Executive Summary
- GRM behaves very differently across layouts in Tokyo, and these differences determine the real investability of a unit.
- The market prices older 1R and 1K units surprisingly efficiently in the 120–140 GRM band, while larger layouts diverge sharply across stations.
- Understanding layout-driven GRM allows investors to detect mispriced units long before yield calculations or agent opinions reveal them.
Key Metrics for 2025
The reference points below are drawn from the same station-level datasets that power Tokyo-Insights tools. They illustrate how GRM behaves across layouts:
- 1R GRM (Sasazuka, 4 minutes walk, 42 years): approximately 124
- 1R GRM (Nakano, 10 minutes walk, 40 years): approximately 124
- 1K GRM (Otsuka, 6 minutes walk): approximately 138
- 1K GRM (Akabane, 9 minutes walk): approximately 130
- 1LDK GRM (Kasai, 8 minutes walk): approximately 142
- 1LDK GRM (Meguro, 11 minutes walk): approximately 170
- 2LDK GRM (Edogawabashi, 3 minutes walk): approximately 165
- 2LDK GRM (Gotanda, 7 minutes walk): mid-160s range
Taken together, these values represent the backbone of how Tokyo actually prices residential income streams in 2025.
1. What GRM Really Measures — and Why Layout Matters
GRM (Gross Rent Multiplier) is often treated as a basic shortcut: price divided by annual rent. In practice, especially in Tokyo, it is much more than that. GRM is a compact expression of:
- liquidity and depth of the tenant pool
- layout-driven demand and rent elasticity
- walking-distance premium or discount
- age and perceived quality of the building
- local competition between landlords and investors
Because GRM compresses a complex rental dynamic into a single number, it reveals pricing patterns that ward-level averages cannot show. Two stations in the same ward can have completely different GRM behavior for the same layout.
The critical point is that GRM is not uniform across layouts. A GRM of 130 means something very different for a 1R than for a 2LDK. This is why Tokyo-Insights focuses on GRM by layout, not just by geography.
2. Layout-Level GRM: The Hidden Variable
Most investors compare GRM across wards or "neighborhoods", but that is not how the rental market actually works. Tenants choose layouts first, then evaluate trade-offs in location, space and budget.
Each layout behaves almost like its own asset class:
- 1R tenants are highly mobile and extremely price sensitive.
- 1K tenants sit in a broader, more varied demand segment.
- 1LDK tenants often pay for both space and lifestyle.
- 2LDK tenants tend to be households with higher income stability.
As a result, GRM has a distinct profile for each layout. Treating it as a single metric across all unit types is a structural mistake in underwriting. The correct approach is to benchmark GRM within layouts first, then compare across stations.
3. 1R — Tokyo's Most Efficiently Priced Layout
Benchmark band (2025): GRM approximately 120–135
Examples:
- Sasazuka 1R (around 4 minutes walk, 42 years): GRM ~124
- Nakano 1R (around 10 minutes walk, 40 years): GRM ~124
These two examples show almost identical GRM levels despite different walking distances and slightly different station profiles. The explanation is simple: the 1R segment in Tokyo is highly efficient.
It is characterised by:
- very high liquidity and short vacancy periods
- tenants who are extremely sensitive to rent levels
- strong competition between landlords for the same profile of renter
The market tends to price 1R units correctly because renters are quick to reject units that do not fit their budget, and supply is abundant enough for them to have options. In other words, 1R GRM is a relatively "clean" signal.
As a practical rule of thumb, 1R units with GRM below around 120 often indicate mispricing or unusually attractive acquisition terms. Conversely, GRM significantly above 135 may point to either a premium micro-market or an overheated segment.
4. 1K — More Variation, More Opportunities
Benchmark band (2025): GRM approximately 125–145
Examples:
- Otsuka 1K (around 6 minutes walk): GRM ~138
- Akabane 1K (around 9 minutes walk): GRM ~130
The 1K segment behaves differently from 1R. The tenant pool is broader, including not only singles but also couples and tenants who would otherwise consider compact 1LDK units. This leads to more variation in both rents and GRM.
Key differences versus 1R include:
- greater diversity in tenant profiles and budgets
- more flexibility on walking distance for certain segments
- more pronounced impact of station identity and line connectivity
For investors, this is where many of the most interesting mispriced opportunities emerge. In some stations, 1K units are priced almost like 1R units (efficient but still attractive). In others, they are priced more like 1LDK units, with premiums that are difficult to justify based purely on rent.
The most attractive situations occur when 1K GRM behaves like 1R GRM in stations with strong underlying rental demand. Akabane is a good example: GRM around 130 with yields around 5.7 percent is a compelling combination for a relatively liquid station.
5. 1LDK — The Most Divergent Layout in Tokyo
Benchmark band (2025): GRM approximately 135–170+
Examples:
- Kasai 1LDK (around 8 minutes walk): GRM ~142
- Meguro 1LDK (around 11 minutes walk): GRM ~170
1LDK units exhibit the greatest divergence in GRM across Tokyo. They sit at the intersection of pure investment demand and lifestyle-driven demand, and this intersection is highly station dependent.
Several factors contribute to this divergence:
- tenant willingness to pay for extra space relative to 1K
- the perceived lifestyle brand of the station
- commuting patterns, especially for dual-income households
- availability of comparable inventory nearby
Stations like Meguro carry a strong lifestyle and brand premium. As a result, 1LDK GRM can push into the 165–175 range, even for units beyond ten minutes from the station. In contrast, stations like Kasai offer more practical value: lower GRM, but robust demand for slightly larger layouts at manageable rent levels.
For investors, this means 1LDK cannot be underwritten using generic thresholds. It requires station-level analysis. The same nominal GRM can be either rational or excessive depending on how tenants behave in that micro-market.
6. 2LDK — Stable Yields, Layout for Households
Benchmark band (2025): GRM approximately 155–175
Examples:
- Edogawabashi 2LDK (around 3 minutes walk): GRM ~165
- Gotanda 2LDK (around 7 minutes walk): GRM in the mid-160s
The 2LDK segment is driven less by transient tenants and more by households with relatively stable incomes and longer tenancy durations. It tends to exhibit:
- lower structural vacancy risk
- less sensitivity to small changes in rent
- stronger links to school, work, and lifestyle access
GRM for 2LDK units is therefore less responsive to walking distance than for 1R or 1K stock. A three-minute walk versus a seven-minute walk matters, but not in a linear way, and often less than the quality of the building or the perception of the neighborhood.
For investors, the key point is that yields around 4.8 percent in central 2LDK markets such as Gotanda and Edogawabashi remain attractive once adjusted for occupancy stability and tenant quality. These assets behave almost like income infrastructure within a portfolio.
7. Comparing GRM Across Layouts
When you look across your datasets, a consistent hierarchy appears in most investable submarkets:
1R GRM < 1K GRM < 1LDK GRM < 2LDK GRM
This is not an accident. It reflects differences in household income, lifestyle elasticity, and liquidity for each layout. Smaller units are priced more efficiently by the market because tenants in that segment move quickly when prices are out of line. Larger units incorporate more lifestyle and long-term decision factors, so pricing can drift further from purely income-driven logic.
The practical consequence is that GRM is not one metric but effectively four metrics, one for each of the main layouts. Comparing them without adjusting for layout leads to noisy and often misleading conclusions.
8. Walking Distance and GRM, by Layout
Walking distance to station is a critical driver of both rents and GRM, but its impact is layout specific rather than universal.
- 1R: highly sensitive; rents and GRM react quickly beyond eight to ten minutes from the station.
- 1K: moderately sensitive; a broad tenant pool smooths some of the impact of longer walking distances.
- 1LDK: mildly sensitive; many tenants trade walking distance for more space and better neighborhood environment.
- 2LDK: least sensitive; long tenancy durations and household priorities reduce the impact of a few extra minutes of walking.
This means that "eight minutes to the station" is not a universal threshold. For some 1R markets it might be decisive; for many 2LDK markets it may be almost irrelevant as long as location quality is high.
From an underwriting perspective, it is more accurate to think in terms of layout-by-distance regimes than absolute cutoffs.
9. Five GRM Rules for Investors in 2025
Based on layout-level patterns, a few simple rules emerge for practical use:
- Compare within layouts, not across layouts. A GRM of 150 is expensive for a 1R but entirely normal for a 2LDK in the right station.
- Benchmark by station, not ward. Ward-level GRM averages are statistically weak for deal selection. Station-level benchmarks are far more informative.
- Look for GRM below the expected band. For example, 1R below 120, 1K below 130, 1LDK below 140, 2LDK below 155 are relatively rare and often indicate underpricing or special situations.
- Use GRM early in the underwriting process. It should act as a first filter, before deep cash flow modelling, to avoid spending time on units that are clearly misaligned with local income patterns.
- Combine GRM with layout-level rent resilience. A station with slightly higher GRM but very stable rents and low vacancy can still outperform a "cheaper" station with weak fundamentals.
Investor Takeaways
- GRM in Tokyo is layout driven, not simply ward driven.
- Walking-distance sensitivity differs sharply between 1R, 1K, 1LDK and 2LDK.
- Mispriced opportunities often appear when a layout's GRM behaves like that of a smaller, more efficient layout.
- Stations with stable GRM patterns across layouts tend to be safer long-term investment bases, especially for portfolio construction.
- Tokyo remains a market where GRM still reveals inefficiencies that data-driven investors can exploit.
Next Steps: From GRM Benchmarks to Actual Deals
GRM benchmarks by layout are a starting point, not an end point. The next step is to connect these benchmarks to actual listings and specific investor profiles.
Practically, investors can combine:
- Station-level GRM benchmarks and shortlists of stations, as discussed in Best Stations in Tokyo for Investment (2025 Edition).
- A structured workflow for screening individual properties, such as the one described in How to Analyze a Listing Using Deal Finder.
- A broader macro view of the city, as set out in the Tokyo Real Estate in 2025 — Investor Playbook.
Together, these elements turn GRM benchmarks into a practical decision framework rather than an isolated metric.
Request a Data-Backed Investor Brief
If you would like GRM benchmarks and layout analysis applied to your specific budget and strategy, you do not need to rely on generic rules of thumb or agent anecdotes.
Tokyo-Insights can translate your profile into a structured, data-backed brief using the same station-level GRM and yield datasets described in this article.
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