s, real estate prices in Tokyo skyrocketed, leading to what is often referred to as the asset price bubble.

Comparing current real estate prices to those a decade ago, there's a noticeable increase. The past decade has seen a gradual rise in property values, attributed to factors like the city's preparation for international events, improvements in infrastructure, and a steady influx of domestic and international investment.

Currently, the trend seems to be towards stable or slightly rising prices, although this can vary significantly depending on the specific area and property type.

The types of properties experiencing the highest growth in prices are primarily located in central Tokyo and popular residential areas.

Luxury apartments and properties in prime locations such as Minato, Shibuya, and Chiyoda wards are particularly sought after. The demand for these properties is driven by their strategic locations, proximity to key amenities, and status symbols.

Moreover, commercial properties in these areas also show significant price growth due to high demand from businesses and investors.

Tokyo's population dynamics play a crucial role in these trends. In recent years, Tokyo has seen a steady population increase, primarily due to internal migration as people move to the city for employment and educational opportunities.

This influx has fueled demand for residential properties, particularly apartments and condominiums. The city's aging population has also influenced the real estate market, with an increasing demand for senior-friendly housing and healthcare facilities.

Outlook and forecast

The current state of real estate prices in Tokyo is being shaped by a mix of economic and demographic factors.

One key economic factor is the low-interest-rate environment in Japan. This has been a long-standing policy to stimulate economic growth, making borrowing more affordable and encouraging investment in real estate.

Additionally, Tokyo's status as a major global financial center attracts both domestic and international investors, supporting high property values.

Demographically, Tokyo's population dynamics play a significant role. The city's population continues to grow, albeit at a slower rate, driven by internal migration for employment and education opportunities.

This sustained influx of people increases demand for housing, particularly in central areas and near transportation hubs.

Furthermore, Tokyo's aging population has led to increased demand for healthcare facilities and senior-friendly housing options, impacting the residential real estate market.

Looking at potential factors that could lead to an increase in housing prices in Tokyo in the near future, several specific trends and events are noteworthy.

The ongoing development of transportation infrastructure, such as new train lines and station renovations, can make certain areas more accessible and desirable, potentially driving up property values in these locations.

Additionally, Tokyo's continuous urban redevelopment, including the construction of new commercial and residential complexes, can also boost property prices in the affected areas.

These factors influencing Tokyo's real estate market might not necessarily apply to other cities or regions in Japan. Different regions may experience varying trends based on their unique economic conditions, demographic shifts, and local policies.

For example, rural or less economically vibrant areas might not see the same level of investment or population growth as Tokyo, leading to different real estate market dynamics.

Conversely, specific factors could lead to a decrease in housing prices in Tokyo. Economic downturns, either domestic or global, can reduce investor confidence and spending power, potentially leading to lower property values.

Additionally, any increase in interest rates by the Bank of Japan could make borrowing more expensive, potentially cooling the real estate market. Natural disasters are also a risk factor in Japan and can have a sudden and significant impact on property values.

These downward pressures on housing prices in Tokyo may not uniformly affect all cities and regions in Japan.

Some areas might be more resilient due to local economic strengths or demographic trends, while others could be more vulnerable due to factors like declining populations or local economic challenges.

Make sure you understand the real estate market in Tokyo

Don't rush into buying the wrong property in Japan. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

real estate market Tokyo

How's the demand for the real estate market in Tokyo?

Current state

The current demand for residential real estate in Tokyo is quite strong, characterized by a steady influx of buyers.

This demand is driven by various factors such as Tokyo's status as a major economic and cultural hub, which attracts people for employment and educational opportunities.

Generally, in Tokyo, the demand often outweighs the supply, especially in central areas and near major transportation hubs.

The supply of new housing in Tokyo is an ongoing challenge. While there is continuous construction and development, the pace often struggles to keep up with the high demand, partly due to limited available land in prime locations. This imbalance between supply and demand contributes to the relatively high property prices in the city.

In terms of the type of properties buyers are looking for, there's a diversity of preferences. Many buyers, especially younger professionals and families, are interested in modern apartments in well-connected areas, prioritizing convenience and accessibility to work and amenities.

There's also a market for high-end luxury properties, particularly among wealthier buyers and investors. These properties are often located in prestigious areas such as Minato and Shibuya.

On the other hand, there's a growing interest in properties that offer more living space and green areas, partly influenced by changing lifestyles and work-from-home trends.

Current mortgage interest rates in Japan are relatively low, a trend that's been consistent for some years. These low-interest rates make borrowing more affordable, thus enhancing the buying power of consumers.

The effect is a stimulation of demand in the real estate market, as more people find it financially feasible to purchase property.

However, it's important to note that while low-interest rates are beneficial for borrowers, they also contribute to the high competition and prices in the housing market.

Regarding government policies and regulations, the Japanese government has implemented various measures over the years to influence the real estate market.

While I'm not aware of any very recent changes, typical policies include tax incentives for homebuyers, subsidies for specific demographics like first-time buyers or young families, and changes in zoning laws to encourage development in certain areas.

These policies are designed to support the real estate market and make housing more accessible.

However, the impact of these policies can vary, and they are often adjusted in response to current market conditions and broader economic goals.

Outlook and forecast

Demographic shifts, notably the aging population and urbanization, are significantly influencing the demand in Tokyo's real estate market.

With an increasing elderly population, there's a growing demand for properties that are senior-friendly, including residential complexes with healthcare facilities and homes that are more accessible and easier to maintain.

Urbanization, marked by a continuous inflow of people into Tokyo for jobs and education, keeps the demand for housing in urban areas high.

This trend particularly favors apartments and condominiums in central locations, close to work, education centers, and amenities.

Current trends in household formation in Tokyo are leaning towards smaller household sizes. This is partly due to the aging population and the trend of young professionals living alone or as couples without children.

Consequently, there's an increased demand for smaller, more affordable residential units like one-bedroom apartments or studio apartments. These properties are particularly popular in central business districts and areas well-served by public transport.

In terms of real estate investment, there's a noticeable trend towards purchasing properties not just for living in but also as an investment. Tokyo's stable real estate market makes it an attractive option for investors.

Rental properties, particularly in central and well-connected areas, are in high demand due to the constant influx of workers and students into the city. Additionally, luxury properties in prestigious neighborhoods like Minato and Roppongi are popular among high-end investors.

Cultural trends also influence the demand in the housing market. For example, there's a growing consciousness about sustainable living, leading to an interest in eco-friendly homes. Properties with green features like energy-efficient appliances, solar panels, and green spaces are increasingly desirable.

Moreover, the Japanese concept of 'Mottainai', which emphasizes the value of resourcefulness and waste reduction, is also driving interest in smaller, more efficient living spaces.

Regarding property buying for investment versus living purposes, both trends coexist in Tokyo. While many people buy properties for personal use, a significant portion of the market is driven by investment purchases, including foreign investment.

Foreign investors are often drawn to high-end residential properties, commercial real estate, and newly developed areas, contributing to the demand in these segments.

Foreign investment in Tokyo's real estate market is substantial and plays a significant role. It creates additional demand, particularly in the luxury property market and in areas popular with expatriates.

Japan has relatively open policies for foreign real estate investors, though some challenges like language barriers and understanding the local market nuances exist.

The government occasionally introduces measures to stimulate foreign investment, such as simplifying the buying process or offering tax incentives, which can boost demand in certain market segments.

Finally, niche markets in Tokyo's real estate, such as luxury properties and eco-friendly homes, are experiencing unique trends. The luxury market remains robust, fueled by both domestic wealth and foreign investment.

Eco-friendly homes are a growing niche, driven by environmental consciousness and a cultural inclination towards sustainability. These trends reflect a diversification in the real estate market, catering to a wide range of preferences and values.

Don't lose money on your property in Tokyo

100% of people who have lost money in Japan have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

invest real estate in Tokyo

How's the rental market in Tokyo?

Current state

The demand for rental properties in Tokyo is consistently high, reflecting the city's status as a major economic and cultural hub.

This demand varies across different types of properties and locations within the city.

In central Tokyo, apartments are in the highest demand, especially among single professionals and young couples. These tenants typically prioritize location over size, seeking properties that are close to their workplace and urban amenities like restaurants, shops, and entertainment venues.

Proximity to public transportation is also a highly valued feature, as it significantly reduces commuting times in a city as vast as Tokyo.

In terms of amenities, modern conveniences such as air conditioning, high-speed internet, and security features are often sought after.

Smaller apartments, including studio and one-bedroom units, are particularly popular in these urban areas due to their relative affordability for single occupants or couples without children.

As we move to the suburban areas of Tokyo, the preference shifts slightly. Here, tenants often include families who are looking for more spacious accommodations.

Single-family homes or larger apartments with multiple bedrooms become more desirable. These areas still benefit from being within commuting distance to central Tokyo, but they offer a more relaxed environment, often with more green spaces and family-oriented facilities.

In these suburban regions, the demographic tends to be more varied, including families, older couples, and individuals who prefer a quieter lifestyle compared to the city center.

The features in demand here include larger living spaces, outdoor areas or access to parks, and family-friendly amenities like nearby schools and shopping centers.

Rural areas around Tokyo see a different rental market dynamic. The demand here is generally lower than in urban and suburban areas, and the tenants might include those who prefer a more laid-back, nature-oriented lifestyle or who have local employment or family ties to the area.

Properties in rural areas are often more spacious and may include traditional Japanese-style houses.

Income levels and economic factors play a significant role in determining where and what people rent. Higher-income individuals and families tend to rent in central or desirable suburban areas and opt for properties with more amenities and space.

In contrast, students and young professionals, who typically have lower incomes, often rent smaller apartments or shared accommodations to keep costs down.

Specific tenant groups do tend to concentrate in certain areas. For example, areas close to universities are likely to have a high concentration of students, who often rent small apartments or shared accommodations. Young professionals might cluster in urban areas that are close to business districts and nightlife.

Meanwhile, areas with a higher concentration of families might be found in more spacious suburban neighborhoods, and regions with relaxed, scenic environments may attract retirees.

Outlook and forecast

The rental market in Tokyo is influenced by a blend of factors, including urbanization, demographic shifts, evolving lifestyles and work patterns, technological advancements, and a growing emphasis on sustainability.

Urbanization remains a key driver, with a steady influx of people moving to Tokyo for work and education. This maintains high demand for rental properties, particularly in central areas and near major transport hubs.

Apartments, especially smaller units like studios and one-bedrooms, are highly sought after by single professionals and young couples.

Evolving work patterns, such as the increase in remote work, are beginning to influence rental preferences. There's a growing demand for properties that can accommodate a home office or have a dedicated workspace.

This shift could lead to a rise in demand for slightly larger apartments or properties in quieter neighborhoods that are conducive to working from home.

It might also reduce the necessity for tenants to live very close to business districts, potentially increasing the appeal of suburban areas.

Demographically, Tokyo is experiencing an aging population, which impacts the rental market. There's an increasing need for senior-friendly rental properties that are accessible and close to healthcare facilities. This trend is leading to a diversification in the types of properties being offered for rent.

Emerging urban areas are becoming new hotspots for rental properties. Neighborhoods undergoing redevelopment or those near newly built transport links are gaining popularity. These areas often offer modern amenities and are seen as up-and-coming, attracting a younger demographic.

Technological advancements are significantly impacting the rental market. The rise of smart home technologies and high-speed internet services is changing tenant expectations.

Properties equipped with modern conveniences such as automated security systems, energy-efficient appliances, and smart home devices are becoming more attractive to potential renters.

Sustainability and green living trends are also influencing the rental market. There's a growing demand for eco-friendly properties with features like energy-saving appliances, solar panels, and efficient waste management systems. This demand aligns with a broader cultural shift towards environmental consciousness in Japan.

The rental market forecast across various regions of Japan varies. While Tokyo and other major cities like Osaka and Yokohama continue to see strong demand, rural areas and smaller cities may experience different trends, often influenced by local economic conditions and demographic changes.

Looking long-term, the rental market in Tokyo is expected to remain robust, driven by its status as an economic powerhouse and cultural center.

The diversification of rental properties to meet changing lifestyles, demographic needs, and technological advancements will likely continue.

However, challenges such as space constraints and the aging population will require innovative solutions.

Finally, niche markets in Tokyo, like luxury properties and eco-friendly homes, are experiencing unique trends. The luxury rental market remains strong, catering to high-income individuals and expatriates.

The market for eco-friendly homes is growing, reflecting a wider societal shift towards sustainability. These niche markets are expected to evolve further, driven by specific consumer preferences and broader market trends.

Make sure you understand the real estate market in Tokyo

Don't rush into buying the wrong property in Japan. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

real estate market Tokyo

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.