Methodology

Distance-to-Station: The Price Premium Most Investors Underestimate

In Tokyo, walking minutes dominate willingness-to-pay. Modeling this explicitly — rather than relying on ward averages — improves pricing accuracy and reduces underwriting error.

1) The distance-decay model

A simple way to think about walk-time is a decay curve. Investors often treat “within the same ward” as comparable, but Tokyo’s station micro-economies make that a weak proxy.

Price per m² = P₀ × e^(−β × WalkMinutes)

β is usually station-specific and line-sensitive. It can steepen beyond ~8–10 minutes for smaller layouts, and flatten for layouts with stronger amenity support.

2) A workflow you can use today

  1. Collect station-tagged sold comps (size, vintage, walk minutes).
  2. Clean obvious errors and winsorize tails by station + vintage.
  3. Fit β and control for age and layout.
  4. Compare live listings to the fair-value curve; price risk accordingly.

3) What to watch

  • Breakpoints around 5, 8 and 12 minutes — sometimes tied to interchange convenience and route options.
  • Age × distance interaction (older stock can be more sensitive beyond ~10 minutes).
  • Layout effects: liquidity vs yield trade-offs behave differently by walk-time bucket.

Continue reading: Impact of Distance-to-Station on GRM & Yield

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