Real Estate Investment in Tokyo! What are the Attractions of the Six Central Wards Suitable for Apartment Purchase?

Previously, in the article "What You Need to Know Before Buying an Apartment (Condo) in Tokyo: Area Breakdown", we briefly explained the five central wards, but this time we will provide a detailed explanation of the areas "3 Central Wards", "5 Central Wards", and "6 Central Wards", which are particularly noteworthy in the Tokyo real estate market. These areas are especially popular among investors worldwide and should be considered when purchasing an apartment or investing in real estate in Tokyo. Please use this article as a reference to help with your real estate purchase in Japan.

Some of you may hesitate to invest because you cannot obtain information about the Tokyo real estate market while living abroad. In this article, we will introduce the divisions of "3 Central Wards", "5 Central Wards", and "6 Central Wards" for foreigners considering purchasing an apartment as a real estate investment in Tokyo, along with the characteristics and attractions of each ward.

While comparing the price trends of new and used apartments in the 23 wards of Tokyo, focusing on the "6 Central Wards", we will also introduce areas where large-scale redevelopment, said to contribute to rising land prices, is underway. Please refer to this information.

What are the 3, 5, and 6 Central Wards Commonly Used in Tokyo's Real Estate Market?

Tokyo has 23 special wards, but the areas where government offices and corporate headquarters are concentrated are called the "Central Wards". The wards corresponding to the 3 Central Wards, 5 Central Wards, and 6 Central Wards are as follows:

• 3 Central Wards: Chiyoda, Chuo, Minato
• 5 Central Wards: 3 Central Wards + Shinjuku, Shibuya
• 6 Central Wards: 5 Central Wards + Bunkyo

Especially the 3 Central Wards, consisting of "Chiyoda", "Chuo", and "Minato", are concentrated with government agencies, headquarters of major companies, and financial institutions. The top three wards in Tokyo's 23 wards in terms of the number of listed company headquarters are the 3 Central Wards, making it the political and economic center of Japan, including landmarks such as the National Diet Building and the Tokyo Metropolitan Police Department.

In addition to the 3 Central Wards, "Shibuya", known as a trend-setting hub for young people and also a high-end residential area, and "Shinjuku", home to Shinjuku Station, the world's busiest train station, are collectively referred to as the 5 Central Wards.

Furthermore, in recent years, the term 6 Central Wards has come into use, adding "Bunkyo", which is home to the main campus of the University of Tokyo and historical sites such as Nezu Shrine and Gokokuji Temple. Bunkyo is also known for its quiet residential neighborhoods and serene atmosphere, making it a popular area.

Characteristics of the Popular 6 Central Wards in Tokyo for Real Estate Investment

The 6 Central Wards of Tokyo are areas where popular apartments for real estate investment are concentrated. Here, we will explain the characteristics of each of the 6 Central Wards.

1. Chiyoda Ward

In addition to Tokyo Station, it is the political and economic center of Japan, home to the National Diet Building, the Prime Minister's Official Residence, and the Supreme Court. Chiyoda Ward has the smallest population among the 23 wards of Tokyo, but due to the large number of people commuting for work or study, the daytime population increases about 13 times to 903,780 people.

While there are many office buildings, there are few residential properties. However, due to the presence of many government offices and headquarters of large companies, there is high demand for housing in this area. Chiyoda Ward has some of the highest rent levels in Tokyo, and stable returns can be expected in real estate investment.

2. Chuo Ward

It is said that Chuo Ward is named for its geographical location in the almost exact center of Tokyo’s 23 wards and its status as an economic and cultural hub. Particularly, the Yaesu and Nihonbashi areas have flourished as commercial centers since the Edo period. This area, home to the Tokyo Stock Exchange and the Bank of Japan, plays a crucial role as the heart of Japan’s economy.

Additionally, Chuo Ward includes famous bustling districts like Ginza and Nihonbashi, lined with high-end brand stores and restaurants, making it a perfect place for shopping and gourmet dining. It offers a sophisticated urban lifestyle and is highly popular as a residential area due to its convenience.

The ward boasts excellent transportation access, with many Tokyo Metro lines passing through Chuo Ward. This allows smooth travel to adjacent wards such as Chiyoda and Minato, as well as other major areas in Tokyo like Shinjuku and Shibuya, making it comfortable for business, leisure, and daily living.

3. Minato Ward

Minato Ward is a highly sought-after area chosen by affluent individuals from both Japan and abroad due to its blend of sophisticated high-end residential areas, well-equipped commercial facilities, and business centers. The ward is home to numerous TV stations, advertising agencies, international company headquarters, and embassies.

You can enjoy shopping and entertainment at large-scale complex facilities such as Roppongi Hills, Tokyo Midtown, and Azabudai Hills, which opened in 2023. Moreover, the ward has numerous high-end restaurants, bars, and clubs, offering a vibrant nightlife.

Among the areas in Minato Ward, “Azabu,” “Aoyama,” and “Akasaka,” known as “3A” due to their initials, stand out with their high-end apartments. Since the opening of Roppongi Hills in 2003, the area has also been referred to as “3A+R” by adding the initial of Roppongi. This area is known as a center of rising land prices, and its real estate is considered highly valuable.

Additionally, the opening of Takanawa Gateway Station on the JR Yamanote Line between Shinagawa and Tamachi stations in 2020 has further improved the convenience of transportation to neighboring areas. Recent redevelopment projects around Shinagawa Station have also continued to drive up land prices in the surrounding areas.

4. Shinjuku Ward

Shinjuku Ward is home to the massive Shinjuku Station, which boasts the highest daily average number of passengers in the world. The south exit of the station features "Busta Shinjuku," a large bus terminal that serves as a hub connecting Tokyo with other regions.

The Nishi-Shinjuku area is a business district with many office buildings, but it also features "Shinjuku Central Park," a beloved urban oasis, providing a rich natural environment and a well-organized living space. Around Takadanobaba Station, where there are many universities and vocational schools, investing in student apartments is recommended.

With a high concentration of offices and restaurants, the residential population tends to consist mostly of single people in their 20s and 30s. As of April 2024, Shinjuku has the highest number of foreign residents among the 23 wards of Tokyo, with 43,691 people. Due to the scarcity of rental properties for foreign nationals in Japan, this area is expected to continue experiencing high demand, making it a prime target for investment.

5. Shibuya Ward

Shibuya Ward has long been known as a trendsetting hub for fashion, food, music, and entertainment for young people. However, in recent years, significant redevelopment projects have been underway, transforming Shibuya into a more mature district by supplying not only commercial facilities but also a large number of office properties. The redevelopment around Shibuya Station is ongoing, and the land prices around the station are expected to continue rising.

Shibuya Station and areas like Harajuku and Omotesando attract many visitors from both Japan and abroad, creating a festive atmosphere every day. Meanwhile, Shibuya Ward is also home to quiet, upscale residential areas such as Shoto, Hiroo, Ebisu, Daikanyama, and Yoyogi-Uehara. The ward features large natural spaces like Yoyogi Park, Meiji Shrine, and Shinjuku Gyoen, offering a relaxed, natural environment within the bustling city.

According to a survey conducted by Shibuya Ward, less than 5% of residents expressed a desire to move out, indicating a high level of satisfaction and popularity. These factors make Shibuya an attractive area for purchasing investment rental apartments or second homes.
Reference: Shibuya Ward | FY2022 Shibuya Ward Resident Awareness Survey Report

6. Bunkyo Ward

In recent years, the term "6 central wards" has been used, adding Bunkyo Ward to the "5 central wards," making it a highly notable area. Unlike the other 5 central wards introduced so far, Bunkyo Ward has a stronger residential character rather than a commercial or business vibe.

It has excellent access to Shinjuku and Chiyoda wards. The area is characterized by a high demand for student rentals, with many educational institutions such as the University of Tokyo and various vocational schools. The educational environment is well-established, and the area is safe, attracting housing demand from families as well. Among the 6 central wards, it is relatively affordable to purchase investment condominiums. The ability to target a wide range of residents, from students to families, is a key advantage of investing in real estate in Bunkyo Ward.

Average Prices of New and Used Apartments in Tokyo

The central 6 wards of Tokyo are known for their high land prices, making real estate in this area highly valuable. Here, let's explore the average price rankings of new and used apartments in the 23 special wards of Tokyo and understand the price trends and positioning of the central 6 wards.

1. Average Prices of New Apartments in Tokyo's 23 Wards

As shown in the table below, all of the top 10 average prices for new apartments in Tokyo's 23 wards are ranked within the central 6 wards.

The average price of new condominiums in Tokyo's 23 wards is led by Minato Ward with approximately 360 million yen, far ahead in first place, followed by Chiyoda Ward (about 230 million yen) and Shinjuku Ward (about 210 million yen). In terms of price per square meter, Chiyoda Ward leads with 267.0 million yen per square meter, and Shinjuku Ward shows the highest increase in price per square meter compared to the previous period at 155.2%. Investing in new condominiums in the central 6 wards, where real estate prices are currently rising, offers high potential returns.

Source: LIFULL Corporation "Average Prices of New Condominiums in Tokyo's 23 Wards"

2. Average Prices of Secondhand Apartments in Tokyo's 23 Wards

Not only for new apartments, but the central 6 wards also rank in the top 10 for average prices of secondhand apartments in Tokyo's 23 wards.

The average price in Tokyo's 23 wards is 88.34 million yen, making Chiyoda Ward, ranked 1st, nearly twice as high. Moreover, the central 6 wards have average prices exceeding 100 million yen, indicating these areas are particularly high in real estate value. Apartments in the central 6 wards maintain high asset value even as secondhand properties, making them highly attractive for investment.

Source: HowMa｜【2024 Latest Edition】Thorough Report on Apartment Prices in Tokyo's 23 Wards! Which wards are affordable in Tokyo? Which are expensive?

Areas with Planned Large-Scale Real Estate Redevelopment

Understanding the future potential of areas where you are considering purchasing a condominium is crucial for real estate investment. Here, we discuss areas within the central 6 wards of Tokyo where large-scale redevelopment projects are currently underway as of June 2024.

1. Minato Ward

In Minato Ward, "Azabudai Hills" opened in November 2023. This development includes approximately 1,400 residential units accommodating around 3,500 residents, along with offices expected to employ about 20,000 people. It is anticipated to significantly contribute to the revitalization of the surrounding area.

Furthermore, the redevelopment plan for the "Roppongi 5-chome West District," dubbed as the second Roppongi Hills, is progressing. This project aims to create a high-rise building complex comprising offices, residences, commercial facilities, cultural institutions, and parks. With a project area of about 80,000 square meters and a total floor area of approximately 1.08 million square meters, it is a massive redevelopment project scheduled to start in the fiscal year 2025 and complete by 2030.

Previously, when Roppongi Hills opened, average land prices in the surrounding area (within a 500-meter radius) rose significantly over a five-year period. With ongoing large-scale redevelopment in Minato Ward, it is expected that real estate prices in the surrounding areas will continue to rise.

2. Shibuya Ward

Around Shibuya Station, multiple redevelopment projects have been progressing since 2012 under the concept of "Entertainment SHIBUYA," aiming to showcase new business and cultural ventures to the world. The "Shibuya Sakura Stage," which was under construction, was completed in November 2023, and various shops have begun to open. With a total floor area of approximately 255,000 square meters, it is a vast complex facility integrating offices, commercial spaces, serviced apartments, and residences. Shibuya Sakura Stage consists primarily of three buildings: SHIBUYA Tower, Central Building, and SAKURA Tower. The total leasing area for offices across these three buildings amounts to approximately 100,000 square meters, marking the largest office supply in the Shibuya Station area redevelopment.

Additionally, a major redevelopment project in Shibuya Ward is planned at the corner of Miyamasuzaka-Shita intersection, aiming for commencement in fiscal year 2024 and completion by fiscal year 2028. This redevelopment will be divided into three sections (A, B, C). Section A will feature a 33-story building with a total height of approximately 180 meters, housing mid-level offices, a hotel in the upper levels, and a large multipurpose hall accommodating international conferences and other events in the lower levels. Section B, adjacent to Shibuya Hikarie on the opposite side of Miyamasuzaka-Shita intersection, will mainly host commercial facilities including shops. Furthermore, this redevelopment will include underground plazas and above-ground pedestrian spaces to facilitate smooth movement across the approximately 20-meter elevation difference between Miyamasuzaka-Shita and Sakagami.

Image source: Overview of Urban Planning (Draft)

3. Chiyoda Ward & Chuo Ward (Tokyo Station Area)

In March 2023, "Tokyo Midtown Yaesu" opened directly in front of Tokyo Station, a large-scale mixed-use commercial facility. In the areas of Tokiwabashi, Yaesu, Yurakucho, and Nihonbashi around Tokyo Station, over a dozen large-scale redevelopment projects are currently underway. These redevelopments aim to create "the world's most business-friendly environment."

The objectives of these redevelopment plans include establishing a hub for international business and fostering the creation of global new businesses. They actively support the entry of overseas companies into Japan and encourage foreigners to start businesses in Japan, competing with cities like Yokohama in Kanagawa Prefecture and Fukuoka in Fukuoka Prefecture.

The most anticipated project among these redevelopment projects is the "Torch Tower (Building B)," expected to be Japan's tallest at 390 meters upon completion in 2028. It will feature shops, offices, a luxury hotel, and an observation facility on its upper floors, offering the highest viewpoint in Tokyo.

Adjacent to "Tokyo Midtown Yaesu" is another project underway on a vast 2-hectare site, aiming for completion in the fiscal year 2028. This project will include a super high-rise large-scale mixed-use building with commercial facilities, offices, theaters, serviced apartments catering to foreign residents, and an international school for foreigners.

Central Tokyo's Apartments in the 6 Wards Promises Stable Demand

We have introduced the central 6 wards of Tokyo, which are particularly popular and highly valued in terms of assets.
During the period when the novel coronavirus spread, teleworking rapidly expanded, temporarily increasing the demand for properties in spacious suburbs. However, as the pandemic subsides, there is a trend towards returning to centrally located Tokyo apartments with good accessibility. Properties in the central 6 wards, which are popular and have high asset value, are expected to maintain stable demand over the long term.

In addition to domestic demand from Japanese nationals, recent trends among foreign investors also indicate a shift in property selection criteria from focusing solely on yield to expecting price stability and appreciation. While this trend was strong among investors from Asian countries such as China, Taiwan, and Singapore, it has recently expanded to include investors from North America and Europe as well.
Furthermore, from a short-term perspective, factors that could cause a decline in prices for new Tokyo apartments and investment properties are not apparent.

• An increase in overseas investors due to yen depreciation
• Rising construction costs of apartments due to inflation
• Japan-specific issues such as labor shortages
• An upward trend in purchasing willingness due to maintained low-interest rate policies

Therefore, the real estate in the central 6 wards introduced here is expected to continue to maintain high demand and stable prices in the future.