If you were anticipating a post-Olympic slow down in the construction industry you may be in for a surprise. The latest report from the Real Estate Economic Institute shows a total of 280 high-rise apartment buildings either under construction or planned across Japan from 2021 onwards. This is an increase of 77 buildings from the previous report in March 2020.
The 280 buildings will contain a total of 109,908 individual apartments. This includes both condo and rental apartments. Approximately 74.7% of the share is within the greater Tokyo area with 173 buildings containing 81,825 apartments.
The development of high-rise apartments in Japan took off in the late 1990s, with ultra high-rise buildings popular with buyers because of an assumed ability to hold values relatively well and be somewhat liquid if the time came to sell, although that is very much subject to market forces. Projects soon spread outside of the greater Tokyo and Osaka regions to regional cities and were encouraged by the special zoning allowances given to station-front redevelopments.
A sharp increase in property prices in 2007 saw demand for apartments dry up. The onset of the global financial crisis saw developers curtail projects and limit supply. By 2010, the annual supply of high-rise apartments had dropped to 17,967 nationwide, a 50% drop from the year prior. The March 2011 Tohoku Disaster had delayed some projects, with a new low of 13,321 units supplied that year.
The market began to show signs of a recovery in late 2012 with supply reaching 16,060 units. By 2013, developers had re-started large-scale high-rises in the Tokyo bayside area which pushed supply up to 19,759 units. A change to the inheritance tax deductions in 2015 pushed up domestic demand for high-rise apartments since they offer the best method of reducing the tax burden on heirs.
Competition for sites to develop high-rise residential towers became fierce, with rising land and construction costs causing developers to switch their focus to more profitable office and hotel projects. In 2017 and 2018 annual supply was in the 11,000 unit range. It increased to 17,039 units in 2019 before dropping to 11,991 units in 2020. Supply in 2021 is expected to be around 15,000 units. In 2023 it is expected to reach 20,495 units, the highest level seen since 2009 (35,607 units).
50+ story apartment buildings planned across Japan
| Nishi-Shinjuku 3 Project (Tokyo)||2 x 65-story||3,200|
| Toranomon-Azabudai Project (Tokyo)||53, 64 and 65-story||1,310|
| Park Tower Kachidoki Mid Tower (Tokyo)||58-story||1,665|
| Tsukishima 3 Project (Tokyo)||58-story||1,317|
| Minami Ikebukuro 2 Project (Tokyo)||57-story||864|
| Nishiazabu 3 Project (Tokyo)||55-story||550|
| Toyomi Project (Tokyo)||2 x 54-story||2,097|
| Toranomon Hills Residential Tower (Tokyo)||54-story||550|
| Higashi Takashima Project (Yokohama)||42, 47 and 52-story||2,500|
| Minami Ikebukuro 2 Project (Tokyo)||2 x 51-story||1,450|
*High-rise refers to a building of 20 stories and above.
Source: The Real Estate Economic Institute, April 27, 2021.
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