Real Estate Investment Opportunities in Hiroshima, the Largest City in the Chugoku Region
Known globally as a city of peace, Hiroshima City in Hiroshima Prefecture is one of Japan's four major regional cities, alongside Sapporo, Sendai, and Fukuoka. Its compact and efficient urban structure, well-developed public transportation, and the UNESCO World Heritage Site Atomic Bomb Dome attract many tourists. Recent redevelopment and economic growth have also invigorated the real estate market.
So, what makes Hiroshima City an attractive destination for real estate investment? When selecting an investment destination, it is important to carefully consider the region's characteristics, potential growth, and potential risks. This article will provide an in-depth look at Hiroshima City’s features, the most suitable areas for investment, as well as their benefits and points of caution. We hope this information will assist you in making a successful real estate investment in Hiroshima and achieving stable returns. Explore the potential of Hiroshima as your next investment destination.
About Hiroshima City
Hiroshima City, the capital of Hiroshima Prefecture, is located in the Chugoku region of western Honshu and faces the Seto Inland Sea. As one of Japan's designated cities, it is the largest city in the Chugoku region, with a population of approximately 1.18 million, the highest in the Chugoku and Shikoku regions.
As the central city of the Chugoku region, Hiroshima City serves as the economic, industrial, cultural, and transportation hub of the area. It boasts a diverse industrial base, including the headquarters of the major automobile manufacturer Mazda, which supports the region's economic development. Its influence extends throughout the Chugoku region, making it an important city in western Japan.
In terms of transportation access, Hiroshima City is very convenient, with about 4 hours by Shinkansen from Tokyo and about 1.5 hours from Osaka. Additionally, access from Hiroshima Airport to the city center is excellent, making it a popular destination for visitors from both domestic and international locations.
Hiroshima Prefecture is rich in tourist attractions. The UNESCO World Heritage Site Itsukushima Shrine, located on Miyajima, is famous worldwide for its beautiful torii gate standing in the sea. At low tide, visitors can walk to the gate, while at high tide, the gate appears to float in the water. The shrine itself is an architectural marvel, attracting many tourists.
In Hiroshima City, the Peace Memorial Park houses the Atomic Bomb Dome, an iconic structure that conveys the tragic history of the atomic bombing and serves as a symbol of world peace. The park also includes the Peace Memorial Museum, where visitors can learn about the importance of peace.
Additionally, Onomichi is known as the "town of slopes and old temples," with a charming atmosphere that retains historical temples and old streets. The view from Senkoji Temple is particularly breathtaking, making it a popular location for film and drama shoots. It is also a great place to enjoy local delicacies like Onomichi ramen.
Five Benefits of Investing in Hiroshima Real Estate
Despite being located in western Japan, away from the Tokyo metropolitan area, Hiroshima City offers many attractive elements for real estate investment. Here are five major benefits of investing in Hiroshima's real estate market:
1. Economic Center of the Region
Hiroshima City is the economic center of the Chugoku and Shikoku regions. With a diverse industrial base, including the headquarters of Mazda and the shipbuilding industry, it supports the regional economy. This industrial diversity creates a stable employment environment, which drives population influx and supports real estate demand. The strength of this economic base enhances Hiroshima City's attractiveness for real estate investment.
2. High Rental Demand
Hiroshima City has a private rental housing rate of 37.5%, the fourth highest after Tokyo's 23 wards, Osaka City, and Nagoya City. Its status as a regional economic center and stable employment environment promote continuous population influx, creating high housing demand. The presence of numerous educational institutions also contributes to the demand for rental properties.
3. Growth Potential from Redevelopment
Currently, Hiroshima City is undergoing significant redevelopment projects around Hiroshima Station. JR West Japan is constructing a new Hiroshima Station building, scheduled to open in the spring of 2025. Additionally, large-scale mixed-use facilities are planned for the north exit of the station. These redevelopments are expected to greatly enhance the city's urban functions, making Hiroshima City an attractive market for real estate investors due to its growth potential.
4. Convenient Transportation Network
Hiroshima City offers excellent access via Shinkansen and expressway networks, complemented by an extensive tram and bus network within the city. The concentration of major facilities in the city center makes transportation highly convenient, enhancing the quality of daily life. This convenience in transportation is a key factor supporting real estate demand and increasing the value of real estate investments in Hiroshima City.
5. Stable Corporate Demand
With many large companies' branches and offices concentrated in Hiroshima City, there is stable demand for corporate housing. Corporate leases tend to be long-term, with lower vacancy risks compared to individual leases. This makes real estate investment in Hiroshima City an attractive option for investors, offering long-term and stable profitability.
Top 3 Recommended Areas for Real Estate Investment in Hiroshima City
Here, we introduce three recommended areas for real estate investment in Hiroshima City, along with the average rent by room type.
1. Naka Ward, Hiroshima City
Naka Ward offers high transportation convenience, being relatively close to Hiroshima Station, where JR West Japan's conventional lines and the Sanyo Shinkansen stop. The Hiroshima Electric Railway tram system is well-developed, making intra-city travel very convenient. Additionally, access to Hiroshima Airport is good, with limousine buses taking about 50 minutes.
The living environment is well-equipped, with numerous restaurants, shopping facilities such as department stores and Costco, and cultural and sports amenities like Hiroshima Castle and Mazda Zoom-Zoom Stadium, home to the professional baseball team Hiroshima Toyo Carp. Naka Ward offers a good balance of transportation, commercial, and cultural aspects, making it a popular area across various age groups, ensuring stable demand.
2. Minami Ward, Hiroshima City
Minami Ward is centrally located in Hiroshima City, offering great convenience. Hiroshima Station, a major transportation hub, provides easy access within and outside the city. The area is also well-served by commercial facilities and restaurants, making it a convenient place to live.
Minami Ward has the second-largest population in Hiroshima City, with high rental demand. The combination of transportation convenience, a well-developed living environment, and a large population ensures stable demand, making it an attractive area for real estate investment.
3. Nishi Ward, Hiroshima City
Nishi Ward is centrally located and offers excellent transportation convenience. It is close to Hiroshima Station, making intra-city travel easy and convenient. Nishi Ward has the third-largest population in Hiroshima City, ensuring stable housing demand.
Additionally, Nishi Ward is one of the more affordable areas for property purchases in Hiroshima City. This makes it possible to start investing with relatively less capital compared to other regions, and the affordable rent settings can help attract more tenants. The balance of central convenience and affordable price range makes Nishi Ward an attractive option for real estate investment.
Three Key Points for Successful Real Estate Investment in Hiroshima
To increase the chances of successful real estate investment in Hiroshima, consider the following three key points when selecting investment properties:
- Choose areas with good transportation access
- Opt for properties with parking spaces in suburban areas
- Leverage corporate demand
1. Choose areas with good transportation access
Transportation convenience is key to successful real estate investment. The following areas in Hiroshima City offer particularly high transportation convenience:
- Naka Ward: JR lines and tram services are well-developed, providing access to various transportation options
- Asaminami Ward: The Astram Line runs through this area, providing easy access to the city center
- Minami Ward: The area around Hiroshima Station, a key transportation hub with Shinkansen stops, is a center for business and tourism
These areas are expected to maintain stable demand and property value due to their excellent transportation access. Choosing areas with good transportation access is a shortcut to investment success.
2. Opt for properties with parking spaces in suburban areas
While public transportation is well-developed in Hiroshima City, it is also a car-centric society. In the city center, the convenience of trams and other public transportation is emphasized, but cars are essential in suburban and residential areas. Therefore, selecting properties based on their location is important in real estate investment.
In the city center, properties near stations or bus stops are popular, while in suburban areas, properties with parking spaces tend to be in higher demand. Investing in properties with parking spaces in suburban areas can lead to stable income.
3. Leverage corporate demand
Hiroshima City has many large company branches, which is a significant advantage for real estate investment. Corporate contracts often involve long-term leases, and company housing or dormitories offer continuous and reliable stable income. Additionally, the demand for accommodation for transferred employees is high, making properties suitable for single employees or families popular.
Choosing properties with corporate demand in mind can be a good strategy as it is less affected by economic fluctuations and can provide long-term profitability.
Jul 29, 2024