Tokyo homes can be expensive but also extremely affordable – if one takes into consideration all the factors influencing the price such as the size, land footprint, location and age. 
Tokyo, considered for decades to be one of the world’s most expensive cities, is also constantly ranked as one of the world’s most liveable metropolitan centres. This seems, on the face of it, to be a contradiction – surely, the price of housing would necessarily play a major part in cost of living calculations which would, in turn, have a major effect on a city’s liveability?
The answer to this paradox lies in several main aspects, of which many, if not most non-residents of Japan are usually unaware:
Japan’s economic and property bubble has burst in 1990, and prices have been alternately going down or flatlining since then. The last 4-5 years, since Prime Minister Shinzo Abe came to power in 2012, have seen this trend reversed to some degree, but current median prices are still at less than 60% of their 1990 peak. The dubious title “One of the world’s most expensive cities”, therefore, is really little more than a stubborn remnant of times long past, which seems to have stuck in people’s minds, regardless of current realities. It is, however, important to take into account that salaries and price indexes have also gone down significantly in this period of time – so while Tokyo is far from being one of the world’s most expensive cities these days – for those of us living, working and earning in Japan, it is also far from being one of the world’s most affordable.
While Tokyo doesn’t feature in almost any of the world’s most prominent “10 Most Expensive Cities for Housing” lists, it does make its way into the top five or 10 of some particular, property-oriented publications, such as “Global Property Guide” – the reason for this is that those particular publications do not take into account the standard apartment size in Tokyo, as opposed to other cities it is often compared to.
When comparing home sizes of 80-400 sq meters, Tokyo indeed seems to be at the top of the list for housing unaffordability – however, when considering the average Japanese studio or one bedroom apartment size, which is usually 30-60 sq meters, there is a stark difference in results.
Land in square meters or square foot are, indeed, expensive in Tokyo – as space is strictly limited, and population density is extremely high. The Japanese, however, are used to making the most of smaller areas, and are leading the charge globally in compartmental, clutter-free and practical interior design ideas such as sliding, rearrangeable doors and walls, retractable furniture which can be tucked away into walls and panels, minimalist furnishing, and ultra-functional, multi-purpose rooms and segments of the home. These techniques, as well as the notorious Japanese tendencies of frugality and “doing the best one can” with whatever is available, mean that a typical Japanese studio of approximately 45 sq meters in size can seem far larger and more comfortable when compared with the same living space elsewhere in the world.
Yet another notorious Japanese tendency is the obsession with “the latest and greatest” in all things – homes being no exception to the rule. This is reflected both in building materials and standards of most residential properties (large, reinforced concrete blocks notwithstanding), which are not meant to last for hundreds of years like their counterparts in many parts of Europe, North America and other countries.
As well, unlike these other countries, prices tend to plummet once a structure has reached approximately 15 years of age. Rental prices, however, which also trend down with the age of the structure, do not slide as sharply – which makes for great property investment potential – assuming one focuses on older, smaller residential units, as opposed to larger and newer homes.
” The dubious title “One of the world’s most expensive cities”, therefore, is really little more than a stubborn remnant of times long past. “



A 16 sqm studio unit with a 4 sqm balcony in Edogawa, in Tokyo’s Eastern suburbs – it is 15 minutes by train to the centre of the city and 30 minutes by train to its Western business districts. Built in 1984, it is priced at 5.5 mil JPY (approximately USD50,000). A modern renovation of this unit, which would bring it up to the latest, minimalist design standards, would cost an additional USD20 – 30,000 at most. The very same unit is currently rented out for a measely 50,000 JPY (approximately 450 USD) per month!


An entire building in Tokyo’s western ward of Suginami, 16 minutes by train to Tokyo’s busiest station and government/business district of Shinjuku – only one year of age, with 9 residential units of various sizes – from small studios to reasonable bedroom+living+dining/kitchen and balcony. Built on 127 sqm of land and totalling approximately 250 cubic meters of structure, it is priced at 220 mil JPY (approximately USD1.98 mil).
This comes up to approximately USD220,000 per unit, on average. Renting one of these units costs an average of USD900 per month (or an average of USD32 per cubic residential meter, including common areas).
These units, in Japanese standards and in comparison with the older, smaller unit depicted above, are spacious, full of light, and are already in line with the latest building and design standards.


” From an investment perspective, one thing remains certain – monthly rental yields in Tokyo are, percentage-wise, the lowest in Japan. “


Generally speaking, as far as houses are concerned, the rules of the game change significantly. The larger the land footprint and the newer the building, the more one will be spending on a residence – prices for brand new residences, while still far from being among the world’s highest, are definitely comparable with other renowned metropolitan centres such as New York, London or Sydney.
A new or newish, typical 3-bedroom house, on a land parcel of 80-120 sq meters, in the same suburbs listed above, will range in price from 25 – 40 mil JPY (approximately USD225-350,000). More central and larger properties, in the city’s posh residential districts such as Meguro or Roppongi, will normally start at roughly 60 mil JPY (approximately USD540,000).
So, yes – Tokyo homes CAN indeed be expensive – but can also be extremely affordable – as long as one takes into consideration all the factors influencing the price such as the size, land footprint, and location.
From an investment perspective, however, one thing remains certain – monthly rental yields in Tokyo are, percentage wise, the lowest in Japan. The price of properties is far higher in comparison with rents – mainly due to the city’s international appeal and worldwide reputation as one of the world’s most liveable cities and one of the top tourist destinations.
While capital growth in the last 4-5 years seems to justify this speculative investment, particularly for those among us considering starting their own short-term stay business in the lead-up to the 2020 Tokyo Olympic games, those among us who remember the two decades of falling and flatlining property prices, will most likely continue to focus on higher rental yields. These are far easier to find in Tier 2 cities such as Fukuoka, Nagoya or Sapporo, to name a few.

Ziv Nakajima-Magen is Partner & Executive Manager, Asia-Pacific, Nippon Tradings International (NTI), which specialises in assisting investors in capitalising on Japan’s vast property market. He can be contacted at: or +81 92 600 1613 .

    Your Cart
    Your cart is emptyReturn to Shop