Tokyo’s luxury residential market has historically been in high demand. Despite concerns about the city’s ageing population and predictions of economic deflation, a huge amount of domestic and foreign investors are still drawn to Japan’s capital and the real estate investment opportunities it offers.
Due to the limited opportunities to develop new luxury and ultra-luxury apartments in the heart of the city, this same demand requires you to have a carefully planned strategy to make sure you acquire the most valuable assets amidst strong investor competition and low supply. We explore how you can do this in this article.
Finding the best Tokyo luxury apartment requires a carefully planned strategy to make sure you acquire the most valuable assets amidst strong investor competition and low supply.
How Much Does a Luxury Apartment Cost?
Rent and property prices can vary significantly between luxury properties and smaller, more affordable apartments in Tokyo. When viewing listings for luxury apartments for sale in Tokyo’s central wards, you’ll see prices range from ¥190,000,000 to ¥438,000,000 and much more.
As a benchmark, the average sales price of a new apartment in the greater Tokyo region was ¥56,760,000 in July 2019, according to the Real Estate Economic Institute, a Tokyo-based think tank. This figure increases significantly to ¥65,400,000 when we look at prices in Tokyo’s 5 central wards where the majority of Tokyo’s luxury property stock is located. In terms of unit sizes, the average sales price per sqm of an apartment in these areas stood at ¥1,067,000 per sqm in Q2 last year, while average prices in surrounding regions were significantly lower.
According to the Real Estate Information Network System (REINS), a multiple listing service operated by the Ministry of Land, Infrastructure, Transport, and Tourism, the majority of sales in Minato, where the large volume of luxury properties are located, started from as much as ¥1-1.25 million per sqm between Q4/2017 and Q3/2018. Meanwhile, the most expensive sale recorded for an apartment was as high as ¥3.9 million per sqm (located in Toranomon).
For specific unit prices, you can browse our full list of Tokyo luxury property listings.
Where Are the Best Luxury Apartments Located?
Tokyo’s luxury apartments and condos are concentrated in a few areas throughout the capital, especially in the Aoyama, Akasaka, and Roppongi. This is due to a large volume of embassies, international businesses, high-end retail stores and restaurants located here. Also, it’s worth noting that all future development plans for luxury and ultra-luxury apartments seem to be concentrated in the 23 wards of metropolitan Tokyo, and specifically inside the capital’s central business districts.
Shibuya
Shibuya offers a wide range of residential stock, with its fair share of low-cost studios as well as high-end and luxury apartments. The demand for properties in this area stems from the huge entertainment and retail amenities located throughout Shibuya. Huge department stores, fashionable cafes and classy eateries distil many different aspects of Tokyo life into one area, making it a high demand area for rental and property investment.
Aoyama
Aoyama is a popular upmarket area that has become increasingly youth-orientated in recent years. With similar prestige to places like Akasaka, it also offers a more unique and modern atmosphere while delivering greater exclusiveness than places like Shibuya. In combination with easy proximity to Shibuya, Omotesando, and Harajuku, there is a high concentration of luxury properties here.
Akasaka
Home to commercial complexes like ARK Hills, Akasaka Sacas, Akasaka Garden City, and Tokyo Midtown, Akasaka attracts a huge number of tourists each year. It is also a popular place for wealthy Japanese families to reside, due to convenient access to surrounding business districts and global business offices. Certain parts of Akasaka also offer impressive seclusion and greenery considering its location at the heart of Tokyo.
Akasaka has always been a popular place for wealthy Japanese families and foreigners to reside, due to convenient access to surrounding business districts and global business offices.
Roppongi
Surrounded by foreign embassies and international offices, Roppongi is one of the most popular areas for foreign investment in Tokyo. Famous also for its iconic nightlife offerings, it attracts a combination of young professionals and upmarket demographics who want to live on the doorstep of places like Roppongi Hills and Tokyo Midtown. You’ll find a strong number of luxury apartments here as well as a blend of low-cost and mid-range family homes.
Azabu
There’s perhaps no place quite like Azabu for its association with Tokyo wealth and privilege. This is one of the capital’s more prestigious residential areas and a large volume of luxury properties can be found here, catering to upmarket families and property investors. Like other locations on this list, Azabu has an international feel while offering a convenience reach to surrounding businesses and amenities.
To learn more about Tokyo’s key investment locations, browse our full collection of property listings in places like Roppongi, Azabu, Akasaka, Aoyama and Shibuya.
What Are Tokyo’s Luxury Apartments Like?
Size
Newcomers to the Tokyo luxury property market will need to understand that places tend to be smaller when compared with other luxury markets around the world. Incoming foreign investors may be surprised to find that pricing for more spacious multi-bedroom apartments, similar to the sizes they are accustomed to at home, come at far higher prices.
Having said this, size is always relative to a specific market, and a number of luxury properties in Tokyo will come with considerable internal space and command high rental yields, on par with properties of larger spaces in other countries where demand for luxury apartments isn’t quite so high.
When compared with regular apartments and homes in Tokyo, luxury properties typically come with additional facilities such as parking; gardens or large balcony spaces; garages, and greater internal storage space that most standard Tokyo apartments.
Property Characteristics
Due to the nature of the city and its sprawling urban layout, one of the biggest attributes of an apartment is its natural lighting. Due to individual buildings being built quite close together to maximize the limited land space, homes that offer windows facing multiple directions are rarer and command greater rental yields due to foreign tenants requesting this feature in their homes.
In terms of property interior styles and finishings, Tokyo luxury apartments are typically high quality as you would expect, but often more simple in their decorative approach, prioritising functionality over aesthetic flare compared to properties in other luxury markets. While there are of course many exceptions to this rule — especially in the luxury property segment where materials and finishings are more likely to be bespoke and custom-made — you’ll find that apartments in Tokyo have many common interior styles across both mid-range and luxury apartments.
Tokyo Luxury Apartments for Sale Maintenance Fees
An additional cost of owning a luxury apartment or condo is their monthly maintenance fees. This monthly fee covers the cost of the general upkeep of the building, grounds, and common areas. For standard apartments, this could be as little as ¥7,000 per month, but for properties in the luxury segment, you may find fees as high as ¥110,000 per month and more.
To learn more about the kinds of properties currently on the market and their interior styles, browse our full list of Tokyo luxury property listings.
What is Demand Like for Luxury Tokyo Apartments?
Tokyo is home to a high concentration of high net worth individuals (HNWIs) that supports a consistent demand for luxury and ultra-luxury apartments. Surrounding regions such as China, Hong Kong and Singapore also provide a large pool of investors who are interested in the luxury Tokyo property market.
This exposure to large groups of both domestic and international buyers, in combination with a limited supply of property stock, means the luxury apartment market in Japan’s capital enjoys high demand throughout the year.
In terms of rental demand, long-term fundamental factors including net migration and a strong employment market, signal that demand for renting luxury apartments in Tokyo is also high. We’re seeing a rising population across the whole of Tokyo including key central wards, and the emergence of international offices in the capital suggests that foreign professionals and families will continue to be attracted in the coming months and years.
Luxury vs. Regular Tokyo Apartments
As an investment choice, buying a luxury apartment comes with a number of benefits, but there are also major considerations you should make too — especially when you’re eyeing up Tokyo as your investment location of choice!
Investment Potential of Tokyo Luxury Apartments for Sale
A luxury apartment in an upscale neighbourhood can be a good investment option. The rental value for these properties is significantly higher than more modest apartment types (between 30-40% higher in some cases), however, this does come at the cost of a more reliable tenant occupancy rate, as demand is slightly lower for these property types. Also, prices are more stable with regular property types such as studios and 2-3 bedroom properties, potentially making them a safer bet for investors of multiple property assets.
The rental value for luxury properties is significantly higher than more modest apartment types, however, this does come at the cost of a more reliable tenant occupancy rate, as demand is slightly lower for these property types.
Location
Luxury apartments in Tokyo are centred around a few up-scale neighbourhoods that attract a more affluent clientele. Regular apartments, on the other hand, will spring up all over the city and in Tokyo’s many suburban areas.
How to Find the Best Luxury Tokyo Property for Investment
Tokyo’s luxury residential property market is incredibly fast-paced. While the same investment “best practices” apply to other property segments, you’ll want to put added focus on timing and efficiency when you’re trying to snap up a luxury property asset that is in high demand. We’ve listed some of the best ways you can ensure you find the best luxury Tokyo property below:
| Research market | With limited stock available in this property segment, make sure you understand the landscape well, including popular property areas and potential for rental yields. |
| Building relationship with realtor | Realtors have immediate access to a number of properties and can help inform you about essential market and property factors. Building a good relationship with a Tokyo real estate partner can make the difference when acquiring a luxury apartment here. |
| Visit properties | Actually viewing specific units in person will help you to better understand Tokyo’s luxury property characteristics, such as space and style factors. Having a better understanding of what you get for your money will give you more confidence to move on future listings that become available. |
| Move quickly on available listings | Time is of the essence in Tokyo’s luxury property market. While the capital’s real estate game moves fast anyway, the added demand and lower supply of high-end properties makes it even more important to move quickly when you find a property you want to invest in. |
Luxury Property Investment Advice for Foreign Investors
In most respects, the process of buying property in Japan is very similar to buying real estate in other countries. Also, Japan is incredibly open to foreign investors when compared to other Asian regions like China, Taiwan or Hong Kong. Yet, when it comes to the actual process of applying and completing the necessary paperwork for your new luxury Tokyo apartment, the system can seem quite opaque and time-consuming for people who are not familiar with the steps to take.
While there are no specific legal restrictions placed on foreigners, language is the biggest barrier to entry when buying property throughout Japan. Many investors opt to work with a foreigner-friendly real estate agent to help them secure their property of choice.
Tokyo Luxury Apartments for Sale Final Considerations
Overall, the residential real estate market in the Greater Tokyo area is expected to continue its steady growth trend, with prices of luxury apartments unlikely to decrease in the short-term. Despite being one of the world’s largest metropolitan areas and an Asian powerhouse economy, the luxury and ultra-luxury property market has still not reached its true potential according to many analysts.
If you need help navigating Tokyo’s luxury property market or want some support acquiring a listing you have found online, get in touch with us at Housing Japan for some local expertise and guidance.
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