Upscale Residential Areas in Tokyo Ⅲ

In the Japanese real estate market, Tokyo’s high-end residential areas are particularly attracting the keen interest of foreign investors.

Thanks to this high interest, we have reached the third installment of our Tokyo high-end residential area series in this article.

This time, we introduce the high-end residential areas of “Minami-Azabu,” “Aobadai,” and “Jiyugaoka.”

Each of these areas is extremely popular among Japanese people, so please consider them as potential investment opportunities in Japanese real estate.

Minami-Azabu in Minato Ward

Minami-Azabu, located in Minato Ward, Tokyo, is one of Tokyo’s premier high-end residential areas.

The charm of Minami-Azabu lies in its unique international atmosphere and historical background.

During the Edo period, Minami-Azabu was home to many samurai residences, leading to active town development by merchants and townspeople.

As a result, the area grew into a town highly regarded by dignitaries from European and American countries, leading to the construction of many embassies in Minami-Azabu.

The real estate investment benefits in Minami-Azabu include a solid rental demand from Japanese affluent and Western elites who favor an international atmosphere.

Additionally, being situated on a hill, Minami-Azabu offers good sunlight exposure and views of Tokyo’s night skyline from two-story houses, which also boosts rental demand.

Furthermore, Minami-Azabu’s location in a quiet residential area while being in central Tokyo provides high transportation convenience.

However, Minami-Azabu has its disadvantages.

Due to its hilly area, the view depends on the location, and without careful evaluation of each property’s location, you might end up investing in an expensive area without yielding substantial returns.

For instance, in 2023, the official land price in Minami-Azabu was 9.15 million yen per tsubo (a Japanese unit of area).

Prices for family homes range from about 120 million yen to a maximum of 2.6 billion yen.

Minami-Azabu is a promising area for real estate investment with strong rental demand, although it comes with high investment risks due to its high property prices.

Partnering with a knowledgeable Japanese real estate brokerage is essential for careful property selection.

Aobadai in Meguro Ward

Located in the northern part of downtown, Aobadai in Meguro Ward is a quiet high-end residential area.

Close to the Daikanyama area, it is surrounded by stylish cafes and shops.

It also hosts embassies from countries like Malaysia and the Arab Republic of Egypt, adding to its scenic and sophisticated atmosphere.

Moreover, Aobadai achieves a lush environment despite being downtown, with half of Aobadai 2-chome occupied by a vast park, one of which is the Saigo Yama Park, once the residence of Saigo Takamori’s younger brother.

Adjacent to Saigo Yama Park is Sugakari Park, a stroll garden on the site of the former Bungo-Okayama domain residence.

Aobadai also features large cultural complexes like the Bunkamura, with concert halls, theaters, art museums, and mini-theaters.

The investment benefits in Aobadai include excellent transportation convenience, making it attractive for elite workers prioritizing commuting ease, thus ensuring solid rental demand.

However, the popularity has led to a spike in prices, making it a high-investment area.

The average land price in Aobadai for 2023 was 1.703 million yen per square meter, setting a record high.

Home sale prices range from about 500 million yen to 700 million yen, over ten times higher than the average home price in Japan.

Given the limited property circulation, being prepared for intense competition in real estate acquisition is crucial.

Jiyugaoka in Meguro Ward

Named after the station on the Tokyu Toyoko Line opened in 1927, Jiyugaoka quickly grew into a high-end residential area, captivating the hearts of many Japanese.

Jiyugaoka is unique in that it blends a quiet high-end residential area with numerous commercial facilities.

Places like “Frele With Jiyugaoka,” “Trainchi Jiyugaoka,” and “Luz Jiyugaoka” are shopping spots that support the Jiyugaoka brand with their unique stores.

Also known as the “Holy Land of Sweets,” Jiyugaoka is famous for its many patisseries, such as “patisserie Paris S’eveille,” “Mont Saint Clair,” and “Mont Blanc,” which are recognized on major Japanese food and drink portals as top shops.

The overall charm of the area contributes significantly to its enduring popularity as a place where many desire to live.

For real estate investment in Jiyugaoka, consider the trend of capital gain potential indicated by the 6.7% increase to 3.43 million yen per tsubo in 2023 compared to the previous year.

Despite Japan’s population decline, Jiyugaoka continues to show growth potential, making it an attractive investment area.

However, the investment disadvantages include the high property values, making it necessary to partner with a skilled real estate brokerage to assess potential tenants’ financial and credit worthiness adequately.

Investing in Tokyo’s high-end residential areas involves significant sums, often in the billions, and the limited property circulation leads many investors to overpay.

Having a real estate brokerage well-versed in high-end property transactions is crucial for success in these areas. Keep this in mind and aim for a successful investment in Tokyo’s luxurious residential neighborhoods.