Residential leases are on the decline

The number of residential rental contracts signed across greater Tokyo has been on the decline for over a year now, with the effects being felt on real estate brokerages. Teikoku Databank reported 104 real estate brokerages filed for bankruptcy across greater Tokyo in 2019, up 6% from 2018. 

According to real estate listing site AtHome, there were 13,846 rental agreements signed for homes and apartments across greater Tokyo in December 2019, a 17.1% drop from the previous year. In Tokyo’s 23 wards, there were 6,218 new leases, down 19.1% from the previous year. Even March, typically the busiest month of the year for moving, saw a year-on-year drop of 13.5% in 2019.

Nevertheless, occupancy rates remain high. The Japanese Property Management Association reported a residential occupancy rate of 95.7% for the months from April to September. 

Rising rents in the city centers have caused some renters to reconsider and stay put. Another contributing factor to the decline in new leases may be a recent trend of doing away with job transfers. In 2019, insurance giant AIG announced a general end to their job transfer system.

Growth in the number of short-term, furnished rentals has also put a dent on new leases. OYO Hotels and Homes burst onto the scene in Japan in 2019 with a lofty goal of subletting 1 million rooms nationwide. The troubled short-term rental provider currently operates around 7,500 rooms – short of their goal but enough to have a noticeable impact on the rental scene. OYO’s system of offering furnished rental apartments effectively cuts out the real estate broker as the middleman, allowing tenants to book directly through their app. 

Meanwhile, moving companies are struggling to find staff amidst a labour shortage. During March, moving costs skyrocket due to demand, while limited staff numbers mean many movers are booked solid.  

Source: The Nikkei Shimbun, February 26, 2020.

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