According to the Knight Frank Prime International Residential Index for 2022, Tokyo saw the highest rate of growth in Asia with a 22.8% annual increase. It was also ranked 4th globally, behind Dubai (+44.2%), Aspen (+27.6%), and Riyadh (+25.0%).

The capital outperformed Singapore (+3.9%), New York (+2.7%), London (+1.5%), Sydney (+1.1%), and Hong Kong (-1.6%). 

While other countries are struggling with rising interest rates, Japan has remained an anomaly, keeping interest rates at ultra-low levels. So far, the domestic real estate market has been supported by these ultra-low interest rates, more double-income households than ever before, low unemployment, a tax system that favors the ownership of real estate, a shortage in the supply of luxury housing, and rising construction costs. Demand too, is primarily domestic, with little reliance on foreign buyers for individual residential properties. 

Tokyo is still far from being the most expensive city to purchase real estate, with the report saying that US$1 million gets you around 60 square meters in Tokyo, putting it in 13th spot. It is relatively cheap compared to Hong Kong (21 sqm), New York (33 sqm), Singapore (34 sqm), London (34 sqm), Los Angeles (39 sqm), and Paris (43 sqm). It is this ‘cheapness’ that has been a draw for the niche foreign buyers and has only been further emphasized with the cheaper Yen. 

Knight Frank is forecasting prime properties in Tokyo to see a more mild 2.0% increase in 2023. The forecast for 2022 was also a 2.0% increase. 

Source: Knight Frank Wealth Report 2023.