Japanese real estate market information

KEN Residential Market Report Vol.59(Aug 2025) Published.

In 2025-2nd quarter (Apr-June), the major three wards saw rents exceed the peak recorded in the previous quarter. Particularly in Minato Ward, rents surged to 25,000 yen per tsubo, contributing to overall increases in these areas. In 2025, notable new supplies included expensive condominiums for sale, which were rented out and offered at high prices. Starting in spring, rental units in properties sold in redevelopment projects in Minato Ward began to be offered. Units with desirable features, such as good views, were rented at high rates per tsubo. There was strong demand among Japanese people for properties rented at ultra-high prices. Additionally, there was a strong trend towards even higher price ranges compared to the previous year. These factors led to a rise in the average rent per tsubo. These trends are expected to continue, and rental prices are likely to stay elevated.

KEN Residential Market Report Vol.58(May 2025) Published.

In 2025-1st quarter (Jan-Mar), the major three wards saw rents rises higher than the peak recorded in the past. In addition to the trend of rents increasing for existing facilities, this peak high in rents has been supported by certain units in newly built, conveniently located high-specification condominium buildings that have recently been provided as leased units with high contracted prices. Some recorded closing rates over 40,000 yen per tsubo. In Setagaya Ward, average contracted price per tsubo has risen steadily since the latter half of 2024. It has almost reached the 14,000 yen per tsubo level in the fiscal period under review. This is higher than the previous market peak around 2008. In the traditional high-value residential areas in Setagaya Ward, there have been larger increases in the prices per tsubo of standard luxury leased properties with large residences, leading to a rise in the average contracted price. We believe that the rising rents for large residences in central Tokyo have affected the surrounding areas.

KEN Residential Market Report Vol.57(Feb 2025) Published.

The major three wards in 2024-4th quarter (Oct-Dec) saw the vacancy rate level out and average rent rate maintain the high level seen since the beginning of 2024. Despite sluggish movements by foreign residents compared to last year, the number of contracts was in line with an average post-pandemic year, supported by stable demand including those from Japanese clientele for high-grade properties.

Since the beginning of 2024, for the highest-grade properties in good locations, not only are there increases in high-priced or high unit price contracts such as those exceeding 40,000 yen/tsubo, there are also increases in the contracted price per tsubo for properties with large but quite old houses, which are expanding the rent increase rate from the previous rents at the time of concluding new contracts. The three-year stays of expats who were transferred from overseas in 2022 when travel restrictions were lifted will end this year, and we expect a turnover in expats.

KEN Residential Market Report Vol.56(Nov 2024) Published.

In 2024-3rd quarter (July-Sept), rents remained at high levels in the major three wards despite declines from the previous period. Although it is not usually the period for relocation among Japanese, the number of contracts exceeded the levels from the same period of the previous year regardless of the price range. Conclusion of contracts for large, high-grade properties that were newly supplied continued, and the number of contracts for properties at the very high end was at a high level, albeit slightly lower than the previous period. Rents for foreign clientele, which had been sluggish during the COVID-19 pandemic, rose significantly, exceeding those for the Japanese. In reality, however, rents per Japanese tsubo are higher because foreign-affiliated companies are managing to increase their budgets for securing secure properties or are selecting rooms with smaller exclusive floor areas to reduce gross rents, against rent rises caused by supply shortage, rather than reflecting rises in their budgets. The vacancy rates have remained stable at low levels, and it is expected that upward pressure on rents at the time of replacement and contract renewal will remain at high levels.

KEN Residential Market Report Vol.55(Aug 2024) Published.

In 2024-2nd quarter (Apr-June), the major three wards saw rents rises higher than the peak recorded a year ago. These rises reflected the new supply of large, high grade properties, which triggered a relocation to new homes and a further increase from the previous fiscal period in contracts for properties at the very high end. Expats transferred to Japan had accounted for a large portion of contracts for these high-end properties until around 2000, when they comprised 70-80% of all contracts. Subsequent property supply induced an increase in demand from Japanese clientele, and the ratio of the Japanese in such contracts gradually rose to 50% by around 2015. Since the COVID-19 pandemic, in particular, contracts with foreign clientele have been sluggish, and those with larger-budget Japanese clientele are taking the lead in recent years. Price hikes have taken root in the market, and rises in ongoing rents at the time of the renewal of regular lease contracts are often discussed, in addition to those of seeking customers for vacant rooms or the renewal of fixed-term lease contracts. It is expected that lessors will maintain their active attitude to leasing.

KEN Residential Market Report Vol.54(May 2024) Published.

In 2024-1st quarter (Jan-Mar), the major three wards saw a decline in vacancy rates for the first time in five quarters, while rents rose to reach a local peak. Although the development in low-priced properties in a distinct busy period remained at the level of the previous year, high-priced properties at 500,000 yen or higher levels maintained strong demand, reflecting a large number of contracts for properties at the very high end. In recent years, the Japanese have accounted for a relatively high proportion of contracts for extremely high-priced properties, and the ratio was 90% in the fiscal period under review. Rents of high-end rental housing have traditionally been higher for foreign renters than they are for Japanese renters. After the COVID-19 pandemic, however, the increase in rents for Japanese renters has been higher than that for foreigners, and average actual rent paid by Japanese renters is now higher than that for foreigners. In the quarter under review, foreign demand has recovered compared to the level a year ago, with a certain number of senior managers assigned to Japan. Moreover, inquiries from foreign residents are expected to increase due to seasonal factors in the next fiscal period, and it is expected that movements for relocation to Japan including middle-class clientele will increase in the future.

KEN Residential Market Report Vol.53(Feb 2024) Published.

The rents of the major three wards in 2023-4th quarter (Oct - Dec) remained high despite a fall from the previous quarter when they posted record highs. The number of contracts is usually low in the 4th quarter, but it was higher than the same period last year and the same period before COVID-19 thanks to the supply of new properties. In the 4th quarter, the supply of new properties ranged widely, from small low-rise properties to large tower properties, including redevelopment, rebuilding and rental condominiums. We believe that the contracts concluded were attracted by the offer of the latest styles of living. The number of contracts was unusually large for this period since relatively low-priced properties at the 300,000 to 400,000 yen levels were included in the price range.
While relocation was difficult in 2023 in an environment where the occupancy of existing properties was high and rents were rising, the largest number of new supplies of high-end rental housing in recent years contributed to the revitalization of the market. Although the impact of new supply looks likely to be weakened once in the next quarter, we hope that corporate demand will recover to close to the pre-COVID-19 level and that relocation will progress in association with job transfers and other factors.

KEN Residential Market Report Vol.52(Nov 2023) Published.

In 2023-3rd quarter (Jul-Sep), rents rose in the major three wards, reaching record highs in each ward. This was due to a recovery in contracts at the very high end, which had been on hold in the previous period, as a result of the supply of high-grade properties, as well as the progress of new non-Japanese assignments in the latter half of the busy season. The vacancy rate bottomed out around the end of 2022 and continues to rise slightly, but even though it has risen, it is still slightly lower than it was at the end of 2019 before the COVID-19 pandemic. This is attributable to the longer downtime before contracts are closed, in turn a reflection of price increases. In Minato and Shibuya wards, which have the highest concentrations of high-end rental housing, rents for large properties in particular have become more expensive and there are fewer properties available. This has led to an increasing number of high-end, high-grade properties in the surrounding wards being contracted at higher rents than before. Rents are expected to remain high for some time as the supply of new properties, including high grade and large types, will continue over the next year.

KEN Residential Market Report Vol.51(Aug 2023) Published.

Vacancy rates increased in the three main wards during the second quarter of 2023 (Apr-Jun). In an environment of high occupancy, landlords are raising asking rents, and properties that are being offered at prices exceeding budget capacity are experiencing longer contract periods than in the past. Rents remained higher than the year-ago period, but were down from the previous quarter. The decline was due to a lull in activity in the very high end, which had been a factor in the rise in tsubo unit prices. We assume that the segment with high budgets is taking a wait-and-see attitude in anticipation of a new supply of high-grade properties this fall and beyond. Although it was a busy season for non-Japanese, the start-up was slower than in previous years, and the number of contracts signed did not increase. In the next fiscal year, we expect to see an increase in the number of contracts with the Japanese high-end segment and non-Japanese.