What You Need to Know Before Buying an Apartment (Condo) in Tokyo: Area Breakdown
For foreigners considering purchasing an Apartment (Condo) for personal use or investment in Tokyo, understanding the differences in areas can be helpful. While these distinctions may not be immediately apparent in everyday life, they play a significant role in the real estate market, with area classifications such as Joto (城東: east Tokyo), Josei (城西: west Tokyo), Jonan (城南: south Tokyo), Johoku (城北: north Tokyo), and the central five wards frequently used.
Each area has its own characteristics and significant variation in real estate prices. Whether it's buying a home or investing in real estate, choosing the right area based on your objectives, risk tolerance, and target returns is key to success.
This article provides detailed explanations of the characteristics of each area and how to choose properties suitable for investment.
Understanding Tokyo's Area Classifications for Apartment (Condo) and Investment Property: Joto, Josei, Jonan, Johoku
Within the 23 special wards of Tokyo, there are four main areas known as Joto, Josei, Jonan, and Johoku. Originally centered around the former Edo Castle (now the Imperial Palace), these areas are referred to based on cardinal directions: Joto (east Tokyo), Josei (west Tokyo), Jonan (south Tokyo), and Johoku (north Tokyo). As the Imperial Palace itself is located in Chiyoda Ward, commonly the classification of these four does not include Chiyoda Ward, resulting in 22 areas.
Joto Area
The Joto Area includes Chuo, Taito, Sumida, Koto, Katsushika, and Edogawa wards. Chuo Ward, one of the central five wards, encompasses bustling commercial and office districts such as Ginza, Nihonbashi, Yaesu, and Kyobashi. Other areas like Sumida Ward, home to the Tokyo Skytree, are known for their traditional downtown culture. Recently, commercial and residential developments have attracted popularity among young families. For investors, focusing on investments that align with tourist flows and local development can be effective. There is also a trend of interest in remodeled used properties for housing needs.
Josei Area
The Josei Area includes Shinjuku, Setagaya, Nakano, Shibuya, Suginami, and Nerima wards. Shinjuku and Shibuya, bustling with foreign tourists, are among Japan's largest commercial, entertainment, and business districts, along with Ikebukuro in Toshima Ward, making them vital parts of Tokyo's urban functions. This area is popular for investment properties like commercial buildings, office spaces, and hotels. On the other hand, Setagaya, Suginami, and Nerima are known for their lush green environments and easy access to the city center, making them popular residential areas for families. From an investment perspective, Nakano Ward is experiencing active redevelopment, making it a promising area for mid- to long-term asset appreciation. One notable feature of the Josei Area is its location on the strong Musashino Plateau, making it more resilient to disasters like earthquakes compared to downtown areas like Ginza and Asakusa.
Jonan Area
The Jonan Area consists of Meguro, Shinagawa, Ota, and Minato wards. With major business districts like Minato and Shinagawa, this area attracts high residential demand from business professionals. Minato Ward, especially, encompasses popular areas such as Roppongi, Azabu, Aoyama, Akasaka, Shirokane, and Takanawa, making it an international hub with foreign companies, IT firms, and various embassies. Moreover, Shinagawa is designated as the starting station for the Linear Central Shinkansen, undergoing significant redevelopment, leading to continuous rises in surrounding land prices. Each area within the Jonan region has its own charm, with Meguro Ward offering a mix of urban and natural environments. With its potential for investment and stability in real estate value, the Jonan Area remains attractive.
Johoku Area
The Johoku Area comprises Arakawa, Bunkyo, Toshima, Itabashi, Adachi, and Kita wards. Similar to Chuto, this area has also developed as a downtown area. Except for Bunkyo Ward, known for its cultural and educational institutions, and Toshima Ward, which houses the massive commercial district of Ikebukuro, the remaining wards are relatively affordable residential areas with a focus on family-friendly environments. Parks and green spaces are plentiful, catering to families with children.
Introduction to the Central Five Wards
The central five wards refer to the five wards most centrally located within the Tokyo 23 wards: Chiyoda, Chuo, Minato, Shibuya, and Shinjuku. These wards serve as the nucleus of Tokyo's economy, politics, and culture, attracting considerable attention domestically and internationally.
Chiyoda Ward
Although not classified into the four areas mentioned previously, Chiyoda Ward is predominantly occupied by the Imperial Palace, yet it also boasts large business districts such as Marunouchi, Otemachi, Hibiya, and Yurakucho, hosting major corporations crucial to Japan's economy. Additionally, various governmental institutions, including the National Diet Building and the Metropolitan Police Department, are located in Chiyoda, making it the political and economic center of Japan.
Chuo Ward
With a smaller population and a focus on commerce and business rather than residential areas, Chuo Ward is renowned for Ginza, Japan's most expensive shopping district, attracting numerous shoppers and tourists year-round.
Minato Ward
In areas like Roppongi Hills and Azabu-Juban, you'll find upscale shopping centers, restaurants, clubs, and art galleries, making it rich in cultural facilities and entertainment options. On the business front, it's a hive of activity with numerous media companies, advertising agencies, IT firms, and Japanese branches of foreign corporations. Moreover, with over half of Japan's approximately 150 embassies located in Minato Ward, it's the most international area in Japan. Popular among the affluent and well-known, it's also a top choice for ultra-luxurious residential areas, boasting the highest average Apartment (condominium) prices in Japan for both new and pre-owned units.
Shinjuku Ward
Shinjuku features the Tokyo Metropolitan Government Building on its west side, a vast business district, and Kabukicho, Japan's largest entertainment district. Shinjuku Station is the world's busiest railway station, serving around 3.5 million passengers daily, ensuring a constant flow of people day and night. When considering real estate investment in Shinjuku, properties such as hotels and commercial buildings are suitable choices.
Shibuya Ward
Shibuya is known for its concentration of commercial facilities, transportation hubs, and fashionable areas like Shibuya, Harajuku, Omotesando, and Ebisu. Shibuya Crossing, a popular spot for foreign tourists, sees up to 500,000 people per day and 3,000 people crossing on each green light. Additionally, Shibuya Ward features upscale residential areas such as Hiroo, Matsu, and Kamiyama, making it an attractive investment destination. Given its popularity among young people, rental demand is consistently high, making Shibuya a stable investment option for rental properties.
For investors, owning assets in these central five wards may offer stability in asset value and rental market stability. However, property prices are high, making it challenging to acquire properties with high returns. Thorough research and strategic planning are necessary for success in these areas. The stable demand for real estate due to high human traffic and various events is also an attractive feature for investors.
Apr 19, 2024
