“Foreign Capital Driving Record-High Apartment Prices” Tokyo Market Buckles Under Bubble-Level Surge

Rising Apartment Prices Post-Long Stagnation
Soaring in Tokyo’s Core, Deepening Polarization
Mounting Discontent Among Households Priced Out

Apartment prices in Tokyo are repeatedly hitting record highs. With a surge of foreign capital fueled by a weak yen and compounded by supply shortages, prices have surpassed the bubble-era peak. Average prices have soared 85% in just five years, and in prime districts, foreign buyers account for more than 30% of transactions. This has stirred mounting backlash within Japan against the influx of overseas investment and growing unease over a sharply polarized market.

Overheated Tokyo Real Estate Market

According to the Real Estate Economic Institute of Japan on the 17th, the average apartment price in Tokyo’s 23 wards jumped from about $376,000 in July 2020 to $695,000 this July—an 85% surge in just five years. The rally continued last month. Across the Tokyo metropolitan area, encompassing Tokyo, Kanagawa, Saitama, and Chiba, the average price of newly built apartments reached $667,000, a 28.4% increase from a year earlier. It was the first time in four months that the average exceeded $667,000.

In Tokyo’s 23 wards, large-scale high-end properties drove a 24.4% rise, with the average hitting $899,000. The number of units sold surged 71.6% to 1,045, underscoring the growing weight of luxury listings.

Saitama saw a 42.9% increase to $470,000, propelled by luxury tower developments in Urawa and Kawagoe. Kanagawa rose 6% to $430,000, and Chiba climbed 11% to $395,000. Overall supply also expanded: 2,006 newly built units were released across the metro area in August, up 34.1% year-on-year—the first increase in three months.

Influx of Foreign Investors

The price surge is largely attributed to foreign investors buying for investment purposes. With overseas visitors and capital flooding in, demand has intensified. A survey conducted by MUFG Bank of 13 real estate firms found that nine reported foreigners making up more than 20% of buyers in central districts such as Chiyoda, Shibuya, and Minato. Five firms said foreigners accounted for over 30%, while one reported foreign buyers comprising more than half.

Although the Japanese government has not conducted an official study, many buyers are believed to be Chinese nationals. Wealthy Chinese families have been sending children to international schools in Tokyo, Yokohama, and Kobe. In Bunkyo ward, home to the University of Tokyo, the number of Chinese residents surged from 4,792 in 2022 to 8,666 within three years.

This has triggered rising resentment toward foreign capital’s penetration of Tokyo real estate. In the name of overcoming prolonged stagnation, the government relaxed regulations, effectively granting foreigners the same purchase rights as citizens. The Sanseito, a new political party that emerged as the biggest winner in June’s upper house election, has called for restrictions on foreign property purchases, boosting its seats from just two three years ago to 15.

Soaring prices are pushing households priced out of homeownership into the rental market. According to property broker AT Home, rent accounts for 34% of tenant income in Tokyo’s 23 wards, far exceeding the 25–30% threshold considered sustainable. Earlier this year, controversy erupted when a Chinese landlord abruptly doubled the rent of a Tokyo apartment and, after tenant protests, shut down elevator service in retaliation.

Tri-Polar Market Dynamics

The explosive price escalation is largely confined to Tokyo. In neighboring Saitama City, average prices rose from $205,000 to $287,000 over the same period. In Nagoya, central Aichi Prefecture, prices inched up from $157,000 to $194,000, just a 14% rise.

While Tokyo’s dominance is longstanding, alarm is mounting over an emerging “tri-polar” market. Analysts note that only 10–15% of properties are “holding or appreciating,” 70% are “gradually declining,” and the remaining 15–20% are “virtually worthless or depreciating.” This means that while headline averages suggest a booming market, the value of 80–85% of properties is in fact falling.

Economists warn Japan’s property sector is showing bubble-like characteristics. Even high-income households are finding central Tokyo’s new builds beyond reach, giving rise to the term “Reiwa Bubble,” named after the current imperial era that began in 2019. Experts highlight that unlike the 1990s bubble, today’s surge is driven by ultra-high-end properties distorting the average.

A striking case is the Azabudai Hills residence, completed in 2023, where penthouses command prices exceeding $1.88 billion. Such luxury towers, concentrated in the five core wards of Chiyoda, Minato, Chuo, Shibuya, and Shinjuku, are propelling average prices skyward.