In recent years, interest in Japanese real estate, particularly Tokyo properties, has been growing rapidly among high-net-worth individuals and investors in China, and the trend is evident in the data, with 87.5% of Greater China investors saying that now is the right time to buy Japanese real estate, according to one survey conducted in 2024. This trend is clearly evident in the data. INA&Associates Inc. also receives numerous inquiries about Tokyo real estate from Chinese and other foreign investors on a daily basis.
The ongoing depreciation of the yen and the fact that Japanese assets are undervalued from overseas perspectives are only one factor accelerating this trend. Underlying this trend is a deep trust in a more intrinsic value, the "Tokyo brand," which is more than just price appeal. In this article, real estate experts INA & Associates, Inc. delves deeply into the "Tokyo brand" and explains why so many Chinese investors are now focusing on Tokyo real estate, along with specific data. We hope this article will help you make important investment decisions.
5 Absolute Reasons Why Chinese Investors Choose Tokyo Real Estate
Chinese investors' strong interest in the Tokyo real estate market is not only a matter of economic rationale, but also a complex interplay of factors that affect the future value of their assets. Here we explain, from a professional perspective, the five main reasons why Tokyo is the investment destination of choice.
1. "Ownership" for absolute asset protection
The most fundamental reason why Chinese investors are attracted to Japanese real estate is that ownership of assets is legally guaranteed. This is of critical value to high-net-worth individuals who want to ensure that their assets are passed on to future generations.
In China, land is the property of the state, and individuals and companies can only acquire "land use rights" for a set period of time (up to 70 years for residential use). In contrast, in Japan, foreigners can acquire ownership of both land and buildings under exactly the same conditions as Japanese nationals. This difference in the legal system fundamentally changes the way of thinking about assets.
| Comparison Items | Japan (Tokyo) | China (major cities) |
|---|---|---|
| Land ownership | Ownership | State ownership (right to use for up to 70 years) |
| Asset Succession | Can be freely passed on from generation to generation | Dependent on expiration of usufruct |
| Stability of asset value | Backed by perpetual rights | Influenced by policies and remaining term of usufruct |
In recent years, China's domestic real estate market has faced structural challenges stemming from the management problems of major developers, and the future of the market has become increasingly uncertain. Under these circumstances, it is inevitable that the need to preserve one's own assets safely and securely and to leave them to one's children and grandchildren will increase. Japanese real estate, especially assets in Tokyo, which have an established international reputation, are seen as the best "safe assets" to receive this demand.
2. "High investment yield" that generates stable profitability
Along with asset preservation, investors naturally place importance on profitability. In this respect, the Tokyo real estate market has a clear advantage over major Chinese cities.
Currently, the average surface yield for residential real estate in central Tokyo hovers around 3.5% to 4.0%. This is a very attractive level compared to yields of just under 2.0% in major Chinese cities such as Beijing and Shanghai. Tokyo real estate, supported by stable rental demand, is highly valued as an asset that provides stable income gains (rental income) over the long term.
| City Name | Average surface yield (residential) |
|---|---|
| Tokyo | 3.5%～4.0 |
| Beijing | Approx. 2.0 |
| Shanghai | Approximately 1.8 |
In particular, many of our clients, who are ultra-high-net-worth class investors, purchase properties with purchase budgets of 300 to 500 million yen almost 100% in cash in lump sum. This completely eliminates the risk of fluctuations in interest rates on borrowings, allowing them to pursue an investment strategy that provides a pure return on their investment. This solid, stability-oriented investment style is a perfect match for the characteristics of the Tokyo real estate market.
3. The Value of the "Tokyo Brand" as Recognized Internationally
The "Tokyo Brand" is more than just an image. It is the overall strength of a city as evaluated by the world's leading institutions based on objective data. In the 2024 edition of the Global Comprehensive Competitiveness Ranking of Cities (GPCI) published by the Mori Memorial Foundation Institute for Urban Strategies, Tokyo has been ranked third in the world for nine consecutive years. Tokyo is also ranked 4th in the GlobalCityIndex2024 by the British consulting firm BrandFinance, and its brand value is widely recognized internationally.
| Ranking Name | Issued by | Tokyo's ranking (2024) |
|---|---|---|
| Global Comprehensive Ranking of Cities (GPCI) | The Mori Memorial Foundation Institute for Urban Strategies | 3rd place |
| GlobalCityIndex | BrandFinance | 4th place |
These high rankings are backed by the strength of the city in a wide range of areas including economy, research and development, culture and exchange, livability, environment, and transportation and accessibility. In particular, political and economic stability, world-class security, and a highly developed urban infrastructure are key factors that underpin the value of long-term assets such as real estate. Chinese investors are not simply looking at individual properties, but are investing in the potential and stability of the city of Tokyo as a whole, where the properties are located. Tokyo is expected to become the world's number one real estate investment destination by 2025, ahead of New York and London.
4. Highly Transparent "Stable Legal System and Transaction Market
Transparency and legal stability of transactions are essential conditions for investing in high-value assets. The real estate market in Japan, especially in Tokyo, boasts the world's highest level of reliability in this regard.
As mentioned above, there are in principle no legal restrictions on real estate purchases by foreigners in Japan. The entire process, from sales contract to registration (official registration of ownership), is clearly defined by law, and the intervention of judicial scriveners and other professionals ensures the safety and certainty of transactions. This allows investors to minimize the risk of getting into unexpected trouble.
From April 2024, notification of contact information, etc. in Japan has become mandatory when an overseas resident becomes the owner of real estate, but this is a measure to further improve the transparency of transactions and does not restrict purchases. Rather, the fact that such institutional improvements are being made on an ongoing basis is itself a sign of the market's health. For Chinese investors, this predictable and stable investment environment is a great relief compared to the complexity and uncertainty of their home market.
5. "Excellent living and educational environment" for their children's education and future
Investment in Japanese real estate by wealthy Chinese is not just about financial returns. Especially for investors with families, the educational environment and quality of life for their children are extremely important criteria.
Tokyo offers a wide variety of educational options, with many internationally acclaimed universities and international schools. It is also known as one of the safest cities in the world, with easy access to clean, quality medical services. Such an excellent living environment is an irreplaceable draw for parents who want their children to grow up healthy and happy.
In fact, an increasing number of parents are purchasing luxury condominiums in central Tokyo, especially large penthouses of over 120 square meters, as second homes during their stay in Japan or as educational centers for their children.
Investment Areas and Properties Popular with High Net Worth Chinese Investors
When Chinese investors choose Tokyo real estate, their eyes tend to focus on a limited number of premium areas, especially in central Tokyo. Here we will explain which specific areas are chosen and why, and what types of properties are preferred.
Reasons why the three central Tokyo wards (Minato, Shibuya, and Chiyoda) are chosen
The so-called "3 wards of central Tokyo" ( Minato, Shibuya, and Chiyoda w ards) are particularly popular as investment targets. Each of these areas has its own brand image and characteristics, meeting the diverse needs of wealthy Chinese.
| Area | Main Areas | Characteristics | Average purchase price range (for wealthy people) |
|---|---|---|---|
| Minato Ward | Akasaka, Azabu, Roppongi, Aoyama | International flavor, concentration of embassies and foreign companies, cutting-edge commercial facilities | 300-500 million yen |
| Shibuya Ward | Hiroo, Ebisu, Daikanyama, Shoto | Sophisticated high-class residential area, trendsetting area, calm living environment | 200-400 million yen |
| Chiyoda Ward | Bancho, Kojimachi, Kioicho | Adjacent to the Imperial Palace, political and economic hub, residential area with history and prestige | 300-600 million yen |
Minato-ku is an international business and commercial center as represented by Roppongi Hills and Tokyo Midtown, and the Azabu and Hiroo areas have a high concentration of embassies and exclusive international schools. It has a mature foreign community and is the most popular area for investors seeking an international lifestyle.
Shibuya Ward is attractive for its fashionable and sophisticated neighborhoods, exemplified by Ebisu and Daikanyama. It is favored by those seeking an upscale yet relaxed living environment. The Shoto area in particular is known as one of the most exclusive residential areas, boasting tranquility and greenery that one would not expect in the heart of the city.
Chiyoda Ward is the center of Japan, home to the Imperial Palace and the Diet Building. The Bancho area, with its history and prestige as a historic residential area dating back to the Edo period, enjoys tremendous support from investors who place the highest value on status.
What these areas have in common is convenient transportation, the maintenance of high property values, and a strong brand power that makes "living there" itself a kind of status.
Specific Property Types and Investment Strategies
In popular areas, there are also characteristics in the specific types of properties Chinese investors seek.
Tower condominiums (high-rise apartments): Penthouses and corner rooms on high-rise floors with good views are especially popular. The extensive common facilities (gym, swimming pool, concierge service, etc.) and strict security system provide the comfort and safety that wealthy people seek. Tower condominiums in the bay area are also attracting attention due to their easy access to the city center and open views.
One-unit income-generating properties: Investors seeking stable rental income (income gain) often purchase apartments or condominiums in central Tokyo in single-building units. For investors with large assets, this is an attractive option as a stable asset that forms the core of their portfolio.
As for investment strategy, as mentioned above, the most common investment strategy is to purchase in a lump sum in cash to avoid foreign exchange risk and interest rate fluctuation risk. This epitomizes the style of Chinese investors, who value quick decision-making and transaction certainty. Purposes also range from pure investment (capital gains and income gains) to use as second homes, educational centers for children, and actual demand with a view to future immigration.
Conclusion: Investing in the "Tokyo Brand" to create future value
Throughout this article, we have explained from various perspectives why Chinese investors are so keenly interested in Tokyo real estate. The essence of this interest lies not only in the sense of affordability due to the weak yen and high yields on the surface, but also in a deeper, more complex value, namely, trust in the "Tokyo brand.
Let me reiterate the main points.
Absolute asset protection: In Japan, ownership of land and buildings is guaranteed, enabling asset succession from one generation to the next.
Stable profitability: Stable investment yields of 3.5% to 4.0% can be expected, exceeding those of major cities in China.
International credibility: The asset value is backed by the brand power of Tokyo, a cosmopolitan city that consistently ranks high in world city rankings.
Highly transparent market: The legal system and market environment are well-developed, allowing foreigners to trade with confidence.
Excellent future planning: A high standard of education and living environment and the possibility of immigration with a business management visa support the future of the family.
The combination of these factors makes "Tokyo real estate" more than just an investment target; it is the perfect platform to protect, nurture, and pass on your assets to the next generation.
Of course, as with any investment, there are risks. Trends to watch, such as future exchange rate fluctuations and discussions on tightening regulations on land acquisition by foreigners for security purposes, are constantly changing. That is why it is essential to have a reliable partner who is well versed in the latest local information and can propose the best strategy for each client's situation.
At INA&Associates, Inc., we believe that the most important asset of a company is its human resources, and we place the highest priority on long-term relationships of trust with our clients. We wish to be a partner not only in brokering real estate transactions, but also in contributing to our clients' asset building and future planning itself. Please feel free to contact us if you would like to discuss real estate investment in Tokyo or would like more detailed information. We look forward to hearing from you.
Daisuke Inazawa
Representative Director of INA&Associates Inc. Based in Osaka, Tokyo, and Kanagawa, he is engaged in real estate sales, leasing, and management. He provides services based on his extensive experience in the real estate industry. Based on the philosophy that “human resources are a company's most important asset,” he places great importance on human resource development. He continues to take on the challenge of creating sustainable corporate value.
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