Tokyo apartment sale prices increase for 59th consecutive month
According to REINS, 2,265 second-hand apartments were sold across greater Tokyo in August, down 31.4% from July and down 5.0% from last year. August is one of the hottest months in the year and often a time when Japanese take a vacation, so sales are typically slower than in July or September.
The average sale price was 32,380,000 Yen, up 2.5% from the previous month and up 7.6% from last year. The average price per square meter was 505,000 Yen, up 2.1% from the previous month and up 5.9% from last year. This is the 56th month in a row to record a year-on-year increase in sale prices. The average building age was 20.69 years.
In the Tokyo metropolitan area 1,141 second-hand apartments were sold, down 33.7% from the previous month and down 4.8% from last year. The average sale price was 40,350,000 Yen, up 4.4% from the previous month and up 7.4% from last year. The average price per square meter was 684,200 Yen, up 4.3% from the previous month and up 7.4% from last year. This is the 59th month in a row to record a year-on-year increase in sale prices. The average building age was 19.39 years.
Price growth in Tokyo more subdued than the 2007 mini-bubble
Earlier this year, rosenka tax values at a section of ultra-prime commercial land in Tokyo’s Ginza district increased by 26% from the previous year to a record high of 40,320,000 Yen per square meter, exceeding the previous high of 36,500,000 Yen/sqm in 1992 and causing some to warn of an impending bubble and overheating of the property market in the nation’s capital.
There is valid cause for concern in some sectors of the investment-property market due to potential over-construction and over-lending to landowners to build small blocks of 'apaato' type rental flats in suburban areas with low rental demand.
But are current conditions mimicking previous bubbles?
This time around Japan is getting more foreign tourists than ever before, boosting revenues for both hotels and retails shops, making the increase in commercial real estate values much more pronounced than the residential market which relies more on real domestic demand.
Supply of new apartments shrinking as developers struggle to secure land
In the midst of a recovering property market, Japan’s top real estate developers are struggling to find suitable plots for residential projects, causing supply to shrink and sales volumes to fall.
The total value of real estate available for sale by the country’s top five developers as at the end of June 2016 was 3.107 trillion Yen (approx. 28 billion USD), down 0.4% from March and the first time in 9 quarters to record a decline. Increasing land prices and intense competition has meant that even though demand for real estate remains high there are fewer projects on offer.Read more
Tokyo Apartment Sales in August 2017
The following is a selection of apartments that were sold in central Tokyo during the month of August 2017:Read more
Apartment occupancy rates reach record high in Japan
The average occupancy rate of rental apartment buildings acquired by J-REITs has been steadily improving since 2010 and has exceeded levels last seen during the peak in 2008. In the second half of 2016 the average occupancy rate was 96%, a record high.
This is due both to an improving property market and REITS acquiring relatively new buildings in prime, central locations. While occupancy rates remain high in Tokyo, other cities across the country are seeing a reversal with a declining trend evident since 2013.
Trends in cities other than Tokyo:
- Sapporo: Although occupancy levels are relatively high, they have been decreasing since late 2014.
- Sendai: Occupancy rates reached record highs due to housing demand following the Tohoku disaster in 2011, but have been slowly falling. Sendai has seen the highest decline of all cities.
- Yokohama: Occupancy has been falling since mid-2013, although there was an improvement in the second half of 2016.
- Nagoya: Occupancy rates have been falling since 2013 and are sitting at a comparatively low level.
- Osaka: Occupancy rates have been improving since late 2015 and are at a relatively high level.
- Fukuoka: Occupancy rates have been steadily falling. The rate of decline has been influenced by a building with an occupancy rate of less than 80%.
*Central Tokyo 5 wards: Chiyoda, Chuo, Minato, Shinjuku, Shibuya.
Source: Mizuho Real Estate Market Report, July 14, 2017.
Tokyo apartment asking prices in July 2017
According to Tokyo Kantei, the average asking price of a 70 sqm (753 sq ft) second-hand apartment across greater Tokyo was 35,620,000 Yen in July, showing no change from the previous month but up 1.9% from last year. The average building age was 22.9 years.
In Tokyo’s 23 wards, the average asking price was 53,260,000 Yen, up 0.3% from the previous month and up 0.9% from last year. The average building age was 22.3 years.
In Tokyo’s central six wards (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo and Shibuya) the average asking price was 72,860,000 Yen, down 0.4% from the previous month but up 1.4% from last year. The average building age was 20.6 years.