New apartment prices in Tokyo up 26%

According to the Real Estate Economic Institute, 2,110 brand new apartments were released for sale in greater Tokyo in August, down 50.0% from the previous month and down 49.1% from last year. This is the 7th month in a row to see a year-on-year drop in supply.

1,469 apartments were sold, making the contract rate 69.6%. This is down 14.1 points from the previous month and down 11.9 points from last year. This is the first time the contract rate has fallen below 70% in 19 months. A contract rate over 70% usually indicates positive market conditions.

The average new apartment price was 56,850,000 Yen, up 2.8% from the previous month and up 18.5% from last year.

The average price per square meter was 775,000 Yen, up 0.5% from the previous month and up 14.5% from last year.

212 apartments in high-rise buildings (over 20-storeys) were offered for sale, down 86.2% from the previous month and down 78.6% from last year. The contract rate was 50.9%, down 42.6 points from the previous month and down 34.3 points from last year.Read more

by Zoe Ward

Secondhand apartment transactions down while prices continue to climb

According to REINS, 2,118 second-hand apartments were sold across greater Tokyo in August, down 16.4% from the previous month and down 5.9% from last year. This is the 5th month in a row to see a decline from one year prior.

The average apartment sale price across greater Tokyo was 28,190,000 Yen, up 7.4% from the previous month and up 10.2% from last year. The average price per square meter was 436,900 Yen, up 6.5% from the previous month and up 9.2% from last year. The average building age was 19.47 years.

1,003 apartments were sold in the Tokyo metropolitan area, down 18.3% from the previous month and down 9.2% from last year. This is the 5th month in a row to see a decline from one year prior. The average apartment sale price was 34,870,000 Yen, up 9.0% from the previous month and up 12.7% from last year. The average price per square meter was 587,500 Yen, up 7.8% from the previous month and up 13.1% from last year. The average building age was 18.26 years.

The average sale price in central Tokyo’s 3 wards (Chiyoda, Chuo and Minato) was 55,820,000 Yen, up 24.2% from the previous month and up 20.8% from last year. The average price per square meter was 920,200 Yen, up 0.8% from the previous month and up 11.7% from last year. The average building age was 15.38 years.

Average sale prices per square meter were up in a number of locations last month:Read more

by Zoe Ward

Japan’s top developers by resale value in 2013

Style Act Co., Ltd. (formerly Attractors Lab) published their ranking of Japan’s top developers by resale value. In top place for the fourth year in a row was Marubeni with an average resale price of 1.6% lower than new. The average resale value across all developers was -10.0%.

The data is based on the average difference in the advertised price of an apartment in 2013 vs. the average price of new apartments built from 2001 onwards. Over 38,000 apartments were used in compiling the data.

Top developers by resale values:Read more

by Zoe Ward

Residential yields and vacancy rates in Minato-ku - September 2014

According to real estate listing site Homes, the average gross yield on an apartment in Minato-ku in September was 5.6%, up 0.3 points from the previous month but down 0.4 points from last year. The average gross yield across Tokyo was 7.0%, showing no change from the previous month and down 0.9 points from last year.

The vacancy rate was 9.9% in Minato-ku and 11.0% across Tokyo.

The average asking price of a secondhand apartment in Minato-ku was 804,386 Yen/sqm as of September 1, up 1.55% from last month. The average asking price for land was 1,279,090 Yen/sqm, up 0.17% from last month. Read more

by Zoe Ward

Are the Olympics artificially pushing up property prices in Tokyo?

When it was announced that Tokyo would host the 2020 Summer Olympics, owners of high-rise apartments in Tokyo’s bayside area (an area will host the Athletes Village and several sporting events) were naturally excited by the news. Apartment sales offices saw a dramatic increase in demand from buyers who feel certain that the Olympics is going to push up real estate values in the area.

In an article in the Nikkei Business publication, Eugene Oki from Attractors Lab suggests that recent price rises in the bayside islands may lack the substance to continue at current rates, and urges buyers to take a careful look at the factors behind market trends.

The Olympics will bring much needed infrastructure such as sports facilities and a bus lane to the bayside area of Ariake, Harumi and Kachidoki, but the Olympic games alone are not going to be a strong enough reason for the extension of a subway or train line. Retail and other facilities that improve the quality of life will also take some time to create. As such, it is difficult to say whether the current increase in real estate prices can be maintained after the Olympics are over.

Price growth is heavily dependent on trains and subways, not buses

The biggest influence on price growth in a particular area is the development of train or subway lines. In Japan, a bus route or buss rapid transit (BRT) has rarely been shown to improve property values.

There are plans to introduce a BRT that would connect Harumi Island with the Ginza district. While access to Ginza may sound appealing, the majority of residents in the island areas need access to business areas such as Otemachi, Marunouchi, Shinagawa and Shinjuku. Rather than stopping at Ginza, a bus to Yurakucho Station on the JR Yamanote Loop Line would at least provide commuters with an easier switch to the train system.Read more

by Zoe Ward

Tokyo apartment sales in August 2014

Tokyo Apartment Sales in August

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

by Zoe Ward

Severe shortage in Tokyo apartment supply not necessarily due to high demand

Rising construction costs and project delays are causing the supply of new apartments in the greater Tokyo area to plummet. In 2013, the total number of brand new apartments to hit the market dropped 23.8% from the previous year to 56,478 apartments.

From August 1, MUFJ, SMBC and Mizuho Bank lowered the prime rate on their 10-year fixed rate home loans to a record low 1.3%. While long-term interest rates are showing signs of falling, the recent rise in the consumption tax rate has led a drop in housing starts as well as a drop in sales of new apartments. Banks are now competing to attract borrowers.

While new apartment sales have slowed, they still remain at healthy levels. The contract rate on new apartments in June was 76.6%. Although this was a decline of 5 points from June 2013 and 2.3 points lower than the previous month, it is still above the level of 70% which is considered the threshold for healthy sales.

What is worrying, however, is the drop in supply. According to the Real Estate Economic Institute, 3,503 brand new apartments were offered for sale in the greater Tokyo area in June 2014, down 28.3% from June 2013 and down 18.5% from the previous month. This level is very close to the last low of 3,441 apartments offered for sale in June 2011 (a few months after the 2011 Tohoku disaster). Read more

by Zoe Ward