Demand from local and foreign buyers continues to push prices higher

Recently, both new and secondhand apartments have seen a steep rise in prices, yet rental prices have remained relatively flat. As a result, yields have been falling with the typical gross yield across greater Tokyo dropping to the 4 ~ 5% range.

The increase in demand from wealthy Japanese looking to reduce their inheritance tax burden as well as renewed interest from foreign investors is thought to be the main driver behind the jump in prices.

Domestic investors looking to reduce inheritance taxes

High-rise apartments have been in high demand as their inheritance tax value is a fraction of their actual market value, offering a potentially large decrease in the tax burden for heirs. While there might be a 20 ~ 30% difference in the market price of an apartment on a high floor versus a low floor, both apartments (assuming they are the same size) are given the same value by the tax office. Buying an apartment on a higher floor, therefore, could provide a bigger deduction than one on a low floor. Compared to cash and other financial assets which are taxed based on their face value, the value of a high-rise apartment for tax purposes might be reduced by as much as 80% from its market value*. Wealthy Japanese have been actively buying up high-rise apartments, including those that might seem comparatively expensive.Read more

by Zoe Ward

Residential yields in Minato-ku - January 2015

Minato Tokyo Yields Jan 2015

According to real estate listing site Homes, the average gross yield on an apartment in Minato-ku in January was 5.3%, down 0.6 points from the previous month and down 0.5 points from last year. The average gross yield across Tokyo was 6.8%, showing no change from the previous month but down 0.7 points from last year.

The average asking price of a second-hand apartment in Minato-ku was 843,128 Yen/sqm as of January 1, up 1.2% from the previous month and up 14.1% from last year. The average asking price for land was 1,262,424 Yen/sqm, up 0.3% from the previous month and up 50.5% from last year.(*Note: January 2014 saw a temporary dip in land prices. Since the prices are based on listings on the Homes site, it is possible that some comparatively cheap land was listed which may have pulled the average down for that month.)Read more

by Zoe Ward

Home loan interest rates to reach record low in January

Mizuho Bank Interest Rate

Three of Japan’s major banks are lowering the prime interest rates on their 10-year fixed rate homes loans in January.

The Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank will lower interest rates by 0.1 points to 1.15%, while Sumitomo Mitsui Trust Bank will reduce their rate by 0.1 points to 0.9%. It is expected that other banks will also lower their rates.

Large-scale monetary easing by the Bank of Japan has caused the long-term interest rate to reach a record low.Read more

by Zoe Ward

Tokyo apartment sales in December 2014

 

December 2014 Sales

The following is a selection of apartments that were sold in central Tokyo during the month of December 2014:Read more

by Zoe Ward

What’s in store for Tokyo’s residential real estate market in 2015?

Let’s take a look at what some analysts are predicting for the Tokyo residential property market in 2015.

Unfavourable conditions for new apartment market?

In 2013, the supply of new apartments reached 56,000 units in greater Tokyo. However, several factors caused the supply to drop by as much as 24% in 2014. An increase in the consumption tax rate to 8% in April 2014 led to a boost in demand from buyers looking to lock-in the lower tax rate (this tax applies to the building portion of new apartment sales). In addition, reconstruction efforts in Tohoku, redevelopment projects for the 2020 Summer Olympics and a weakening Yen have led to a steep rise in construction costs and a shortage in labour. This has reduced the profit margins for developers and has caused some projects to be delayed or cancelled.Read more

by Zoe Ward

High-rise plans for northern side of Toranomon Hills

Toranomon 1 Chome District A
District A (Left), District B (Right)

On December 12, the Tokyo Metropolitan Government’s Bureau of Urban Development announced details for the Toranomon Station South District Plan. There are plans for this project to be certified under the National Strategic Special Zone, which could provide an allowance to increase the floor space for the site.

District A

District A (Toranomon 1-17~20), which is a 1.5 hectare site directly across the street on the northern side of Toranomon Hills, currently contains several smaller buildings including the Toranomon 10 Mori Building (1966) and the Nishimatsu Building (1962). Current plans are for a 36-storey, 185m tall office building with a total floor area of 175,000 sqm. Development approval is expected to be announced in June 2015. If approved, construction will start in February 2017 with completion expected by December 2019.Read more

by Zoe Ward

150+ year old warehouse and shop in Bunkyo-ku at risk of demolition

Iseya Bunkyo

The owner of a historic shop in Bunkyo-ku, Tokyo announced plans to demolish the building and sell the land after having difficulty in maintaining the 150 year old property. Local residents have formed a group to oppose demolition and held a public symposium on December 17th to call for urgent action to protect the property.

The former Iseya Pawnshop, located alongside the Hongo-Kikuzaka slope, operated from 1860 to 1982. The property consists of three buildings including a 2-storey warehouse, shop and a 1-storey tatami room. The traditional warehouse dates from the Bakumatsu era, or the closing days of the Tokugawa shogunate (1850s ~ 1860s) and was relocated from Shikihama in Adachi-ku to its current location in 1887. The tatami room was built in 1890 and the shophouse was built in 1907.

Ichiyo Higuchi, a prominent author of the Meiji period who is featured on the 5,000 Yen banknote, mentioned the store in her writing as she lived in the neighbourhood for several years.Read more

by Zoe Ward