Even for veteran investors, the obvious questions of 'what property to buy and when to buy?' are not easy to answer due to the level of uncertainty in the available data and difficulties in obtaining information sources. Needless to say, global investors must prepare to take even higher risk to invest in a foreign country as it is rather complicated to obtain reliable information sources overseas so as to decide on what to invest.
There are many factors to consider when purchasing real estate properties, whether the potential property is located in a "high need area" should be one of the top criteria. In this article, we would like to relate this to the number of households and total population in the region. According to the UN, Tokyo remains the world's largest city as of 2018 while Delhi is projected to surpass Tokyo as the world's most populous city by 2030.
Will the attractiveness of investing in Tokyo's real estate market shift to other developing countries with growing population?
In 2015, the decline of Japan population was officially confirmed for the first time since World War II, confirming a trend in an aging population that has well studied in Japan and aboard.
Let's take a look at the graph below. As for 2015, according to the census of Ministry of Internal Affairs and Communications, the number of households in Japan was projected to grow continuously along its trend. Despite the shrinking population, the number of households are on the rise as the family structure has been shifted to nuclear families and one-person households as a growing demographic.
As of 2018, the trend has been confirmed to continue, and forecast says that this trend will continue for another 10 years.
So, what about Tokyo’s population when the entire population of Japan is in its decline? Let's take a closer look on each district of Tokyo which consists of 23-ku <ward> which are considered to be the center of Tokyo. The population in numerous districts have been projected to grow continuously, 8 out of 23 ku such as Chuo-ku, Minato-ku, Chiyoda-ku, Koto-ku, Taito-ku, Shinagawa-ku, Bunkyo-ku, and Nerima-ku are forecasted to have more than 10% growth by 2045 since 2015.
Even inside Tokyo, don't you think that the investment return would vary significantly from one area to another and is also determined by the buying & selling terms?
In the above, we touched on the topic of investment attractiveness that relates to Japan's growing household and Tokyo’s population. Next, we will further talk about the attractiveness of investing in Tokyo with the theme of "Average rental prices in Tokyo". Stay tuned!
National Institute of Population and Social Security Research
Ministry of Internal Affairs and Communications "Census"
"The World’s Cities in 2018" by United Nations https://www.un.org/en/events/citiesday/assets/pdf/the_worlds_cities_in_2018_data_booklet.pdf
2018 NRI's - "Japan Real Estate Investment Market ''
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