Fixed-term leasehold apartment supply drops in first half of 2018

According to the Real Estate Economic Institute, just 364 brand-new fixed-term leasehold condominiums in 14 buildings were released for sale across Japan in the first half of 2018, down from 369 units released in the first half of 2017.

Fixed-term leasehold refers to apartments built on land that is leased from a landowner under a fixed term. At the end of the term, the building is usually demolished and the land returned to the owner. This is not a common form of land ownership in Japan. Instead, the system of freehold land is far more commonly found. Fixed-term leasehold apartments accounted for just 1% of the total new apartments supplied for sale across the country in 2017.

10 of the 14 buildings were located in the greater Tokyo area, with 9 of those located in the Tokyo metropolitan area. The average price of a brand-new leasehold apartment was 51,050,000 Yen, down 16.8% from the first half of 2017. The average price per square meter was 686,000 Yen, down 10.9% from 2017.

The most recent peak was in 2008 with an annual supply of 1,480 units.

Supply is likely to increase in the near future when sales start in a new leasehold condominium under construction in the center of Shibuya. Park Court Shibuya The Tower is a 39-storey, 505-unit luxury condominium being built on land owned by the adjoining Shibuya City Office. The land is under a 70 year fixed-term leasehold expiring in 2093. The building is due for completion in late 2020 with apartments to be delivered to buyers from late January 2021. Despite being a leasehold property, apartments are priced at similar levels to freehold apartments, with a 1,000 sq.ft apartment on a high floor listed for 233 million Yen (approx. 2 million USD).

Source: The Real Estate Economic Institute, December 11, 2018.

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