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Other Than Tokyo, Where Should I Invest In Japan?

Japan real estate financial planning low-risk investment land prices and rents go up

There’s no doubt that Tokyo is a great city to invest in. Last year, land prices in Japan’s capital metropolis rose for both commercial and residential real estate, The Ministry of Land, Infrastructure, Transport, and Tourism announced in March. Land prices rose by 4.2% from 2018-2019. That was after the 3.4% rise from 2017-2018. Land prices in this megalopolis have been going up for six consecutive years. Commercial real estate in Tokyo rose fastest: 6.8% (2018-2019) (even higher than the previous 5.4% the year before). Asakusa, with its Kaminarimon (雷門, “Lightning Gate”) is especially popular with tourists, and its land prices rose by a prodigious 34.7%! Every single ward (yes, all 23 of them) went up. In all but one, the increase was greater than 5% (sorry, Ōta-ku). Taitō Ward had the largest increase: 11.0%. Our offices are in Akasaka, Minato Ward, where IT company owners and workers in the entertainment business drove rents up. Still, many potential real estate investors may ask themselves, besides Tokyo, which other parts of Japan are seeing land prices and rents go up?

Not Just Tokyo’s Land Prices, But Japan’s Land Prices Rose 1.2% In 2019

japanese cities for real estate investors

This rise is nationwide, regardless of zoning. Land prices reached a peak in 1991, and are still only 40% of what they were back then. Therefore, there is still plenty of room for them to grow again moving forward.

Rural-to-urban migration doesn’t just increase the population and the demand-supply ratio in Tokyo. It also affects other big cities in Japan. Additionally, foreign visitors/tourists need hotels and shops. This increases demand and as such land prices have gone up. Another contributing factor is the Japanese government’s monetary easing.

 

Nationwide, residential land rose by 0.9% from 2018-2019, after rising 0.3% from 2017-2018. Commercial areas have gone up for four consecutive years now, often beating the increase in residential land by a fair margin.

In 2018, land prices increased in 19 prefectures. The number of prefectures went up from 2017, in which it was 18 prefectures showing price increases.

Where Did Land Prices Go Up Recently?

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Without straying too far from Tokyo, let’s first look at the three prefectures surrounding Tokyo’s 23 Special Wards: Saitama, Chiba, and Kanagawa. These, along with Tokyo, form the majority of the Kantō Region. Chiba’s land prices went up by 0.65%, Kanagawa’s by 0.83%, and Saitama’s by 1.02%.

Ishikawa is part of the Chūbu Region, and its land prices went up for the first time in 27 years. The same happened in Ōita, on Kyūshū.

In northern Japan, Niseko, Hokkaidō made news headlines all over the world for land price increases: >50% in one year! Miyagi Prefecture, located in the Tōhoku Region, saw its land prices increase by 4.4% because of development projects near Sendai Station.

Hiroshima City, located in western Japan (the Chūgoku Region), also had its land prices go up. They went up 0.65%.

The Kansai Region is the historical capital region of Japan. It wasn’t until the feudal Kamakura Period that Kantō (including Kamakura, Kanagawa and Tokyo) became Japan’s capital. Kyoto land prices went up by 2.4%, and Osaka land prices increased by 2.45%. In Osaka City, in 2018, land prices increased from ¥268,000 to ¥283,000 per square meter. Land prices in Nara went down slightly.

What about warm, subtropical Kyūshū and Okinawa? How did they fare? Okinawan land prices went up by a mighty 8.3%! Okinawa is a popular tourist destination, and most of the increase was in Naha, the capital city of Okinawa. Fukuoka also enjoyed its land prices going up 2.28%. There, in Fukuoka City, they went up from ¥113,100 to ¥122,700 per square meter in 2018.

japan renting investingWhere Did Rents Go Up In 2017, 2018, And 2019?

Tokyo Kantei Co., Ltd. released data about rents from 2017-2019. This data covered the entire nation of Japan.

In Tokyo, rents stayed more or less level in 2017. Then they increased by 5.3% in 2018, and 4.3% in 2019.

In the Kantō Region besides Tokyo, rents in Chiba City decreased by 0.1% in 2017, but then turned around. In 2018, they went up by 1.8%. In 2019, they shot up by 6.7%. Saitama City’s rents went up steadily, 3.6% in 2017, 1.7% in 2018, and 3.4% in 2019. Yokohama’s have actually been going down for two years. In 2017, they increased by 6.0%, but in 2018, they decreased by 1.4%, then went down again in 2019, by 0.5%.

Kantei also released data about the Kansai Region. In Kobe (after which the eponymous basketball player was named) rents decreased by 3.1% in 2017. They went down again by 1.0% in 2018. However, in 2019, they went up by 3.3%. In Osaka, land prices increased by 1.9% in 2017. Then they went up again in 2018 by 4.6%, then increased again in 2019 by 0.2%.

In the Chūbu Region, Nagoya logged a remarkable 9.9% increase in rents in 2018. This nearly-10% increase came right on the heels of its 2.5% increase in 2017. Unfortunately for real estate investors and speculators, this didn’t last, because rents declined by 1.9% the following year.

Besides Tokyo, Which Other Parts Of Japan Are Seeing Land Prices And Rents Go Up? Conclusion

Tokyo and the surrounding prefectures, mostly in the Kantō Region, have all had their land prices go up substantially in recent years. There’s still plenty of room to grow. The Kantō Region’s population is growing by hundreds of thousands of people every year. It has diversified industries and many of the world’s largest corporations, as well as high tenancy rates. That’s not to say that other parts of Japan don’t have their investment opportunities, too, though. From the ski slopes of Niseko, Hokkaidō, to land near tourist sites in Okinawa, land prices are going up. So are rents. Opportunities for the international real estate investor are numerous.

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