Category: Guide

The Business Districts of Tokyo

Before beginning to look at the process for securing business premises in Tokyo it can be wise to first study the various business districts to determine a short-list of those that meet your requirements and determine which types of company you would like to be close to.

Tokyo comprises 23 Wards and as the various business districts span across them below you will find information grouped together. You may also refer to the graphical representation to get your bearings relative to local landmarks.

Marunouchi / Ōtemachi / Yūrakuchō / Ginza

• Marunouchi (丸の内)

This business district is located in the Chiyoda City ward and lies between Tokyo Station and the Imperial Palace. Many Financial, Legal, and Business Services companies are based there along with Electronics and Heavy Industry companies – think Citigroup, Lathan & Watkins, KPMG, Mitsubishi, Hitachi, and the like.

Marunouchi is serviced by the following rail/subway lines:

• Nijūbashimae Station (Chiyoda Line)
• Otemachi Station (Chiyoda Line, Hanzomon Line, Marunouchi Line, Toei Mita Line, Tozai Line)
• Tokyo Station (Chūō Line, Keihin-Tohoku Line, Keiyo Line, Marunouchi Line, Shinkansen, Sōbu Line, Yamanote Line, Yokosuka Line)

• Ōtemachi (大手町)

This business district is also located in Chiyoda City but lies north of Tokyo Station and Marunouchi. The land, previously residential area was destroyed by fire in 1657 and was completely redeveloped over time into the area it is now with modern high-rise buildings.

Ōtemachi is home to Banking, Insurance, Property Development, Communications, and Newspaper companies

Ōtemachi is serviced by the following rail/subway lines:

• Ōtemachi Station (Chiyoda Line, Hanzōmon Line, Marunouchi Line, Toei Mita Line, Tozai Line)
• Tokyo Station (in the neighboring district of Marunouchi. See line listing above)

• Yūrakuchō (有楽町)

This business district is also located in Chiyoda City and lies between Ginza and Hibiya Park. It is home to many smaller-sized companies and is less modern than neighboring areas and with its izakaya bars (居酒屋) and outdoor yakitori restaurants (焼き鳥) it is a popular stop-off for business people on their way home.

Yūrakuchō is serviced by the following rail/subway lines:

• Yūrakuchō Station (JR East Yamanote Line, JR East Keihin-Tōhoku Line, Tokyo Metro Yūrakuchō Line)
• Hibiya Station (Toei Mita Line, Tokyo Metro Hibiya Line, Tokyo Metro Chiyoda Line)

• Ginza (銀座)

Ginza is located in the Chūō City district to the east of Yūrakuchō. It is world famous for its department stores, boutiques, and restaurants. You will find many of the leading fashion houses have a flagship store leading it to having the highest concentration of western shops in Tokyo.

Ginza is serviced by the following rail/subway lines:

• Ginza Station (Tokyo Metro Hibiya Line, Tokyo Metro Ginza Line, Tokyo Metro Marunouchi Line)
• Ginza-itchōme Station (Tokyo Metro Yūrakuchō Line)
• Higashi-Ginza Station (Tokyo Metro Hibiya Line, Toei Asakusa Line)

Kōjimachi / Nagatachō

• Kōjimachi (麹町)

This business district is located in Chiyoda City and along with being the location of some western embassies it is home to television and radio companies.

Kōjimachi is serviced by the following rail/subway line:

• Kōjimachi Station (Tokyo Metro Yurakucho Line)

• Nagatachō (永田町)

The Nagatachō business district in Chiyoda City is most widely known as the location of the Diet of Japan (Japan’s Legislature) and the Prime Minister’s Residence. This district is home to financial and communications companies.

Nihonbashi

• Nihonbashi (日本橋)

This business district is in Chūō City and is north of Ginza and north-east of Marunouchi/Tokyo Station. It is home to a general spread of companies from banks, chemicals, and holdings.

Nihonbashi is serviced by the following rail/subway lines:

• Bakuro-yokoyama Station (Toei Shinjuku Line)
• Hamachō Station (Toei Shinjuku Line)
• Higashi-nihombashi Station (Toei Asakusa Line)
• Kayabachō Station (Tokyo Metro Hibiya Line, Tokyo Metro Tōzai Line)
• Kodemmachō Station (Tokyo Metro Hibiya Line)
• Mitsukoshimae Station (Tokyo Metro Ginza Line, Tokyo Metro Hanzōmon Line )
• Nihombashi Station (Toei Asakusa Line, Tokyo Metro Ginza Line, Tokyo Metro Tōzai Line)
• Ningyōchō Station (Toei Asakusa Line, Tokyo Metro Hibiya Line)
• Suitengūmae Station (Tokyo Metro Hanzōmon Line)
• Bakurochō Station (JR Sōbu Line – Rapid)
• Shin-Nihombashi Station (JR Sōbu Line – Rapid)

Roppongi / Akasaka

• Roppongi (六本木)

Roppongi is a business district in Minato ward and is south of Akasaka and north of Azabu. It is home to a number of foreign embassies and is known for its night life. Well known companies such as Ferrari Japan, The Pokemon Company, Google Japan, and the Mori Building Company have chosen this business district to be headquartered.

Roppongi is serviced by the following rail/subway lines:

• Roppongi Station (Tokyo Metro Hibiya Line, Toei Ōedo Line)
• Roppongi-itchōme Station (Tokyo Metro Namboku Line)
• Nogizaka Station (Tokyo Metro Chiyoda Line)

• Akasaka (赤坂)

Also located in the Minato ward, this is a commercial and residential district. It is home to companies in the entertainment industry (music, broadcasting, talent) along with building/construction companies.

Akasaka is serviced by the following rail/subway lines:

• Akasaka Station (Tokyo Metro Chiyoda Line)
• Akasaka-mitsuke Station (Tokyo Metro: Ginza Line, Marunouchi Line)
• Nagatacho Station (Tokyo Metro Hanzōmon Line, Tokyo Metro Yurakucho Line, Tokyo Metro Namboku Line)
• Aoyama-itchōme Station (Tokyo Metro Hanzomon Line, Tokyo Metro Ginza Line, Toei Oedo Line)
• Nogizaka Station (Tokyo Metro Chiyoda Line)
• Tameike-Sannō Station (Tokyo Metro: Ginza Line, Namboku Line)

Shinbashi

Shinbashi (新橋 )/ Hamamatsuchō (浜松町)

Also in Minato ward – Sinbashi (sometimes referred to as Shimbashi) is home to ANA and its subsidiary companies but also news agencies and broadcasters and investment companies. Hamamatsucho is convenient for accessing Haneda Airport and the dock area warehousing of Tokyo Bay.

Shinbashi is serviced by the following rail/subway lines:

• Shimbashi Station (Ginza Line, Keihin-Tohoku Line, Toei Asakusa Line, Yamanote Line, Yokosuka Line, Yurikamome)
• Shiodome Station (Toei Oedo Line, Yurikamome)

Shibuya (渋谷区)

The Shibuya ward is home to a major commercial, financial, and fashion center. It is also an intersection for the railway network with two of the busiest stations in the world (Shinjuku and Shibuya Stations).

Shibuya is serviced by the following rail/subway lines:

• Tokyo Metro
• Tokyo Metropolitan Bureau of Transportation
• Tokyo Corporation
• Keio Corporation
• Odakyu Electric Railway Odawara Line
• JR East

Shinagawa (<品川<区)

This ward is home to a number of foreign embassies/consulates along with the headquarters of a diverse range of companies – from Fuji Electric to Sega.

Shinagawa is serviced by the following rail/subway lines:

• JR East
• Tōkyū Corporation
• Tokyo Waterfront Area Rapid Transit
• Toyko Monorail
• Keikyū Corporation
• Tokyo Metro
• Tokyo Metropolitan Bureau of Transportation (Toei)

Meguro (目黒区)

This is mainly a residential ward but is home to a number of foreign embassies/consulates along with the corporate head offices and light industrial companies. Amazon Japan and Books Kinokuniya are examples.

Meguro is serviced by the following rail/subway lines:

• Tōkyū Corporation (Tōyoko Line, Ōimachi Line, Meguro Line, Den-en-toshi Line)
• Keiō Corporation (Keiō Inokashira Line)

Shinjuki (新宿<)

Shinjuki ward is home to the administrative center of the government of Tokyo, the Metropolitan Government Building.
Shinagawa is serviced by the following rail/subway lines:

• JR East
• Tokyo Metro
• Tokyo Metropolitan Bureau of Transportation (Toei)
• Odakyu Electric Railway Odawara Line
• Keiō Corporation (Keiō New Line)
• Seibu Railway Seibu Shinjuku Line

Once the location of your business premises has been shortlisted it can be further refined by looking into the rental costs, the distance to customers or partner companies, the convenience and transport links if customers need to visit, and the catchment area for potential employees.

Contact Century 21 SKY Realty

Part 4 – Applying for a Housing Loan Guide

The Final Steps

Drafts of the contract of sale and other relevant documents are provided to both Buyer and Seller prior to the contract date and the realtors involved will answer questions or work out any issues that need resolving. Two major dates are decided in the contract of sale, 1) the contract date and 2) the settlement date. The contract date is when the contract is signed and the deposit (earnest money) is paid. The settlement date is when the balance of the purchase price is paid leading to the registration of the property with the Buyer as the new Owner.

On the contract date the Buyer and the Seller assemble usually at a bank handling the sale. The Buyer’s real estate office broker will read and explain the full “Explanation of Important Points” to the Buyer. This can take at least an hour, as the many facts about the property are confirmed with the Buyer (the buildable ratios, any setbacks, etc.) After the explanation the Buyer will give the deposit money in the form of a cashier’s cheque to the Seller and the bank will confirm the deposit in the Seller’s account.

For the transfer of the property to begin the buyer on the settlement date will pay the remaining sum to the seller from the loan amount received from the bank (assuming a bank loan/mortgage has been sought).

The title is now transferred from the Seller to the Buyer and it is now that fees and taxes are paid to register the title and close the deal. The payment of the fees is usually in cash and is handled by the Judicial Scrivener (shiho shoshi) handling the deal. The Judicial Scrivener is usually chosen by the bank handling the financing.

The fees and taxes are summarised as follows:

• Real Estate Acquisition Tax: 3% payable within 3-6 months to the local tax office;
• Registration Tax: Between 0.4% and 2%;
• Stamp Duty: JP¥ 200 for contracts less than JP¥ 1 million and rising to JP¥ 200,000 for contracts over JP¥ 1 billion;
• Judicial Scrivener Fees: Typically 0.1% of the property value, though varies according to a rather complicated formula concerning the size of the property, building age, etc. All judicial scrivener fees are regulated by the government, so there should be no fee difference between one and another.
• Real Estate Agent fees: 3% of the property sale price + JP¥63,000.

The final step is the purchaser will receive the keys and documents relating to the property, from kitchen appliance instruction manuals to condominium management rules, as appropriate.

The process has now closed and the buyer is now the legal owner of the property.

Contact Century 21 SKY Realty

Purchase Application & Signing a Contract

Your ties to Japan matter

Japanese banks will offer mortgages to help foreigners resident in Japan purchase a home. These ‘Home Loans’ have traditionally very low interest rates, however there are a variety of prerequisites that will assist with a successful application:

• Holding a permanent Resident Visa
• Holding a Work Visa
• Being the spouse of a Japanese national
• Having a child or children attending a school in Japan

In addition to the above, evidence of working in Japan for at least 3 years will be advantageous. Also, showing job security by not having moved between employers will be beneficial. As proof of income you will need to show the lender your Withholding Tax Statement (源泉徴収票 , gensen-choshusho).

Japanese language requirements

As mentioned in previous parts of this guide, legal contracts will be in Japanese so it is important to either be proficient in the Japanese language or have a trusted translator and confirm this is acceptable to the bank.

Your age and health matters

Typical mortgages in Japan have a maximum term of 35 years and it is expected the applicant will be no older than 80 years old when the mortgage loan is finally repaid.

The bank will also require protection from the borrower dying or having a long term illness preventing the repayment of the mortgage. This is done through the borrower having Group Life Insurance (dantai shin’you seimei hoken , 身体信用生命保険) in place which will either be bundled with the monthly repayment amount or as a separate policy and payment.

Banks and their terms

Popular banks that offer mortgages to foreigners are shown below, but not all banks have information available in English:

• SMBC Prestia
• Suruga Bank
• Shinsei Bank
• Tokyo Star Bank
• MUFJ Bank
• Mizuho Bank
• Mitsui Sumitomo Trust Bank
• Bank of China Loan Amount: Typically up to JP¥ 100 million.
Property/Mortgage %: Banks base their mortgage appraisal on the value of the land rather than the property so with the land value making upwards of 85% of the purchase price the purchaser needs to be prepared to fund at least 15% from cash. Taking into account the mortgage down payment, Ernest Deposit and other fees/taxes the purchaser should be aware that up to 35% of the total purchase price may be required as cash.
Salary Multiplier: Typically a loan can be up to 8x of annual salary but with the mortgage repayment being 25% of monthly income.
Mortgage Interest Rates: Either fixed, typically for 10 years, or variable. No rate percentage is mentioned in this guide as they are affected by the prevailing economic situation and outlook.
Early Repayment: Banks can add a clause that prevents early repayment or will impose fees if the mortgage is repaid early. If you are considering that early repayment maybe an option would be to check the loan contract to see if this is viable or even possible.

The Loan Process

It is typical in Japan for the seller of the property to be confident that the buyer is able to have the financing in place, even if application to purchase or letter of intent have clauses allowing the buyer to walk away if a mortgage application is not successful. It is therefore a good idea for the buyer to enter into discussions with the bank/s before making an offer. This shows you are serious about purchasing the property and will help kickstart any negotiation process.

The 4 steps of securing a mortgage are:

• Pre-application (事前審査 , jizenshinsa)
• Application (本審査 , honshinsa)
• Mortgage document signing
• Mortgage Execution

Pre-application

The bank will check the applicants personal credit information and this includes looking at the applicant’s place of work along with past and current debts. Documents that are required as part of the Pre-application are:

• A completed Pre-application form;
• Identity Document, such as a passport or driver’s license;
• Health Insurance Card (健康保険証 , kenko-hokensho);
• Withholding Tax Statement (源泉徴収票 , gensen-choshusho);
• Details of other loans outstanding and their repayment schedule;
• Layout plan of the property the mortgage is being applied for.

A decision from the bank can be expected within a week.

Application and Document Signing

Once the purchaser wishes to move forward with the mortgage application the bank will investigate the property’s value, state of repair, and contract conditions. If the application is rejected the applicant could look at reducing the loan amount by paying a larger cash deposit.

If the loan still cannot be secured then the clause in the sales agreement will take effect and the contract will be cancelled and the Ernest Deposit returned.

If the mortgage application is successful the mortgage documentation is signed between the borrower and the bank along with deciding the date of execution of the mortgage.

This part of the process can take up to one month to complete.

Execution

On the execution date the loan amount will be transferred into the property purchaser’s bank account. On the same day the purchaser will meet with the seller, a representative from the real estate company, and a legal scrivener to execute the sales contract.

The procedure of the execution of the sales contract and remaining matters will be covered in the final part of our Property Buying Guide.

Part 5 – Property Transfer & Closing Contact Century 21 SKY Realty

Part 3 – Property Search & Viewing

The Purchase Application

There are two types of purchase application in Japan.

If you are purchasing a new property you will need to complete an application to purchase (購入申込書 kounyuu moshikomisho). Competition for a new-build may be fierce and the developer or real estate company may have received, in relation to condominiums, more applications than actual units available. In this case a lottery may occur and the prospective purchaser may lose out. Along with the application to purchase a fee of up to ¥100,000 will be required but this will be returned if the application is unsuccessful.

If you are purchasing pre-owned property you will need to complete a letter of intent (買付証明書 kaitsuke shoumeisho) and submit it to the seller. The letter of intent serves two purposes – first to show you are serious about purchasing the property and second to kickstart the negotiation process.

Along with the purchase applications the prospective buyer will need to pay the Ernest Deposit (<10% of the total purchase price) to the seller. In the case of purchasing a new property, the up-front fee paid will be part or all the Earnest Deposit.

The Explanation of Important Matters

Before a purchase agreement proceeds it is a legal requirement that the realtor provides the purchaser a document called the Explanation of Important Matters (重要事項説明書 juuyoujikou setsumeisho) containing information on the history of the property, maintenance status, zoning, survey results, condominium management fees, penalties, etc. The document was originally conceived as a more concise and more easily understandable document than the legalese in a contract of sale. On the other hand the required contents have grown over the years and the document can be many pages long. It is read or reviewed with the buyer by a registered broker (宅地建物取引主任者 ) at the time of signing the purchase agreement. Please note: most realtors are not registered brokers, though every real estate company must have a certain number of brokers to perform such specific tasks. As a signed/stamped purchase agreement is legally binding it is important that this document is read and understood. This is where having a trusted Real Estate company to assist you can be priceless.

Sign and Seal the Deal

The signing of the contract and the purchase agreement are performed usually at a room in a bank with both the buyer and the seller in attendance. The reason this is done in a bank is that the deposit of the the funds for the purchase, usually presented in the form of a cashier’s cheque, into the seller’s bank account need to be confirmed before the deal is completed.

Once you are happy with the Explanation of Important Matters and/or have sought clarifications this document and the purchase agreement can be signed. After this the deposit is confirmed and the registration of the new owner can be undertaken by the legal scrivenor (司法書士), a type of lawyer who performs property registrations, and who has also been in attendance at the signing. The legal scrivener, by the way, is also tasked with calculating all the costs, taxes, etc., and determining the buyer’s and the seller’s share of these costs.

If the purchaser does not already have a seal, which is your name registered in Japanese characters or letters, one will need to be made and registered as it’s a legal requirement for documents in Japan. Copies of the certification of the registration will also be required at the contract signing.

Part 4 – Applying for a Housing Loan Contact Century 21 SKY Realty

Read Part 1 – Introduction to the Japanese Real Estate process

You can gain insight and advise into the Tokyo house-hunting situation during the Covid-19 pandemic in our perspective article HERE.

The focus of this Property Search and Viewing guide is to help you through the process in normal conditions.

Identifying your Property of Interest Location

Our Area Guides provide a starting point with which to start narrowing your chosen locations to start the property search. Our guides cover:

What types of property are available?

Information regarding the differences between Freehold and Leasehold can be found HERE.

The types of property available for purchase in Japan can be summarized into 4 main categories:

• Apartment

• House

• Whole Building

• Land

Using a Real Estate Search Site you can start to investigate what properties are available, but there are a couple of things to know first.

Abbreviations of the property layout

Especially for apartments you may see a combination of the letters L, D, and K. These refer to Living area, Dining area, and Kitchen Area. By referring to the floor plan in the property listing you can see if these areas are separate areas/rooms or shared areas e.g. a shared Kitchen and Dining area.

The “J” shown in the Floor Plan

Referring to the floor plan below it can seen that the letter J is used – e.g. 13.7 J for the Master Bedroom. But what does the J mean?

The J (or Jyou) refers to the number of traditional tatami (畳) mats that would cover the floor (see the image below the floor plan). A tatami mat is approximately 1.6m², so the floor area of the Master Bedroom in the example is 13.7 x 1.65 = 22.6m². Do note the “J” does not mean that tatami mats will be present in the property, it is an area measurement unit that is used.

It should also be noted that tatami mat size can differ by region in Japan, so where the traditional size may be 1.6m², in Tokyo they may be smaller at 1.55m².

Typical Floor Plan

Tatami Mats

Property Viewing Process and Questions

Nothing beats visiting the area or areas where your interested property is located to experience the amenities and transport links. Also, it can be advisable to visit properties first-hand to appreciate the layout, size, and condition. Also the access is very important in Tokyo as road widths vary considerably. Some roads can be so narrow as to be a challenge to drive down. Similarly the neighborhood quality can vary. Very old or decrepit housing or buildings can be found practically anywhere, even on expensive real estate, and be a detriment to nearby property values. So it is always important to visit.

It is also useful to have a good real estate agent working for you to ask the right questions and do background checks on the property. Don’t just focus on the property itself but ask what are the potential problems that may be faced. For example, if you plan to purchase an apartment or condominium you will be responsible for payments into the reserve fund that is used for the repairs and general upkeep of the building’s fabric and common areas. If the reserve fund is healthy you will avoid unexpected ‘top-ups’ if major renovation/repair works are needed in the future.

Other historical checks that are wise to carry out are to check if there have been any accidents in the property and/or unit in the past and whether the property has been sold multiple times in the recent past. These could reveal that it is best to avoid the purchase.

Looking into the future is also a wise move and by checking if there are any upcoming projects in the area that may negatively impact the value of the property. However, if the upcoming project improves the amenities or transport links it may point to a rosier investment potential.

Read Part 3 – Purchase Application & Contract Signing Contact Century 21 SKY Realty

Buying property can be seen as a complicated and intimidating process, especially if it’s in a foreign country. Century 21 SKY Realty aims to make the process more comfortable and informed by helping clients navigate the purchase process.

To this end we have created this guide to explain the key aspects of purchasing property in Japan. It is meant as an information resource but as your property search criteria are individual to you we do encourage potential purchasers to contact us so we can tailor information and advice accordingly.

A foreign resident or non-resident can purchase property in Japan so long as the required documentation and funds can be provided.

• Resident – a person who resides in Japan or has been in Japan for at least a year.
• Non-resident – a person who resides outside of Japan

This is not meant in terms of whether the property is a house, condominium, etc, rather what ownership rights does the purchaser have. For this guide we are focusing on Freehold and Leasehold rights.

Freehold – known as 所有権 (shoyuken) in Japanese

This means the purchaser has full ownership of both the land and property built upon it. Where the property is subdivided, in the case of apartments and condominiums, an applicable fraction of the land the building is on is owned by the condominium owner.

Leasehold – known as 借地権 / shakuchiken in Japanese

This is where ownership is only for the building and a lease payment is required for the land the property is on.

Which ownership rights are preferred depends on the individual needs. It may be seen as beneficial to own both the land and the building (freehold) but the value of both is not guaranteed. Land value may increase but the building’s value may depreciate. A leasehold property may be less expensive to purchase but the land is not owned, but also the taxes related to the land ownership are avoided. Also leasehold agreements usually have a specific term after which the rights to any building on the land revert to the land owner unless a new leasehold agreement can be negotiated.

As mentioned above for leasehold, the property and the land are separate and the rights to each are reflected in the taxes that are applicable.

Consumption Tax	(currently 10%) – this is a tax that is applicable only to the sale of the building (not the land). For properties that have depreciated the tax payable can be relatively low. It is also typical for the purchaser to pay the consumption tax although it’s actually the legal responsibility of the seller.
Stamp Tax/Duty	This tax is calculated on a sliding scale starting at JP¥ 200 for contracts less than JP¥ 1 million and rising to JP¥ 200,000 for contracts over JP¥ 1 billion.
Registration and License Tax	This is a tax between 0.4% and 2% and is dependent on the type of transaction and the value.
Real Estate Acquisition Tax	This a 3% tax that is imposed only once when land or properties are purchased.
Property Tax and City Planning Tax	These taxes are levied on 1st January. Property tax is 1.4% and City planning tax is 0.3%. This tax is based on an assessed value by the tax office – that is usually much less than the market price or value.

At the time of purchase or sale the applicable taxes are calculated by the lawyer, or shiho shoshi or legal scrivener, that is handling the property registration and divided as appropriate between the two parties.

Following the property purchase process can be straightforward but an area where foreigners can face challenges is in securing finance.

• Although Japanese banks may have loan documentation in English, the actual legal contracts will be in Japanese.
• Loan terms and eligibility vary between banks.
• Many banks require the foreign loan applicant to be either a permanent resident of Japan, have a Japanese spouse, or to demonstrate they will be staying long-term in Japan with, for example a work visa.
• Banks may require to see evidence of working in Japan for at least 3 years.

• There is a limit to how much a foreigner can borrow, typically up to JP¥ 100 million and banks may impose their own minimum loan amounts and/or percentage of the property value that can be applied for.

Read Part 2 – Property Search & Viewing Contact Century 21 SKY Realty