In Tokyo, space comes at a premium and real estate is an expensive investment. While prices have been increasing over the last few years, there are a few criteria that can knock down the cost of your property. Read on below for a list factors to look out for.

Location, location, location

Choose your ward wisely

Naturally, properties in the C5W (central 5 wards), namely Shinjuku, Shibuya, Chuo, Minato and Chiyoda, are the most costly. Considering a property in one of the outer wards can save you up to two-thirds of the cost of a place in the center. Many of these locations are still within 10 to 30 minutes of Central Tokyo and popular with renters. Real estate in especially Katsuhika, Nakano and Musashino has recently dropped in prices, so it is worth putting those wards on your list.

In general, the sweet spot is a location that is still within the 23 special wards of Tokyo, as opposed to outer cities that are still considered part of Tokyo (instead of a -ku, they carry a -shi for “city” at the end — e.g. Higashikurume-shi). In fact, the outer wards generally reap higher ROIs. While neighbouring prefectures tend to be naturally much cheaper, the long commute makes them a less popular choice with a higher vacancy risk.

Walking distance from the nearest station

Japanese people pay a premium for an apartment within a 5 minutes' walk of the nearest station. Prices drop for a walking distance above that; they drop considerably lower if you are willing to consider a property that is more than 10 minutes from the nearest station. Equally, places outside the Yamanote Line go for higher prices if the nearest train station is an express stop; meaning a local train station can save you some money. While you or the renter will have to put up with the slower local train, they are usually less crowded than the express — you win some, you lose some.

Undesirable neighbourhoods

A very affordable property compared to other places in the same ward can often indicate a less desirable neighbourhood. Investigate what the reason is. Good real estate agents in Japan are transparent and will be upfront with this information. Naturally, you should visit the area yourself before purchase. Reasons for a bargain property include undesirable industrial facilities in the neighbourhood (e.g. a gas plant or garbage incineration facility), a slaughterhouse or other meat production facility, a cemetery, or a local yakuza stronghold. Of those, the most tolerable for renters seems to be a cemetery. If you are considering a place for yourself, it is within your discretion what you can put up with, but we strongly advise against purchasing in a yakuza-infiltrated area. Squatting, extortion, and violence are just a few of the problems that have been associated with their presence — and no bargain is worth the risk.
 
Surprisingly, properties next to highways and train lines, which can go hand in hand with considerable noise pollution, rarely equates to discounts in Tokyo.

Other considerations

Jiko bukken – stigmatised properties

Jiko bukken is a Japanese term that describes a property where an accident has occured. It is usually associated with a death — either natural or suicide. Not only that, sometimes the bodies are not found for a considerable length of time, further stigmatising a unit. The first renter after the accident needs to be informed of the incident, which results in extreme price drops. Some owners prefer to just rid themselves of such a seemingly cursed unit. Interestingly enough, Japanese real estate site SUUMO came up with a campaign in 2013 that advertised jikko bukken as the chance to live with a ghost.
 
Euphemisms aside, if you are considering such a unit, make sure the accident did not leave any structural damage, pest problems or odour issues that are hard to remove. Legally, renters after the first contract post-incident do not need to be informed of it, but most realtors in Tokyo prefer to do so to avoid future issues. There is even a website that lists accident properties. Also, renters might find out about the circumstances from talking to their neighbours.
 
Other properties that are considered jiko bukken are those that had an accident like gas leaks, fire or liquefaction, e.g. those built on top of an old well or in a flood area (see Tokyo flood maps here). Again, the bargain might save you tens of thousands of dollars, but such a property requires very thorough due diligence best executed with a real estate agent you trust.

Old buildings

Old buildings mean considerable price drops. The Japanese love anything that is sparkly and new. The lifecycle of a building in Tokyo is usually 30 years before it gets knocked down and potentially rebuilt. Generally, a unit of 20 years is around 20% cheaper than a new property and a building in the 30-year range around 30% cheaper.

However, potential drawbacks are higher repair and maintenance costs, so make sure that you check the owners’ association’s repair fund and if any large-ticket items are planned in the near future before purchasing an older unit. Also, issues for renters in old units can consist of cockroaches and other pests, smell, an outdated bathroom or kitchen, and dark rooms as older buildings often have fewer, smaller, and tinted windows.

By Mareike Dornhege

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