Demand returns to Tokyo’s once-overlooked suburbs

If you think the residential real estate industry is suffering at the moment, think again. Data shows that brokerages and developers are just as busy now as they were last year. 

Surveys carried out by Recruit Sumai Company in December and again in May showed a striking change in buyer preferences. In December, 40% of home buyers placed closeness to a train station as the most important criterion, while 40% preferred more space. In May, only 30% were focused on train access, with 52% putting size as their main priority. In terms of total commute time, 34% of respondents said they would consider a public transport commute of over 30 minutes, a 10 point increase from the previous survey.

The developer of a 1,000-unit residential condo near Ebina Station in Kanagawa Prefecture had 140 groups through their showroom over the 4-day weekend in mid-September. Within Tokyo, a budget of around 40 ~ 50 million Yen might get a one or two-bedroom apartment, while three-bedroom apartments in the Ebina project can be found in the 40 million Yen range. It is around a 70 ~ 80-minute train ride into Tokyo’s Otemachi business district. 

Real estate developers have been responding to the shift in demand, carefully adjusting the supply of new condos in areas that are seeing a boost in demand. This was apparent in August with Chiba Prefecture seeing a 296% increase in the supply of brand-new apartments released for sale by developers. Saitama saw supply jump by 179.4%, while Kanagawa saw a 41.7% increase. Tokyo’s 23 wards saw supply drop by 51%. 

Detached home sales may be a leading indicator of the changes afoot, with annual detached house starts in greater Tokyo typically double those of condominiums. According to REINS, a total of 573 newly-built homes were reported to have sold across greater Tokyo in August, up 36% from last year, and the third month in a row to see an increase. Kanagawa Prefecture saw a 47% increase, while the Tokyo metropolitan area saw a 37% increase. Existing home sales for the month totaled 1,175 units, a 22% year-on-year increase. 

Home-builder and developer Sanei Architecture Planning reported a 20 ~ 30% year-on-year increase in both contracts and sales volume between April and August. Many of their homes in Tokyo’s 23 wards are priced in the 50 ~ 70 million Yen range. They are also seeing sales volume increasing in Saitama and Chiba prefectures. 

Custom-home builder Sumitomo Forestry saw a 4% year-on-year increase in order value in July, followed by a 26% increase in August. Sekisui House saw orders increased by 16% in August, while Misawa Home saw a 15% increase. 

The president of Tokyu Fudosan Holdings was surprised to see increasing sales of existing detached homes alongside the Tokyu Denentoshi Line in Tokyo. Brokerage Tokyu Livable had a 13% increase in transactions of existing homes brokerage in greater Tokyo in July, with August seeing a 33% year-on-year increase. Between April and July, detached homes over a 10-minute walk from a station along the Denentoshi Line have increased by 5% from the same period last year. This is an otherwise difficult segment of the market, with homes further away from transport difficult to sell in the past. 

Source: The Nikkei Business Daily, September 28, 2020.

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