The End of Japan's Lost Decades

Tokyo has officially ended its 30-year property bear market, with central apartment prices reaching all-time highs in 2025. Prime locations in Shibuya, Minato, and Chiyoda wards now command over $2,000 per square foot — surpassing Manhattan and Hong Kong. A modest 500-square-foot apartment in Shibuya Crossing vicinity now costs more than $1 million, representing a 250% increase from 2020 levels. The dramatic turnaround has been driven by multiple factors converging simultaneously.

Warren Buffett's high-profile investments in Japanese trading houses sparked the initial foreign interest, but the real catalyst has been China's property crisis pushing capital overseas. Japanese government policies making it easier for foreigners to buy property, combined with the yen's weakness, have created perfect conditions for international buyers. Global funds that missed the U.S. and European property booms are now piling into Tokyo, viewing it as the last major undervalued developed market.

The Tokyo Premium

The transformation has been particularly dramatic in traditional luxury districts. Roppongi Hills residences that traded for $800 per square foot in 2019 now fetch $2,500. The scarcity of land in central Tokyo, combined with strict building regulations, has created genuine supply constraints. Unlike many global cities that added inventory during the pandemic, Tokyo's new development pipeline remains extremely limited. This perfect storm of increasing demand and constrained supply has finally broken the deflationary mindset that dominated Japanese real estate for three decades.