Property prices and the cost of living in Tokyo has often been portrayed as the highest among the world’s major cities. This couldn’t be further from the truth! In fact, when we factor in several other important considerations, living or purchasing luxury real estate in Tokyo is an inherently more practical choice.
1. Lower Cost of Living
The cost of living matters a lot to rank and file executives, especially fresh graduates. So if your company wants to bring the best talent into Tokyo, this is a strong selling point. Cheaper cost of living could also tip their decision on making an investment in property.
Tokyo (86.87)ranks 18th on Numbeo’s Cost of Living Index, below 11th-placed New York City (100.00) and Zurich (128.29).
Eating out in Tokyo is frequently cheaper than buying street food in New York. Image courtesy of Tinou Bao
2. Lower Crime Rate
Japan is one of the safest countries in the world, and by extension, Tokyo is one of the safest cities in the world. For crime, the city ranks 344th out of 374 cities around the world, with an index score of 22.64 (the lower, the better). In comparison, Paris (ranked 112th, 51.76 points), New York City (164th, 44.44), and London (107th, 52.48) can’t even break into the top 100 of the index.
A breathtaking view of Tokyo’s skyline. Image courtesy of Derrick Brutel
3. Price-to-Space Ratio of Rental Units
A price-to-space ratio survey involving 30 major cities around the world showed that Tokyo actually offers cheaper rental options. Using a base rental rate of $1,500 USD, Tokyo provides an average of 538 sq. ft of living space, which is almost double what you’ll get in New York City (277 sq. ft) or London (301 sq. ft). Tokyo even ranks higher than a few cities in Asia, including Hong Kong (321 sq. ft) and Singapore (449 sq. ft).
A man walks by a phone booth in London on a rainy day.
4. Higher Rental Yields
Rental yield is a crucial aspect of property investment. And once again, Tokyo comes out on top compared to its major global rivals.
Tokyo’s major luxury districts have a gross rental yield of between 2.39% (Chiyoda ward) and 4.44% (Minato ward). The latest data also indicates that yields for apartments in the Greater Tokyo region climbed to 4.5% in 2019!
A gargoyle overlooks a street in Paris
London struggles to match this yield, and its prime neighborhoods like Mayfair and South Kensington posted yields of 2.23% and 2.76%, respectively. The yields do go up in the outskirts, but that’s common in most cities.
It’s a similar story in Paris. The 6th Arrondissements (Saint-Germain-des-Prés), 7th Arrondissements (Eiffel Tower), and 8th Arrondissements (Avenue Montaigne) recorded average yields of 2.79% to 3.13%.
When you factor in the level of healthcare, foreigner-friendly property laws, and affordable financing options, Tokyo’s credentials really do shine.
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