Not Just Tokyo, The Allure of Real Estate in Yokohama and Kawasaki Cities, Kanagawa Prefecture
May 26, 2023
If you are a foreigner living in Japan and considering purchasing a home, the choice of location is inevitably narrowed down based on your job and family circumstances. However, when it comes to foreign investors considering real estate investments in Japan, Tokyo properties are often considered as the top choice initially. While this perspective is certainly not wrong, it's worth noting that there are many attractive real estate options in Yokohama and Kawasaki cities, which are located just south of Tokyo in Kanagawa Prefecture. Therefore, it might be beneficial to include these areas as potential candidates when considering a real estate purchase.
What is Kanagawa Prefecture like?
While it may not have the same level of popularity as Tokyo, Osaka, or Kyoto among foreign tourists, Kanagawa Prefecture is the second most populous region in Japan, following Tokyo. As of May 2023, the population is approximately 9.22 million people.
The largest city in Kanagawa Prefecture is Yokohama, with a population of around 3.77 million people. Kawasaki City, located between Yokohama and Tokyo, has a population of approximately 1.54 million people. When combined, these two cities form a massive urban area with a total population of 5.31 million people.
In economically vibrant Kanagawa Prefecture, the nominal gross domestic product (GDP) reached 33.9055 trillion yen as of 2020. This figure is comparable to the GDP of countries like Malaysia and Pakistan. Furthermore, according to Teikoku Databank, Japan's largest credit research company, in 2021, the net difference between the number of companies relocating to and from Kanagawa Prefecture was a positive value of 146, making it the prefecture with the highest number of incoming companies nationwide. This signifies that many business owners and entrepreneurs have chosen Kanagawa Prefecture as their business base after comprehensive analysis of factors such as location, cost, and growth potential.
Furthermore, Kanagawa Prefecture is home to numerous attractive tourist destinations. These include Kamakura, known for its historic temples and Buddha statues; Hakone, a popular hot spring resort area; and the Enoshima-Shonan area, which stretches along the coast and offers trendy cafes, restaurants, and a thriving marine sports scene, including surfing.
Benefits of Purchasing Real Estate in Yokohama and Kawasaki
1. Affordable Land Prices
One of the significant advantages of buying investment properties or a house/apartment for personal use in areas like Yokohama and Kawasaki is the lower land prices compared to Tokyo, despite being adjacent to the Tokyo metropolitan area. According to the land price survey conducted by the Ministry of Land, Infrastructure, Transport and Tourism, the average land price in Kanagawa Prefecture is approximately 54.2 when Tokyo is set at 100, which is roughly half the price. Although there may be some variations within the prefecture due to average values, the lower financial burden of land purchase compared to Tokyo is a significant benefit. Additionally, for those considering rental apartment management, the cities of Kawasaki and Yokohama have a large population and their proximity to the central Tokyo area contributes to a lower vacancy rate, which adds to the appeal.
2. High Rental Yields
In the profitable real estate market within Tokyo's 23 wards, the average rental yields range from approximately 3.5% to 6%. Generally, the further away from the Tokyo city center, the higher the rental yields tend to be. However, in real estate investment, if one cannot identify promising regional cities, there is a risk of experiencing higher vacancy rates due to factors such as population decline. From this perspective, even in areas within Yokohama or Kawasaki, careful selection of the specific neighborhood is crucial. Being in close proximity to the Tokyo city center and having a large population, these areas offer a sense of stability compared to other regional cities. Rental yields in Yokohama and Kawasaki are often slightly higher, ranging from around 4.5% to 7%, compared to properties within Tokyo's central area.
3. Popular and Convenient
Kawasaki City
Kawasaki City has made significant contributions to Japan's rapid economic growth as an industrial zone in the past, but it was also associated with a mixed and unsafe image. However, in recent years, it has successfully shifted from manufacturing to research and has been rapidly redeveloping, transforming the entire city into a sophisticated urban area. In particular, the area surrounding Kawasaki Station, which serves as the central hub of Kawasaki City, has undergone redevelopment in recent years, giving rise to modern large-scale commercial facilities such as Lazona Kawasaki, La Cittadella, Muza Kawasaki, Ruffon Kawasaki, and Costco. Therefore, there is no shortage of shopping, dining, and leisure options.
Furthermore, Kawasaki City has a well-developed transportation network, making it highly convenient in terms of transportation. It is possible to commute from most areas within the city to Tokyo's city center. In particular, Kawasaki Station, which is served by the JR Tokaido Main Line, Keihin-Tohoku Line, Nanbu Line, Keikyu Main Line, and Keikyu Daishi Line, boasts excellent access to major stations. It takes only 8 minutes to reach Yokohama Station, 18 minutes to Tokyo Station, 21 minutes to Shibuya Station, 41 minutes to Shinjuku Station, and 15 minutes to Haneda Airport, the gateway to the sky.
| Travel Time from Kawasaki Station | |
|---|---|
| Yokohama Station | 8 minutes |
| Shinagawa Station | 9 minutes |
| Tokyo Station | 18 minutes |
| Shibuya Station | 28 minutes |
| Shinjuku Station | 35 minutes |
| Haneda Airport Terminal 1 and 2 Station | 15 minutes |
And, although it may not be widely known, one of the greatest attractions of Kawasaki City is its growing population. While it is said that Yokohama City already reached its population peak around 2020, Kawasaki City, which is adjacent to Tokyo, continues to experience population growth, and the latest projections estimate that it will reach a population of approximately 1.52 million around 2030.
In addition, Kawasaki City is not only a bedroom community for people working in Tokyo, but it also has a significant supply of properties suitable for families, such as apartments and detached houses, due to the presence of major companies' offices and factories like Fujitsu, Toshiba, NEC, and more within the city. Furthermore, within a 30-minute radius from Kawasaki Station, there are many universities such as Keio University, Shibaura Institute of Technology, and Tokyo University of Marine Science and Technology. This indicates that there is potential rental demand for both working professionals and university students in the city, making it an ideal area for real estate investment.
Yokohama City
Yokohama, which opened as a port in the Meiji era (1868 onwards), has been the center of rapid modernization in Japan and continues to be the most popular city. In fact, it has consistently ranked first in the "Desirable Places to Live" survey conducted by major real estate websites in Japan for six consecutive years from 2018 to 2023.
In Yokohama, which has many modern office buildings and large commercial facilities, there are numerous attractions that draw tourists from all over the country throughout the year. These include the Minato Mirai district, known for its modern office buildings and large commercial complexes, Yokohama Bay Bridge with its view of the iconic buildings and the harbor-facing Yamashita Park. Yokohama is also home to Japan's largest Chinatown.
Furthermore, the area around Yokohama Station, which serves as the heart of Yokohama, has been undergoing extensive redevelopment based on a plan established in 2009. The Tsuruya district, located on the north side of Yokohama Station's west exit, is transforming from its previous eclectic atmosphere into a trendy neighborhood. As part of this redevelopment project, a 43-story tower with a height of approximately 178 meters is being constructed, aiming to enhance industrial competitiveness, establish an international economic hub, attract global companies, and provide disaster-resistant and environmentally friendly housing. The tower will serve various purposes including residential units, retail spaces, offices, hotels, and serviced apartments.
In addition to the above, Yokohama has many attractions that continue to draw visitors throughout the year. It is located near the main area of Yokohama Station's west exit, which includes large commercial facilities such as Yokohama Takashimaya and Sotetsu Joinus, as well as areas like Kouei and Yokohama Nishiguchi Gobangai. There are also redevelopment plans underway at Yokohama Station's east exit, so it is an exciting city to see how much it will transform.
Yokohama continues to thrive and has become a leading area for real estate investment, with its captivating charm that attracts people. Additionally, it offers excellent transportation convenience, and here are the estimated travel times from Yokohama Station to various major stations:
| Travel Time from Yokohama Station | |
| Kawasaki Station | 8 minutes |
| Shinagawa Station | 18 minutes |
| Tokyo Station | 25 minutes |
| Shibuya Station | 30 minutes |
| Shinjuku Station | 35 minutes |
| Haneda Airport Terminal 1 and 2 Station | 26 minutes |
As mentioned earlier, Yokohama City and Kawasaki City, which continue to develop, are diverse metropolises where various households mix, including single individuals commuting to the city center, families who want to live in spacious homes while keeping rent affordable, and students attending the numerous universities in the area. These cities offer many attractions for those looking to purchase real estate. If you are considering buying a house or investing in real estate in Japan, I highly recommend considering this area as a potential location.