Authored by the expert who managed and guided the team behind the Japan Property Pack
Yes, the analysis of Tokyo's property market is included in our pack
Are you considering investing in Tokyo's real estate market? Curious about the emerging trends that could shape your property decisions in 2025? Want to know which areas are set to boom and which might cool down?
We will lay down recent insights, ici no guesswork, we rely only on solid data.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Japan Property Pack
1) Foreign investment in Tokyo's residential market will surge as Japan eases visa restrictions
Foreign investment in Tokyo's residential market has been on the rise, with Japan's real estate market reaching $10.2 billion in 2023.
Investors from Singapore played a big role, contributing nearly $3 billion due to the favorable exchange rate of the weak yen. This trend is expected to continue as property prices in Tokyo are projected to increase by around 8% annually in 2024, especially in the luxury sector.
High-end properties, particularly those priced over 60 million yen, are anticipated to see an 8% value increase by 2025. This surge highlights the growing demand for luxury real estate, drawing interest from both local and international buyers.
By 2025, the market for newly built condominiums in Tokyo's 23 wards is expected to keep growing. The Japanese government's decision to ease visa restrictions and offer tax incentives for foreign investors is making the market even more attractive.
These changes, along with a stable market and promising long-term returns, are pulling in investors from places like Hong Kong, Singapore, Korea, and Taiwan. The combination of these factors is creating a buzz around Tokyo's real estate scene.
For those considering a property purchase in Japan, these insights offer a glimpse into the potential opportunities and benefits of investing in Tokyo's dynamic market.
Sources: E-Housing, Savills, TechBullion
2) Central Tokyo rental yields will drop as property prices rise faster than rents
In central Tokyo, property prices have been climbing steadily in recent years.
Take Minato and Shibuya, for example, where the average price per square meter jumped by 5% in 2024. This upward trend is expected to persist, with predictions pointing to a 5-6% annual increase in property prices in 2025. While this might sound promising for property owners, there's a catch.
Rental rates aren't keeping up with these rising property prices. In 2024, mid-market rents in central Tokyo's five wards only rose by 4% year-on-year. This slower pace means that rental yields, or the returns landlords earn from renting out their properties, are likely to see a slight dip.
Historically, Tokyo's rental yields have hovered around 3% to 5%. But with property prices outpacing rent increases, these yields are under pressure. Market analyses back this up, showing that while the rental market is on the mend, property prices are climbing even faster.
For potential buyers, this means that while owning property in Tokyo might seem lucrative, the returns from renting it out might not be as high as expected. It's a classic case of the market dynamics where property appreciation outstrips rental income growth.
Sources: Global Property Guide, E-Housing Japan, Tokyo Market Data
Everything you need to know is included in our Property Pack for Tokyo
3) Foreign buyers will target central Tokyo for its global city status and top amenities
Foreign buyers are zeroing in on central Tokyo because of its global city status and top-notch amenities.
In 2024, surveys revealed that international investors were particularly drawn to central locations due to Tokyo's robust infrastructure and transportation networks. This makes it a super accessible and convenient place to live and work.
Interestingly, the rising property prices in central Tokyo haven't scared off foreign buyers. Thanks to the depreciation of the yen, these properties are relatively cheaper compared to other big cities like Singapore and Hong Kong. This has led to about 20% of high-priced condos in central Tokyo being snapped up by foreign investors.
Central Tokyo's allure is also boosted by its concentration of amenities and services. Think luxury shopping, dining, and cultural attractions. The city's focus on work-life balance and green spaces makes it even more appealing to international residents and investors.
Tokyo is not just about lifestyle; it's also making strides to cement its status as a global financial hub. This ongoing effort is a big draw for foreign buyers who see central Tokyo as a prime investment spot.
Sources: Knight Frank, E-Housing, Asian Investor
4) Foreign investors will boost demand for short-term rentals as tourism rebounds
In 2023 and 2024, Tokyo saw a dramatic increase in international tourist arrivals.
For example, in March 2024, 3.1 million international visitors flocked to Japan, which was a 69.5% jump from the previous year. This surge shows that Tokyo is still a top spot for travelers. As tourism bounces back, the demand for short-term rental properties is on the rise. In Tokyo, Airbnb listings had a 39% occupancy rate, highlighting the strong need for these types of accommodations.
Moreover, the number of active Airbnb listings in Tokyo went up by 8% over the past year, indicating a growing interest in short-term rentals. Foreign investors are particularly keen on the Japanese real estate market. They're drawn by factors like demographic shifts and technological advancements. The yen's depreciation has also made Japan more appealing to foreign investors, boosting their purchasing power.
With the yen's value dropping, foreign investors find it easier to invest in Japan, making it a hot spot for real estate opportunities. This trend is especially noticeable in Tokyo, where the real estate market is thriving. The combination of a recovering tourism industry and favorable economic conditions is creating a perfect storm for property investment.
Investors are not just looking at traditional properties; they're also eyeing short-term rental opportunities. The rise in tourism and the demand for unique accommodations make this a lucrative market. As more tourists visit Tokyo, the need for short-term rentals will likely continue to grow, offering promising returns for investors.
In summary, the rebound in tourism and the favorable economic climate are driving the demand for short-term rental properties in Tokyo. This trend is expected to continue as more foreign investors enter the market, attracted by the potential for high returns.
Sources: Nippon.com, Airbtics, E-Housing
5) Central Tokyo rents will rise sharply due to high demand and limited supply
Rental prices in central Tokyo have been on the rise recently.
In early 2024, rents in the Tokyo 23 wards jumped by 4.1% from the previous quarter and 5.2% from the same time in 2023. By the third quarter, they had climbed even more, showing a 5.9% increase year-on-year.
One big reason for this is the growing population density in central Tokyo. The Inner East submarket is buzzing with new housing and mixed-use developments, but the overall pace of new construction is slow. This means land for development is scarce.
High condominium prices in Greater Tokyo are nudging people towards rentals, boosting demand. Occupancy rates in existing rentals are sky-high, hitting 97.2% in the 23 wards, which shows just how strong the demand is.
Sources: Savills, Savills PDF, Real Estate Asia
Get to know the market before you buy a property in Japan
Better information leads to better decisions. Get all the data you need before investing a large amount of money. Download our guide.
6) Luxury apartment rents will surge as international professionals demand high-end accommodations
In Tokyo, luxury apartment rents have surged recently.
With average rents in the Tokyo 23 wards climbing by 5.2% year-on-year to JPY4,237 per square meter in early 2024, the luxury market is even hotter, showing an 11% increase over the past year. This spike is largely due to the influx of international companies setting up shop in Tokyo, bringing with them a wave of professionals who prefer upscale living.
The Tokyo Summer Career Forum in 2024, a key event for Japanese-English bilinguals, saw 232 international companies participating, underscoring the city's growing appeal to global businesses. These companies attract international talent, who often look for high-end accommodations, further driving up demand in the luxury rental market.
In the past five years, Tokyo's expatriate population in the 23 wards has grown by nearly 20%. Central areas like Chuo, Bunkyo, and Chiyoda are particularly popular among foreign residents, drawn by the quality of life and educational facilities. This demographic shift highlights the increasing appetite for luxury living spaces in these prime locations.
As the world economy recovers and COVID-19 restrictions ease, high-income professionals are relocating to Tokyo for better opportunities. These individuals often have the financial means and desire to reside in luxury apartments, adding to the demand for such properties.
Sources: Savills, Career Forum, Japan Forward, GoConnect
7) Outer wards will see property prices drop as people move to central areas
People are flocking to central Tokyo more than ever.
In recent years, there's been a noticeable shift in where folks want to live in Tokyo, with more residents moving towards the heart of the city. This trend is clear from population migration data, showing an increase in people heading to central Tokyo compared to the outer wards. The buzz of city life, shorter commutes, and easy access to amenities are big draws.
One major reason for this shift is the rising property prices in central Tokyo. In November 2023, the average price of existing condominiums in the Tokyo Metropolitan Area jumped by 9%, while new condos saw a massive 42.5% surge. This shows a strong demand for properties in central locations, which isn't as pronounced in the outer wards.
Surveys highlight that people prefer shorter commutes and the convenience of urban living. This preference is driving more residents to central areas where amenities and job opportunities are more concentrated. Plus, improvements in transportation infrastructure, like new subway lines, are making central areas even more accessible and attractive.
Demographic studies back this up, showing that younger populations are drawn to central locations for better job opportunities and lifestyle conveniences. Economic reports also indicate that job growth is primarily happening in central Tokyo, encouraging more people to move there.
Sources: Global Property Guide, E-Housing, Kyodo News, Tokyo Price Forecasts, E-Housing Insights
8) Suburban rental yields will rise as these areas attract more families
Suburban areas in Tokyo are becoming a hot spot for families, leading to a noticeable rise in rental yields.
In places like Setagaya, known for being family-friendly, rental yields for apartments range from 3.73% to 6.06%. This makes it a promising area for property investors. Over in Nerima, a 2-bedroom apartment in Joto-ku offers a 4.44% yield, showing that suburban areas are indeed attractive for investment.
Families are drawn to these areas because they offer more space and better amenities. Setagaya and Musashino, for example, are investing in educational facilities and family-oriented amenities like parks and childcare centers. Improved transportation links make commuting to central Tokyo easier, which is a big plus for working parents.
The media often highlights the perks of suburban living, such as larger spaces and a more family-friendly environment. This positive coverage boosts demand for suburban housing. Real estate reports show that prices in these areas are stable or even growing, making them appealing to both investors and families. In Nerima, the affordability of housing is a major draw for young families.
Suburban areas are becoming more attractive to families, which in turn is driving up rental yields. This trend is supported by the availability of larger living spaces, better amenities, and improved transportation links. As a result, suburban areas are becoming increasingly appealing to both families and investors.
Sources: Global Property Guide, Unlock Japan, TenantCloud
Everything you need to know is included in our Pack for Tokyo
9) Rental yields in Tokyo's outer wards will rise as people seek affordable housing options
In Tokyo, outer wards like Adachi and Katsushika are now offering rental yields between 5.0% and 6.0%, making them attractive for property investors.
From 2019 to 2023, there was a noticeable shift as people moved from central Tokyo to these outer areas. Many foreign nationals, who initially settled in the Central 5 Wards, later opted for the outer wards, seeking more space and affordability. This trend has increased the demand for rental properties in these areas.
Living in outer wards is generally cheaper than in central Tokyo. For example, property prices in Adachi and Katsushika are more budget-friendly, drawing those looking for affordable housing. This affordability, along with better public transportation, has made these areas more appealing for commuters heading to central Tokyo.
As public transport continues to improve, outer wards are becoming more accessible, which is a big plus for residents who work in the city center. This ease of commuting is a key factor in the growing popularity of these areas.
Investors are taking note of these changes, as the combination of higher rental yields and lower property prices in outer wards presents a promising opportunity. More people are seeking affordable living options, which is likely to drive up rental yields even further.
For those considering buying property in Tokyo, the outer wards offer a compelling mix of affordability and potential returns. These areas are poised for growth as more people look for cost-effective living solutions.
Sources: E-Housing, Savills Asia
10) Tokyo's aging population will drive higher demand for senior-friendly housing
Tokyo's aging population is driving up the demand for senior-friendly housing.
In 2024, 23% of Tokyo's residents were 65 or older, and this is expected to climb to 30% by 2045. This shift means more homes need to cater to seniors. With people living longer, thanks to Japan's rising life expectancy, there's a growing need for housing that supports these extended lifespans. Older adults are increasingly looking for compact, urban homes close to medical facilities, which highlights the demand for accessible living spaces.
The Japanese government is aware of the challenges posed by an aging population, such as pressures on healthcare and long-term care. This awareness has led to a push for age-friendly housing solutions. In central Tokyo, there's been a noticeable increase in the construction of barrier-free and accessible housing units, specifically designed to meet the needs of older adults.
These new housing developments are not just about accessibility; they also focus on creating a community feel. Many of these homes are located in areas with easy access to public transport, shopping centers, and parks, making them attractive to seniors who value convenience and social interaction. The trend is clear: senior-friendly housing is becoming a priority in Tokyo's real estate market.
For potential property buyers, this means an opportunity to invest in a market that's adapting to demographic changes. Properties that cater to the needs of an aging population are likely to see increased demand. As Tokyo continues to evolve, the focus on senior-friendly housing is expected to grow, offering both challenges and opportunities for investors.
11) Luxury property rental yields will drop because of high purchase prices
In 2023 and 2024, luxury property prices in Tokyo have surged significantly.
Buying a high-end property in Tokyo has become quite expensive, with prices rising around 8% annually, according to Mitsubishi UFJ Trust and Banking. This trend is particularly noticeable in Tokyo's upscale neighborhoods, where the demand for luxury living is high.
When it comes to rental yields, or the return on investment for property owners, Tokyo's average yield is lower than other Japanese cities. This is mainly because of the steep property prices. For example, in the southern districts of Tokyo, the expected yield for residential properties is about 3.8%, which is considered low.
The issue is that while the cost of buying these properties keeps climbing, rental prices aren't increasing at the same pace. This mismatch leads to a decrease in rental yields, making it tough for owners to get the returns they anticipated.
Even in high-demand areas, the high purchase prices of luxury properties are a challenge. Owners find it difficult to achieve the rental yields they might have expected, despite the prime locations.
So, if you're considering investing in Tokyo's luxury real estate, be aware that the rental yields might not meet your expectations due to these high purchase prices.
Sources: Tokyo's Rental Yield Analysis, 2024 Property Investment Forecast in Japan, Net Yields of Tokyo Apartments
Buying real estate in Japan can be risky
An increasing number of foreign investors are showing interest in Japan. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
12) International students will drive up demand for rentals near Tokyo universities
In cities like Tokyo, international students are flocking in large numbers, reshaping the housing market.
Take the University of Tokyo, for instance, where 15% of the student body is international. This isn't just a one-off; Waseda University, another major institution, hosts 5,560 international students, the highest in Japan.
These students are driving up demand for housing near campuses, with many opting for off-campus living. This trend has led to housing shortages in university areas, as students prefer the independence and convenience of nearby rentals.
As a result, rental prices in these districts are climbing. In 2023, the Northeast region of the US, known for its international student population, experienced a 9.78% increase in rental prices, highlighting the pressure on housing markets around universities.
Japan's government data shows about 280,000 overseas students in 2023, a number bolstered by international exchange programs. This influx is a key driver of the growing demand for rentals near educational institutions.
Sources: Japan Times, Immerse Education, Amber Student, The PIE News
13) Foreign buyers will flock to Tokyo's luxury market driven by favorable exchange rates
Tokyo's luxury properties are becoming more attractive to foreign buyers due to the weaker Japanese yen.
With the yen's depreciation, foreign buyers can now afford more space in Tokyo compared to cities like Singapore and Hong Kong. Imagine getting 64 square meters of prime property in Tokyo for $1 million, which is a lot more than what you'd get elsewhere.
Whenever the yen weakens, foreign investment in Tokyo's real estate tends to rise. Back in 2018, favorable exchange rates led to a record high in foreign direct investment in Japan's real estate sector, showing a clear pattern that might repeat now.
Real estate agencies, such as Sumitomo Real Estate Sales, have noticed a surge in inquiries from international buyers. They even offer services specifically for these clients, highlighting the growing interest from abroad.
Interestingly, about 20% of high-priced condos in central Tokyo are snapped up by foreign investors, many hailing from the Asia-Pacific region. This trend underscores the appeal of Tokyo's luxury market to international buyers.
With the current exchange rates, foreign buyers are likely to seize the opportunity to invest in Tokyo's luxury real estate market.
Sources: Statista, Sumitomo Real Estate Sales Company, Knight Frank
14) Zoning changes boost mixed-use developments expanding residential options in commercial areas
Tokyo is reshaping its cityscape by revising zoning laws to allow for more mixed-use developments.
Traditionally commercial areas are now welcoming residential spaces, making the city more vibrant and livable. A standout example is the Yaesu 2-Chome Central District Redevelopment, which blends office, residential, and educational spaces. This shift is part of a broader strategy to boost Tokyo’s appeal to both residents and businesses.
There's a noticeable uptick in mixed-use projects approved by the city. The Azabudai Hills project is a prime example, featuring retail, residential, and office spaces. With a hefty investment of Y640 billion ($4.5 billion), it will host over 20,000 employees and 3,500 residents. This trend is gaining traction as demand for residential properties in commercial districts grows.
In areas like Shibuya and Shinagawa, luxury apartments often exceed ¥2 million per square meter, highlighting the strong market for these spaces. The real estate market in Tokyo is shifting from purely commercial to mixed-use developments, with the average price of newly built condominiums reaching approximately ¥1.2 million per square meter.
Public demand for more residential options in commercial areas is driven by a desire for better work-life balance and access to green spaces. The government is also providing incentives for developers to create these mixed-use spaces, further fueling the trend. This shift is expected to continue, with further price increases anticipated in 2025.
Sources: E-Housing, World Construction Network, Urban Design Review, E-Housing
Everything you need to know is included in our Property Investment Pack for Tokyo
15) Buyers will prioritize eco-friendly homes in Tokyo real estate decisions
Sustainability is becoming a key factor in property decisions, especially in bustling cities like Tokyo.
In Japan, there's a noticeable shift towards eco-friendly homes, with over 82,000 new custom-built homes being net zero energy houses in 2022. This trend is gaining momentum as Tokyo plans to enforce stricter regulations, such as requiring solar panels on all new detached houses by 2025.
People are increasingly drawn to sustainable living environments, partly due to the impacts of climate change and urban heat. This shift is supported by government initiatives that encourage households to save, generate, and store electricity, making sustainable living more appealing.
The media plays a significant role in this transition by spotlighting successful projects like the "Tokyo Zero Emission House." Such coverage boosts public interest and awareness, making eco-friendly homes more desirable.
In the real estate sector, there's a growing demand for green certifications, as seen in the rising number of participants in the Global Real Estate Sustainability Benchmark (GRESB) from Japan. This indicates a strong interest in sustainable practices among property developers and buyers.
As sustainability becomes more important, buyers are likely to favor homes that offer eco-friendly features, aligning with the broader trend towards greener living. This trend is particularly notable in urban areas, where the benefits of reducing energy consumption are most apparent.
Sources: Jones Lang LaSalle, Statista, E-Housing
16) Koto Ward's popularity will soar due to its waterfront location and new urban developments
Koto Ward's popularity is soaring due to its waterfront location and exciting urban developments.
In recent years, property prices in Koto Ward have surged, especially in the Kiba district. This uptick has caught the eye of investors, with major players like UBS pouring money into the area, signaling strong confidence in its future. The waterfront is a big draw, offering stunning views and a vibrant lifestyle that appeals to both locals and newcomers.
One standout project is the TOYOSU22 by Tokyo Gas Real Estate Co., Ltd., which is transforming the area into a sustainable city. This development focuses on smart energy and community living, enhancing the appeal of Koto Ward. Residents can look forward to a high quality of life, with modern amenities and eco-friendly initiatives.
The Tokyo Metropolitan Government is also playing a crucial role by upgrading infrastructure in Koto Ward. The redevelopment of the Toyosu Wharf district is a key example, with plans for mixed-use spaces that blend residential, business, and commercial areas. This modern infrastructure makes Koto Ward a prime choice for both living and business, thanks to its strategic location and connectivity.
With these developments, Koto Ward is becoming a hotspot for those seeking a dynamic urban lifestyle. The combination of waterfront views, modern infrastructure, and sustainable living options is hard to resist. As more projects come to fruition, the area's appeal is only set to grow, attracting even more interest from investors and potential residents alike.
Sources: Savills Asia, Tokyo Tokyo, Real Estate Tokyo
17) Online platforms streamline property transactions enabling investors to buy remotely easily
In Japan, online real estate platforms are becoming increasingly popular.
Companies like Cushman & Wakefield Japan are leading the way with 3D virtual property tours, allowing buyers to explore homes without stepping foot inside. This tech-savvy approach is a game-changer for investors who want to make decisions from afar.
Tokyo is seeing a surge in remote property deals, with a 34% recovery in commercial real estate transactions happening online. This trend shows that people are getting more comfortable with digital platforms for buying and selling properties.
Buyers are now leaning towards digital transactions, with many embracing virtual reality (VR) and augmented reality (AR) for a more lifelike property viewing experience. These technologies make it easier for remote buyers to feel like they're actually there.
Financial services are also catching up, with options like Smartpay’s buy-now-pay-later making it fast and secure to finance property purchases. This is drawing more international investors to Tokyo's online property market.
With these advancements, investors can now buy properties remotely with ease, thanks to streamlined online platforms.
Sources: Matterport News Release, Fintech Magazine, Axis Technical
Don't lose money on your property in Japan
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.
18) Compact energy-efficient apartments will dominate as environmental concerns rise
Compact, energy-efficient apartments are gaining traction as environmental concerns rise.
In bustling Tokyo, there's been a noticeable uptick in buildings earning energy-efficient certifications like BELS and ZEB. These certifications mean the buildings are not just saving energy but also generating their own power, which is a huge plus for those who care about the planet.
Smart home tech is also on the rise, making it easier for residents to manage their energy use efficiently. This tech helps people cut down on their energy consumption, which is crucial for shrinking their carbon footprint.
The media is doing its part by showcasing the perks of energy-efficient living, nudging more folks to consider these eco-friendly options. Plus, the Japanese government is sweetening the deal with financial incentives for energy-efficient upgrades, making sustainable living more affordable.
These government incentives are in line with the growing awareness of climate change and the urgent need to reduce CO2 emissions, especially in urban hubs like Tokyo.
As more people become aware of these benefits, the demand for compact, energy-efficient apartments is expected to keep climbing. Environmental concerns are reshaping the property market, and these apartments are at the forefront of this change.
Sources: 2025 Japan Property Market Insights, Eco-Friendly Properties in Tokyo Metropolitan, GLP J-REIT Obtains BELS and ZEB Certifications
19) Shinagawa will be a tech professional hotspot with new tech hubs developing
Shinagawa is rapidly becoming a hotspot for tech professionals due to several exciting developments.
One major factor is the increased investment in tech infrastructure. Companies like Shinagawa Refractories are pouring resources into areas like decarbonization and labor-saving technologies, showing a strong commitment to building a robust tech environment. This kind of investment is crucial for creating a thriving tech scene.
Big tech companies are also making moves, with announcements about new offices and campuses in the area. The Takanawa Gateway City project, featuring the impressive 46-floor LINKPILLAR 1, is set to be a hub for international businesses and startups. This development is part of a larger effort to transform Shinagawa into a global gateway, making it an attractive destination for tech professionals.
Government initiatives are playing a key role as well. The Shinagawa Development Project, spearheaded by JR East, aims to enhance the value of the Shinagawa Station area by creating a collaborative ecosystem that supports startups and fosters next-generation talent. These efforts are essential in building a thriving tech community.
Transportation improvements are another draw. The upcoming Linear Chuo Shinkansen will connect Tokyo and Nagoya in just 40 minutes by 2027, significantly enhancing connectivity to Shinagawa. This makes commuting easier for tech professionals, further boosting the area's appeal.
Partnerships between local universities and tech companies are fostering innovation. The UTokyo GATEWAY Campus, a collaboration between JR East and the University of Tokyo, aims to create an experimental site for enriching people's lives. This partnership highlights the innovative spirit taking root in Shinagawa.
Finally, the growth in coworking spaces and innovation labs is a clear indicator of Shinagawa's emergence as a tech hotspot. Facilities like LiSH, which support over 100 startups, offer private offices, coworking spaces, and shared labs. This growth provides tech professionals with the resources they need to thrive.
Sources: Takanawa Gateway City, Shinagawa Refractories, Gateway Tech Takanawa
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.