Investing into a property in Shibuya is good or not?

Nikkei announced that the office vacancy in Shibuya has increased in this Q2.

Past years IT companies have been concentrated in Shibuya region. Due to COVID19 pandemic, the majority of them have shifted into the remote work and redundant office spaces appeared.

This time, I would like to spend some time to analyze the potential of Shibuya as the investment destination.

I will highlight negative aspects, then demonstrate positive factors and finally share my conclusion on the investment decisions.

Negative factors

1 Concentration of IT workers

When it comes to the IT industry, their offices have been found in Roppongi surrounding, Shibuya or probably in Akihabara. As reported in the media, as the remote work is promoted more, physical office demand will be decrease.

2  Secondary office grade

Say since around 2010, there are a few high-rise office buildings in Shibuya region. Thus, as for the status or the grade as office, Shibuya has not so been strong as have other office areas, like Tokyo station surroundings, Minato area, or Shinjuku area.

3 Less efficient transportation link

Speaking of the transportation hubs, we consider Tokyo, Shinjuku, Shinagawa, or Ueno where several JR lines as well as metro, local railroad companies are available. In this point, Shibuya has two major JR lines, several metros, and local lines although the transportation linkage has been improving now. Thus, Shibuya looks less efficient compared to those key hub stations.

4 Unfavorable corporate culture of local leading company

Shibuya has been famous for Tokyu conglomerate, whose corporate culture looks conservative, less innovative, and top down structure. In the past, several scandals seem to be reported by medias. Unless other leading companies commit themselves in the location, Shibuya may remain conservative by reflecting the culture released from that leading company, even though Shibuya station surrounding development projects have been very active and there will be several landmarks.

Positive factors

1 Good location for work & living

Although the remote works will be promoted further, people would live in more comfortable and convenient locations where their work and residence are close. Shibuya is an ideal location compared with other office locations. Thus, more life & work combined facilities would be provided in the market.

2 Less risk of natural disasters

Think about natural disaster risks, other famous office areas that I highlighted above are located much closer to the water front area compared with Shibuya. Thus, when we think about working in a secured environment, I think Shibuya may be the good choice.

3 Preferred under the future trend

Obviously, IT industry will be getting more important in the world for future. Therefore, the location where IT workers work and live comfortably may be prosperous over middle to long term. IT workers seek the convenience, lively atmosphere, dominance of younger generations, and entertainment aspects, and Shibuya looks ideal destination for them.

4 Diversified culture

For the past decades, both tourists and residence, we have had considerable amount of foreigners in Japan nationwide. In Shibuya, we found both of them. My Brazilian husband said the city he likes most is Shibuya. Probably he can comfortably stay there, full of entertainments, places where he can stay with other non-Japanese. Therefore, Shibuya will attract those non-Japanese people. This is also good sign for Shibuya to be the international city fitting to the future trends.

To sum up, the positive and negative points on Shibuya are as follows.

Negative factors are
1 Concentration of IT workers
2 Secondary office grade
3 Less efficient transportation link
4 Unfavorable corporate culture of local leading company

Positive factors
1 Good location for work & living
2 Less risk of natural disasters
3 Preferred under the future trend
4 Diversified culture

Further queries or doubts, please email to ytomizuka@abrilsjp.com

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