Tokyo’s real estate market continues its upward cycle at a gradual pace. A  combination of slow but gradual rental growth and a large inflow of capital is pushing up asset prices and limiting affordable investment opportunities. Given robust pre-leasing activity in newly developed buildings, gradual growth is likely to continue, at least toward the end of 2018. Tokyo is expecting a large upcoming office supply toward the Tokyo Olympics in 2020, though impact is expected to vary by submarket. Under the current strong investment climate, it is essential to take local macroeconomic variables into account and consider a long-term investment horizon. Considering these factors, Shibuya’s significant redevelopment projects and favourable fundamentals are likely to make it an attractive investment target. 

•  Shibuya is going through a large redevelopment phase which could boost the area’s presence and competitiveness.
• Total office and retail stock will expand by over 800,000 sq m through 2023, adding space larger than Roppongi Hills, and potentially generating significant footfall.
• Shibuya has been a hub for rapidly growing and high-flying startups and technology companies. The area enjoys a desirable tenant profile. 
• The retail customer base is likely to widen to include more young professionals with stronger spending power.
• Demographic trends are favourable, showing improving income levels in Shibuya and increasing young populations in neighbouring wards. 

Shibuya has developed as an epicentre of vibrant culture, and the district is famous for birthing many fashion and entertainment trends. It is now going through a huge redevelopment phase that will change the characteristics of its office market. New retail landscapes are also transforming the area to a more mature market with significantly larger footfall. 

Shibuya’s technology industry is a driving force for its robust office fundamentals. The series of developments around Shibuya Station will significantly increase office supply, but high demand should result in almost immediate absorption. Preleasing activity for new office space is robust, which indicates strong pentup demand in the area. Promising startups will support the growth of the
ward as they continue to drive future office demand.

Furthermore, increasing young populations in neighbouring wards indicate that Shibuya has a reliable talent pool on which to draw. Improving income levels in Shibuya reflect strengthening market
conditions and are favourable for future growth.

Overall, Shibuya is well-positioned to boost its status. Redevelopment projects around Shibuya Station are expected to have a wide and continuous impact on the Tokyo real estate market.

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