Tokyo actually does have rules about shadows: new building plans have to show how the new building will affect the sunlight of neighboring buildings. I think there's some limitations along these lines, but not a lot. But yeah, you can make your building as ugly as you want.
Anyway, those older, ugly, poorly-maintained buildings eventually get torn down and replaced with something better, because the land value is very high. It's much more laissez-faire than the US and property rights are much, much stronger (the idea that you should mostly be able to do what you want with your property).
