Property Investment Alert: Composite Shibuya Shoto

AUTHOR’S NOTE: While reading the below article, it is best you have the following links open in separate browser windows as the article mentions information that is further expanded on in the below links.

Click here to see the property details for Composite Shibuya Shoto

Click here to see the investor presentation for the property

Click here to read more about Shibuya’s gentrification

There is nowhere else on the planet right now that offers as great an investment opportunity as Shibuya does. The sheer amount of gentrification happening in the area is nothing short of awe inspiring, with more than 800,000 square meters of office and retail inventory expansion set to be completed through 2023, amongst various developments.

Why? Shibuya has always been Tokyo’s premiere cultural center and is to be, going forward, the IT/Creative center for the city.

This designation has been given by the Tokyo government and allows IT/Creative companies who establish Asia headquarters in the area tax incentives and simpler visa approval processes for bringing in foreign talent, mainly in the form of engineers and digital creatives.

Currently most of Japan’s largest IT companies are located around Shibuya station and once the Shibuya Stream complex is finished, Google is set to move in occupying more than double the floorspace they had in their previous Roppongi Hills home due to their workforce expansion in the city.

Source – Savills Japan

Why does this matter to Composite Shibuya Shoto?

Simple answer – very high tenant demand and low inventory supply which means sustained high occupancy.

This property is positioned to take advantage of the ever growing need for furnished, short term stay apartments in the Shibuya area.

Shibuya’s brand name is well on it’s way to eclipse more traditionally famous Tokyo locations like Ginza & Omotesando. If you are a renter set to work in Tokyo on a short term stint, the first place our data shows tenants look at is Shibuya.

The rent levels estimated for Composite Shibuya Shoto are historically are very successful in terms of sustaining occupancy according to our track record of operating in the area.

Currently we manage 34 units around the Shibuya station area. These units have maintained very high occupancy over the course of operations. Our current inventory rents out from between ¥180,000 / month to ¥520,000 / month with many units renting in the ¥250,000 / month level give-or-take depending on specific sizes.

However, regardless of rent level and sizes, due to the sheer popularity of Shibuya, all units are consistently rented out at the monthly furnished rent level. At present, we are receiving more inquiries than we have properties for in the Shibuya area.

In this property’s case, we estimate that we can rent in a combination of monthly furnished and daily stay scenarios to provide a NET yield of 4.2%.

For a brand-new building on freehold land that is walking distance to Shibuya station, what is not to like?

Who are the tenants?

Given our experience managing property in the area, we have seen:

IT Engineers coming to Tokyo on internal global transfers for between 3-6 months.

Japanese language students from all over the world who, as part of their post secondary education, are coming to Shibuya for 3 months whose parents wish them to be close to the school in a safe, clean furnished apartment in a safe neighborhood.

Business people coming to Tokyo several times a year for a month or more at a time to see clients and maintain relationships.

Additionally and very importantly, Housing Japan offers owners further piece-of-mind in the form of guarantor company services to underwrite each lease.

Much like long-term unfurnished leases that require co-signers or guarantors to underwrite a lease in the event the tenant stops paying rent, we can offer the same level of protection for short-term tenancies as well.

What about the Olympics?

We are currently working with many companies that need housing for the games. The housing needs are not for athletes but for the tens-of-thousands of support staff, global media and other visitors that will descend on the city for the games.

All of these people need short-term furnished places to stay for the games. At present we are sending proposals out with significantly higher-than-market rent levels.

So far, these proposals are being agreed upon without tenants batting an eyelid leading us to believe we should be charging more.

In short, for this type of rental, the Olympics do represent an opportunity to make a lot of rent in a short period of time.

That said, the Shibuya gentrification project is a completely separate economic venture from the Olympics ensuring tenant demand well past the games.

In closing…

If you’ve read this far then you’re interested in learning more.

Enquire below to schedule a viewing, to learn more about the financing options available for qualified borrowers and to learn more about our track record as property managers all in greater detail.

We very much look forward to having an opportunity to display in person our great enthusiasm for this well-positioned investment property!



Editor’s Note: Adam German is Vice President of Business Development at Housing Japan and a well-known figure in both the marketing and sales side of Tokyo real estate. Originally from Canada, Adam has been behind some of the most successful international residential property services in Tokyo.