Tokyo’s Growing Yen for High-Rise Apartments

By Suryatapa Bhattacharya | Mansion Global

An uptick in demand for high-rise luxury apartments in Japan’s capital city is driven, in part, by younger couples, tech entrepreneurs and foreign buyers want more upscale amenities.

The Marc Jacobs store in Minamiaoyama, an area known for its high-end shopping in Tokyo.


In Tokyo—both in the old days and today—the closer a home is to the emperor’s Imperial Palace, the higher the status of its owner.

Three of the capital’s most exclusive neighborhoods, Azabu, Aoyama and Akasaka, popularly known as the three As, are located just south of the palace. Here, luxury residential towers that cater to the city’s elite now sit where feudal lords once had their lavish villas.

Among Tokyo’s 23 municipalities or wards, Minato ward—where the three As are located—saw the biggest jump in residential land prices last year. Japan’s land ministry pegged the average price of land there at the equivalent of $1,420 a square foot, up 11.5% from the previous year. The priciest land in the ward, in the heart of Akasaka near the U.S. Embassy, was valued at $3,100 a square foot, up more than 50% over five years.

Penthouses in towers located in the three As and the neighboring Roppongi district can sell for as much as ¥3 billion, or $27 million, real-estate agents say.

Presidents of Japanese companies, lawyers, doctors and executives who work for foreign securities companies are among clients seeking such properties, according to Satoshi Watanabe, property manager with Mitsubishi Jisho Residence Co., a real-estate developer owned by Mitsubishi Estate Co.

A mix of old and new architecture in Omotesando, an upmarket shopping area that’s walking distance from the Aoyama neighborhood in Tokyo.


Usually properties worth $10 million or more aren’t offered for sale on the open market because the buyers want to remain anonymous. Instead, homes are quietly sold to a select and small database of buyers that real-estate agents have curated over years. Similarly, property sale prices and the identity of the buyers aren’t disclosed in public records.

One of Japan’s priciest apartments since the “bubble economy” of the late 1980s sold to an unnamed buyer in 2015, according to Zoe Ward, director of Japan Property Central KK, a real-estate agency.

The 2,186-square-foot penthouse, located in a 44-story building called Park Court Akasaka Hinokicho The Tower, sold for $13.6 million while the building was still in the planning stages, according to the developer, Mitsui Fudosan Residential Co.

With sweeping views of the city and located next to a park with an ice-skating rink in winter, the building, designed by Japanese architect Kengo Kuma, is set to be completed this month.

Prada’s flagship store stands in the fashionable Minamiaoyama neighborhood. It was designed by the Swiss architectural firm Herzog & de Meuron.


Luxury high-rise residential properties in Tokyo are generally priced lower than their counterparts in London, Hong Kong or New York because domestic buyers, who are the main drivers of the market in Tokyo, are more restrained in their definition of luxury. There is little demand for splashy interiors, or a gym or a swimming pool in the building. Multiple bathrooms are usually only found in a penthouse.

“In the Japanese culture, even if you are wealthy, having too much—it is a bit of a negative status symbol,” said Adam German, head of marketing and vice president of Housing Japan, a real-estate agency.

Times and tastes are changing, however. In previous generations, the eldest son inheriting a family business would typically have lived with his parents, taken care of the house and inherited it, said Yukiko Takano, who works in the Tokyo office of List Sotheby’s International Realty. Today, younger buyers prefer a bigger, more modern master bedroom, she said.

Technology entrepreneurs and other domestic buyers in their 40s and 50s often resemble foreign buyers more closely than their Japanese elders, Ms. Takano said. “They have a different way of buying and living. They don’t want a gigantic house but a good area,” surrounded by the latest in food and fashion, Ms. Takano said.

Proximity to food and fashion is part of the appeal of living in one of Tokyo three coveted neighborhoods, Azabu, Akasaka and Aoyama. The Japanese-brand Issey Miyake’s Pleats Please store, located in Minamiaoyama, is among dozens of upmarket stores that dot these areas.


Foreign buyers make up only a tiny slice of the market, even though laws in Japan don’t restrict foreign ownership. International buyers often come from Singapore, Hong Kong or elsewhere in Asia, said Toshiyuki Sanada, an architect and deputy general manager for Mori Building Co. specializing in luxury residential properties for overseas buyers.

Compared with New York and Hong Kong, building heights tend to be lower, owing to zoning restrictions and the expense of earthquake-proofing an especially tall tower. Residential towers typically top out at around 60 stories, and the new ones have backup food, water and power systems in case of earthquakes.

The newly built 44-story Park Court Akasaka Hinokicho The Tower, where a penthouse sold for $13.6 million.


One building popular among foreign residents is the 29-story Motoazabu Hills, a Mori Building development that towers over the Azabu neighborhood. Boulevards with Michelin-star restaurants and Japanese- and international-brand boutiques sit on streets lined with cherry trees that burst into clouds of pink in the spring and ginkgo trees that display bright yellow leaves in the fall.

It is also close to embassies and Roppongi, where moneyed expats come to play.

Some of the newer buildings that Mori is developing are designed to include as many as five bedrooms with en suite bathrooms—rare in Japan. A 54-story Mori tower under development in Minato ward near its Toranomon Hills building is set to have some apartments larger than 5,000 square feet.

Demand from foreign buyers is growing, Mr. Sanada said, especially with a weaker yen in the past year, allowing for a more attractive exchange rate to currencies like the Hong Kong dollar that are pegged to the U.S. dollar.

Mr. Sanada is also optimistic that exposure from the 2020 Summer Olympics in Tokyo will attract interest from foreign buyers.