Reasons to invest in real estates in the Tokyo metropolitan area

In this article, I will introduce the reasons why you should invest in real estates in the Tokyo metropolitan area.

The population of the Tokyo metropolitan area is the largest in the world

Tokyo Station

According to the United Nations, the Tokyo metropolitan area has the largest population in the world. (The World ’s Cities in 2018)
It is expected to remain the largest in the world until it is overtaken by Delhi, India in 2030.

The GDP of the Tokyo metropolitan area is the largest in the world

Otemachi

According to data from the Brookings Institution and PricewaterhouseCoopers, the Tokyo metropolitan area has the largest GDP by city in the world. There are many large companies and wealthy people in Tokyo, and real estate transactions are also active. Rent income from tenants is important for real estate investment. Since the population and economy are large, it is relatively easy to find tenants and the risk of vacancy can be reduced. It also has low liquidity risk because it is easy to find buyers.

Headquarters of large global companies gather in Tokyo

The majority of Global Fortune 500 Japanese companies are headquartered in Tokyo

Skyscrapers in front of the Imperial Palace

There are many attractive and profitable companies in Tokyo. The world's largest companies are listed in the Global Fortune 500, and the majority of Japanese companies listed there are headquartered in Tokyo. This means that the profits of overseas subsidiaries and branches will be controlled in Tokyo. It is analyzed that Japan continues to record current account surplus because dividends from overseas subsidiaries of Japanese companies are increasing. Even in years when the trade balance is in deficit, the current account is always in surplus. There is no doubt that overseas investment and dividends by Japanese companies have a positive impact on the Japanese economy. And many of the big companies that support the Japanese economy are headquartered in Tokyo. This is also working positively for the real estate market in Tokyo.

Real estate prices in Tokyo continue to rise

Tokyo Metropolitan Government Building

According to data from Real Estate Information Network for East Japan (REINS), the number of contracted properties and prices for both condominiums and pre-owned houses have increased year-on-year. (Monthly bulletin market watch for March 3rd year of Reiwa)

Condominium

Contracted property in March (Greater Tokyo area)

・ Number of cases 4,228 + 16.1% year-on-year
・ Average Price: 38.37 million yen + 10.0% year-on-year

Pre-owned houses

Contracted property in March (Greater Tokyo area)

・ Number of cases 1,629 cases + 25.8% year-on-year
・ Average Price: 34.66 million yen + 11.5% year-on-year

It has been reported that the number of contracts concluded for both condominiums and pre-owned houses has reached a record high since the inauguration of Real Estate Information Network for East Japan (REINS).

There are many wealthy people in Tokyo

Marunouchi

There are many wealth people in Tokyo.

According to reports from US research firms Wealth-X and Nippon.com, Tokyo had 6,785 ultra wealthy people with more than $ 30 million in wealth in 2017, ranking third in the world after Hong Kong and New York. Japan is reported to have the second largest number of ultra wealthy people in the world after the United States. ("Ultra-rich" population, Tokyo and Osaka are in the top 10: Hong Kong is the best in the world)

According to Nomura Research Institute, Ltd., there are 1.33 million wealthy households in Japan with net financial assets of 100 million yen or more, and both the number of households and the amount of assets held are increasing. (Nomura Research Institute estimates that 1.33 million households are wealthy in Japan and total net financial assets are 333 trillion yen)

Since this statistic does not include landowners who own almost all of their assets in land or buildings, I feel that there are actually more wealthy people in Japan. There are local landowners who manage their assets in real estate rather than financial assets. There are more wealthy people in Japan because these landowners are not included in the statistics above.

Tokyo is a safe city

The Akasaka Estate

Tokyo is safe and you can walk safely even at midnight.

The Economist has rated Tokyo as the safest of the 60 cities. (Safe Cities Index 2019)
Anti-government demonstrations and riots are occurring in major cities overseas. In Tokyo, order is maintained even after a state of emergency is declared.

Demonstrations and riots destroying buildings is a horror for real estate investors. Although some real estate companies recommend investing overseas, we recommend investing in safe real estates in Tokyo. Many of the tenants also live by observing the rules stated in the lease contract. This is very important to protect and increase your valuable assets.

In addition, the city is clean, so residents can live comfortably.

Disciplined national character

A businessman bowing at Atago Shrine

Lower Resident Risk

Toyokawa Inari

We are in the real estate management business, and we often talk to residents. Everyone lives by observing the rules properly. This is because there are several screenings before moving in. For example, in the case of our company, we require the applicant to pass the screening of the rent guarantee company with which we are affiliated. In addition, if they are likely to cause trouble, we may refuse to move in after consulting with the owner.

Real estate investment has resident risk and rent delinquency risk. Residents are customers, so you can think of them as gods, but unfortunately some of them behave like gods of poverty. Therefore, it is necessary to prevent the move-in of people who are likely to cause trouble. Once they move in, it will be difficult to force the tenants protected by Act on Land and Building Leases out. These risks can be reduced by passing the screenings of the management company and the guarantee company.

In general, Japanese people follow the rules and discipline. The higher the popularity of property, the lower the risk of residents. For example, if you have a condominium in a prime location in the city center, you will be flooded with move-in applications, so you can choose a resident. If this is an old apartment in a rural area, it is difficult to find a resident in the first place, so it is difficult to reduce the resident risk.

In central Tokyo, the population is large and the average income is high, so it is easy to reduce the resident risk.

Strong transportation infrastructure

Shinjuku Station

Wherever you go in Tokyo, you can live without a car because of the well-developed transportation infrastructure.
Trains, buses and taxis are controlled and operate on time.

Shinjuku station is the busiest station in the world

Shinjuku Station Terminal

According to Guinness World Records, Shinjuku Station is the busiest station by passenger use with an estimated average of 3,590,000 passengers per day. (Busiest station

In addition, Shibuya Station, Ikebukuro Station, Tokyo Station, etc. have the largest number of passengers in the world. Trains arrive on time in minutes, and you can go anywhere in Tokyo with just the train. It is a very convenient city for both investors and residents, so it will continue to grow.

Tokyo is a disaster-resilient city

Nijyubashi Bridge

For example, at Shibuya Station, a rainwater storage facility was put into service in August 2020 in preparation for flood damage, which has made it possible to temporarily store 4,000 tons of rainwater. In this way, in Tokyo, the government, corporations, and citizens of Tokyo are working together to take disaster countermeasures. Since each city is developing in preparation for disaster risk, it is easy to collect data published by the government and corporations when investing in real estates.

Tokyo has withstood the Great East Japan Earthquake, so it can be said that it is a disaster-resilient city.

There are historic buildings of cultural value

Meiji Shrine

Tokyo is a modern city with many skyscrapers and a well-developed transportation network, but there are many historical buildings of cultural value in Tokyo. Not only the places that are registered as cultural properties by the government and become tourist spots, but also the small shrines and temples that you encounter while taking a walk are built in the Edo period. I feel that Tokyo is a fascinating city that combines high-rise buildings built with the latest technology and historic buildings.

Sanno-Hie Shrine

Tokyo is the center of subculture

Akihabara
BANDAI NAMCO's stock price rises with this tweet

Tokyo is the center of subculture.

Many anime, manga, and games are born in Tokyo. And these markets continue to expand.

In January 2021, the Tokyo-based BANDAI NAMCO's stock price rose as the world's richest man, Elon Musk suggest to be a fan of Bandai Namco's THE IDOLM@STER. I became to know about THE IDOLM@STER for the first time in Bloomberg's coverage, so I think it had a lot of diffusion power. His tweet is liked by 582.5K on Twitter. (Bandai H share rebounds, expects profit from Mr. Musk's "character push")

Also, he mentioned the movie "Your Name" in his tweet. This is also 85.8K likes, which is a great diffusion power.

Many of the companies and creators are based in Tokyo, and these people also rent or buy offices. And the development of the Japanese content industry is also working positively on the real estate market in Tokyo.

At the end

Shibuya

I lived in London, Auckland, Los Angeles and Tokyo, but Tokyo is my favorite city. I can confidently introduce real estates in Tokyo because the people living in Tokyo are very attractive. No matter where you go, they are all polite and kind. All the photos in this article were taken by me and I like them all because I have good memories. I think the charm of the cityscape of Tokyo is that even the photos taken casually become beautiful.

Tokyo is safe and you can go out with peace of mind at night. The food is delicious and there is plenty of entertainment. It's always interesting to discover new things just by taking a walk. Real estate prices continue to rise and stable rent income comes in, so real estate investment in Tokyo is a good choice.

If you are thinking of investing in real estates in the Tokyo metropolitan area, please feel free to contact us. We would be more than happy to help you find the best real estates for your needs.

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