Investment Destination Guide in central Tokyo

Today, based on the data released by Nikkei Real Estate Market, we would like to analyze the area and segment to be invested, especially taking into account the economic recovery after COVID pandemic. Followings are several office development concentrations in the central Tokyo for the next decade.

On the other hand, given the COVID 19 pandemic, more and more people have been shifting to the remote working from commuting. On the graph below, we can figure out that almost one-fourth of the corporate workers have been working from home. The percentage of freelance teleworker has slightly dropped in 2020. This is probably due to the significant increase of freelance workers because of the pandemic. The workers who have their own workplace or working styles may be limited and therefore, the percentage of remote workers looked dropped slightly.

(Source : MLIT “Telework population research

” https://www.mlit.go.jp/report/press/content/001391381.pdf)

If this working condition proceeds, more or less fifty percent of workers would be working from home over say next decade.

Furthermore, due to the decrease of inbound and domestic tourists as well as the flexibility in living, people, especially younger generation, have preferred living in hotels as long-term residents.

https://prtimes.jp/main/html/rd/p/000000210.000035599.html

Given above phenomena and upcoming commercial complex developments, the areas to be considered as an investment destination should have the following criteria.

Considering above points, I would like to suggest the following areas as investment destination.

1 Chuo-East Nihonbashi, Ningyocho, Kayabacho, Hacchobori

The east side of Tokyo station, there will be around ten large scale new commercial complex projects. In the north east of Tokyo station, there will be six. Some of them may provide more residential spaces than as they are under the current plans, as the remote work is promoted.

In those areas, office seems to be a not prospective one and residential or complex of long stay service hotel and dining facility. Supermarkets or other amenities would also be preferable.

2 The area between Minato and Shibuya

https://www.tokyu.co.jp/shibuya-redevelopment/index.html

In Aoyama surrounding, there will be six new complex developments will be in the markets till 2031. Thus, most of the area in Minato wards as well as Shibuya ward behind the Aoyama and Shibuya station will have the prosects in capital value increase.

In such areas, the recommended investment sectors would be residential and long term stay accommodations. Those are the areas preferred as high-end residential and also by expat residents here in Japan. Therefore, up to dated luxury residential or dining facilities would be solid investments.

3 East side of Minato ward

https://wangan2020.info/

In Hamamatsucho surrounding area, there will be six new commercial complex projects. Mita, Hamamatsucho, Daimon, Shiba, and Shibaura would be good area to invest. In addition to residential properties, storage systems and soho style offices would also be demanded.

4 East Shinagawa

https://tokyoyard.com/

In Tamachi station surrounding area as well as Shinagawa station adjacent areas, there will be around ten projects to be completed over the next ten years. Those areas have good access to the public transportation and middle class residential apartments and long stay hotel style residents would be demanded after COVID.

5 Areas between Nakano and Shinjuku

The photo is from the following site:  https://town-review.net/nishishinjuku-3chome/

In addition to the new development in west side of Shinjuku, in Nakano, a large scale commercial development will be carried out. Historically, areas along with JR chou line have preferred office workers who commute to Tokyo central. However, reflecting the new normal after the COVID, the facilities to satisfy aged workers or aged people would be highly supported in those areas. Needless to say that the residential sector would be a good investment those areas at the first place. However, as people may prefer living more city central, we feel that the area between Nakano and Shinjuku would be developed as outstanding residential areas for retired couples.

To sum up, the areas to be looked at would be the following.

Other concerns would be the earthquake risk. As it has been almost ten years since the Tohoku earthquake, the risk of another earthquake should be aware. Therefore, the properties with newly built and with strong earthquake resilient system would be highly recommended, especially for the properties in the east of Tokyo station.

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

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