With rental growth exceeding the increase in sale prices, the average price-earnings ratio (PER) for a brand-new apartment across greater Tokyo in 2021 was 24.56, down slightly from 2020 (24.69) but up from 2019 (24.36). A high PER means a low rental yield.
The average price of a 70 sqm (753 sq.ft) brand-new apartment increased by 1.1% from 2020 to 78,280,000 Yen. Meanwhile, the average monthly rent of a 70 sqm apartment increased by 1.7% to 260,962 Yen.
The Jiyugaoka Station area alongside the Tokyu Toyoko Line in Tokyo provided the lowest rental yield in greater Tokyo with a PER of 40.82. The average monthly rent was 257,812 Yen, while the average price of a 70 sqm apartment was 126,290,000 Yen. In other words, the expected gross yield is approximately 2.44%.
Nakameguro, located a few stops along the same train line, was in 3rd spot with a PER of 35.56. The average monthly rent of a 70 sqm apartment was 376,794 Yen, while the average price was 160,770,000 Yen, resulting in a gross yield of 2.81%.
Daikanyama was in 16th spot with a PER of 29.41. The average monthly rent was 482,797 Yen, while the average purchase price was 170,390,000 Yen. The gross yield was 3.40%.
Iidabashi saw the greatest improvement in PER with a 10.19 point drop to 23.36. This is due to a lack of new high-rise apartment developments around the station area. Instead, the supply of new apartments was limited to cheaper compact-type apartments. Meanwhile, the average monthly rent of a 70 sqm apartment in Iidabashi increased by 29.8% to 427,388 Yen.
Source: Tokyo Kantei, May 9, 2022.
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