Houses and apartments in Japan are typically on the small side. The standard size of a three-bedroom apartment might be around 70 sqm, and a two-bedroom apartment in the 50 ~ 60 sqm range. Detached homes might be under 100 sqm, spread over three floors and including the car park. There are larger homes and apartments to be found, but buyers need to be aware that the availability of these larger properties is very limited.
To prove that point, let’s look at data provided by REINS, a database of listings used by brokerages. Of the 17,412 second-hand apartments available for sale in Tokyo’s 23 wards at the end of 2020, only 2.8% were between 100 ~ 140 sqm (1,076 ~ 1,506 sq.ft) in size, and just 0.9% were over 140 sqm in size.
In Tokyo, larger apartments tend to be priced higher per square meter than their smaller, investment-grade counterparts. There are a few reasons behind this. Owner-occupiers are generally prepared to pay more for an apartment big enough to live in, and the lower interest rates on home loans mean they can usually afford to. Apartments over 100 sqm in size are generally considered luxury items in Japan and priced accordingly. Meanwhile, the smaller studios and 1-Bedroom apartments are typically designed for investors and may have cheaper finishes and cheaper prices. Investors are more focused on maximizing their rental yield and less concerned about floor materials and kitchen quality. Loans for investment properties tend to have stricter terms and higher borrowing costs, limiting budgets.
Take a look at the chart below showing the difference in pricing per square meter based on apartment size. Building age also plays a part in affecting these averages.
Source: REINS, August 3, 2021.
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