Office vacancy rates in Tokyo down for 18th consecutive month

According to Miki Shoji’s office report, the office vacancy rate in Tokyo’s five central business districts (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) was 5.47% in December 2014, down 0.08 points from the previous month and down 1.87 points from last year. This is the 18th month in a row to see a month-on-month decrease in vacancy rates.

In Minato-ku, vacancy rates dropped to the 5% range for the first time since January 2009.

The vacancy rate in brand new office buildings was 13.40%, down 0.33 points from the previous month and down 1.10 points from last year. Only one office building was completed in December and was fully leased at the time of completion.Read more

by Zoe Ward

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

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

Secondhand apartment prices in November 2014 - Tokyo Kantei

November apartment prices Japan

According to Tokyo Kantei, the average asking price of a 70 sqm (753 sqft) second-hand apartment in Tokyo’s 23 wards was 43,300,000 Yen in November, up 1.7% from the previous month and up 6.6% from last year. The average building age was 22.3 years.

In central Tokyo’s six wards (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo and Shibuya), the average apartment asking price was 61,280,000 Yen, up 1.8% from the previous month and up 12.0% from last year. The rate of increase has been expanding since August 2014. The average building age was 21.6 years.Read more

by Zoe Ward

New apartment prices in Tokyo up 10.3%

According to the Real Estate Economic Institute, 3,337 brand new apartments were released for sale in greater Tokyo in November, up 6.8% from the previous month but down 33.3% from last year. This is the 10th month in a row to see a year-on-year decline. It is also lower than the Institute’s forecast of 4,000 apartments. This is the lowest level for November since 2008 and is thought to be due to developers postponing sales in major projects until the new year.

2,617 apartments were sold, making the contract rate 78.4%, up 15.1 points from the previous month but down 1.2 points from last year.

The average new apartment price was 52,240,000 Yen, up 14.6% from the previous month and up 5.2% from last year. The average price per square meter was 737,000 Yen, up 15.5% from the previous month and up 6.2% from last year.Read more

by Zoe Ward