Tokyo – Q2/2024
MARKETINMINUTES
Savills Research

Residential Leasing
Savills team
Please contact
us for further
information
JAPANJon Salyards
Managing Director,
Institutional Investment
Advisory+81 3 4330 3266
jsalyards@savills.co.jp
Andy Hurfurt
Managing Director,
Institutional Investment
Advisory+81 3 4330 3328
ahurfurt@savills.co.jp

RESEARCH
Tetsuya Kaneko
Managing Director,
Head of Research &Consultancy, Japan+81 3 4330 3103
tkaneko@savills.co.jp

Stable performance with bright prospects
Strong migration trends should bring about further improvements.
• Average rents in the Tokyo 23 wards (23W) correctedmarginally by 0.2% quarter-on-quarter (QoQ) to JPY4,229 per
sq m, although sit 4.8% higher on a year-on-year (YoY) basis.
• On the other hand, rents in the central five wards (C5W)
increased by 0.7% QoQ and 5.5% YoY to JPY5,063 per sq m.
• The C5W rental premium over the 23W average increased
moderately to 19.2%.
• In the C5W, Shinjuku, Minato, and Chuo saw the most significant
quarterly increases of 2.2%, 1.7% and 1.0%, respectively,
while rents in Shibuya contracted by 1.8% QoQ. Overall, yearly
growth among all wards in the C5W continues to perform well.
• Average rents for smaller units in the C5W in the 15-30 sq m
size band increased at the largest rate in consecutive quarters,by 0.8% QoQ, while average rents for larger units in the
45-60 sq m size band decreased by 1.3% QoQ, indicating thatproximity and access are becoming greater priorities.
•A verage occupancy rates in the 23W loosened by 1.0 percentage
points (ppts) QoQ to 96.2%, while falling marginally by
0.4ppts on an annual basis. Occupancy in the C5W alsoloosened moderately by 0.8ppts QoQ to 96.1%.
• Tokyo prefecture’s population has grown between 2019and 2024, with foreign nationals comprising a greater
proportion of new entrants.
savills.co.jp/insight-and-opinion/“Following the strong rental
growth in the previous
quarter, the 23W market
posted a marginal quarterly
rental correction, while theC5W experienced moderaterental growth in Q2/2024.
This spring moving season
brought a large net incrementof over 65,000 people to theTokyo 23W, while increasing
office attendance and recent
robust wage growth should
also contribute to strong andstable rental demand.”
SAVILLS RESEARCH & CONSULTANCY

1Bryan Kuek
Manager, Research &Consultancy, Japan+81 3 4330 3104
bkuek@savills.co.jp
Simon Smith
Regional Head of
Research & Consultancy,
Asia Pacific+852 2842 4573
ssmith@savills.asia
Savills plc
Savills is a leading global realestate service provider listed on
the London Stock Exchange. The
company established in 1855, hasa rich heritage with unrivalled
growth. It is a company that leads
rather than follows, and now hasover 600 offices and associates
throughout the Americas, Europe,
Asia Pacific, Africa and the Middle
East. This report is for general
informative purposes only. It may
not be published, reproduced orquoted in part or in whole, nor may
it be used as a basis for any
contract, prospectus, agreement
or other document without priorconsent. Whilst every effort has
been made to ensure its accuracy,
Savills accepts no liability
whatsoever for any direct orconsequential loss arising from its
use. The content is strictly
copyright and reproduction of thewhole or part of it in any form is
prohibited without written
permission from Savills Research.

Residential Leasing

MAP 1: Tokyo’s 23 Wards by Survey Area

Adachi

Itabashi
Kita
NerimaKatsushika
Arakawa

ToshimaNakanoBunkyoTaito

SumidaShinjuku

Suginami

Edogawa

ChiyodaShibuya

Chuo

Koto

MinatoSetagaya
MeguroShinagawaTokyo 23 Wards
Central (C5W)
South

Ota

West
North (Inner)
North (Outer)
East (Inner)
East (Outer)

Source Savills Research & Consultancy

SURVEY GEOGRAPHY
In order to illustrate trends in the central
Tokyo residential market, Savills has
segmented Tokyo’s 23 wards (23W) into
seven distinct geographical areas: Central(or “central five wards”), South, West, North(Inner and Outer) and East (Inner andOuter).

In contrast to the luxury residential
market, advertised or “asking” rents for midmarket units fitting the above criteria are
typically non-negotiable and are not subject
to incentives such as rent-free periods. Savills
mid-market rental indices are therefore
considered to closely reflect movements incontract rents for the Tokyo market.

RENTAL INDEX DATACHARACTERISTICS
Savills collates thousands of leasing
comparables each quarter in order to analysetrends affecting “mid-market” rental
apartment units in Tokyo. Our benchmark
rental data is based on average advertisedmonthly rents for units which fit the following
criteria:

OVERALL RESULTS
Average rents in the Tokyo 23W correctedmarginally in Q2/2024, though the C5W
saw some moderate rental growth over thequarter. That said, this followed a period ofrobust growth in the previous quarter, so atemporary pause was a distinct possibility.
Tokyo welcomed a large net influx of over
65,000 new residents between March and
May 2024, exceeding that of the same period
in previous year, and cementing the arrival ofTokyo to a normalised state of affairs. With
more companies pushing for greater rates ofoffice participation, many workers appear
to be choosing to live more centrally, withless of an emphasis on larger living spaces
in order to be closer to their workplaces.
Among these new entrants, foreign nationals
comprise an ever-growing proportion, who

1) studio and one- or two-bedroom rental
apartments of up to 100 sq m in size,2) reinforced concrete structures built within
the last ten years, and
3) properties located in Tokyo’s 23 wards
and situated within a ten-minute walk of thenearest station.
savills.co.jp/insight-and-opinion/

2

tend to rent and often prefer more centrally
located residences, and the sustained growthof this demographic should become a more
prominent driver of demand in the 23W rental
market moving forward.
In addition to demographic factors,
record corporate profits led to robust wage
increments, which could support demand
for units in the 23W. Meanwhile, prices in
the for-sale market remain at elevated levels,and some pockets of demand appear to haveconsequently shifted towards the rental
market. That said, many households onmodest incomes are likely feeling the pinch of
inflation and higher average rents, thus somedemand should remain for more affordable
units in outer wards of the 23W andsurrounding prefectures. This is especiallythe case in the context of still negative real
wages, which are likely to become positive
only after the summer.
The situation appears positive in the Tokyo
23W residential leasing market. The levelof net migration during this spring moving
season demonstrated Tokyo’s appeal amongresidents, and its socio-economic clout
will continue to lure new migrants, while
aforementioned macroeconomic trends lookto develop further moving forward. Overall,these factors point to sustained rental growthover the coming year.
MID-MARKET RENTAL TRENDS BYSURVEY AREA
Following the period of strong rental growthin the previous quarter, which elevated theTokyo 23W residential leasing market to newhighs, the market appears to remain firmin Q2/2024. Though there was some slightvariation by submarket, average rents in thewider 23W market were stable overall, dippingby 0.2% QoQ to JPY4,229 per sq m, whilerents in the C5W managed to keep following a
growth trajectory, reaching a record JPY5,063
per sq m, at a modest quarterly increment of
0.7%. Overall, rents among all submarkets
in the 23W sit comfortably above theirrespective pre-pandemic levels and appear
poised for further growth. This stability has
been underpinned by strong demographic
trends during the spring moving season,with a net increase in population of over
65,000 new residents between March and
May 2024. This was notably larger than thatof the previous spring moving season andwas likely supported by both the growing
normalisation of workstyle trends, ascompanies in Tokyo increasingly mandate
a return to offices (Graph 4), in addition
to sustained immigration, with foreign
nationals comprising almost a third of thisnet influx. Furthermore, interest in the rental
market should continue to be bolstered by

Residential Leasing

GRAPH 1: Mid-market Apartment Rental Index,
Q3/2014 to Q2/2024
Tokyo 23 ward average
Central five wards
4 period Mov. Avg. (Tokyo 23 wards)
4 period Mov. Avg. (Central five wards)

115
110
105
100
95
90
85
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q3
Q1
Q2

RENTAL INDEX (Q3/2008 = 100)

120

2024
20142015
2023202420142015 2016 2017 2018 2019 2020 2021 2022 2023
Source Savills Research & Consultancy

GRAPH 2: Rental Premiums/Discounts* vs 23W
Average, 2019 to 2024

PREMIUM / DISCOUNT TO 23W AVERAGE

2019

2020

2021

2022

South

North
East
(Inner) (Inner)

2023

2024

25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
C5W

West

North
East
(Outer) (Outer)

Source Savills Research & Consultancy*The above represents the average premium/discount over therespective year.

GRAPH 3: Mid-market Apartment Rents,
Q1/2016 to Q2/2024
Tokyo 23 Ward
North (Inner)
North (Outer)

Central 5 Wards
East (Inner)
East (Outer)

South
West

5,250
5,000
JPY / SQ M / MONTH

4,750
4,500
4,250
4,000
3,750
3,500
3,250
3,000
2,750
Q1
Q2

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q3

Q1

2,500
2024
2016 2017 2018 2019 2020 2021 2022 2023
20232024
Source Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

demand from residents that have been pricedout of the for-sale condominium market,
which has witnessed unabated inflation
over recent years, largely due to elevatedmaterials, construction, and land prices.
Overall, Tokyo’s undisputed appeal amongresidents for its employment, education, andentertainment offerings should underpin
further rental growth and improvements in
occupancy.
The C5W enjoyed moderate growth inQ2/2024, with average rents increasing by
0.7% QoQ to JPY5,063 per sq m. Indeed,
centrally located residences in Tokyo havebeen extremely popular in the post-pandemic
period, which can be reflected in averagerental levels having exceeded pre-pandemic
levels by a notable margin. Shinjuku andMinato witnessed the largest quarterly
rental growth at 2.2% and 1.7%, respectively,
while Chuo and Chiyoda also made further
quarterly improvements, at 1.0% and 0.7%,
respectively. Shibuya’s average asking
rents contracted by 1.8% QoQ, although
this counterintuitively appears to be a signof strong demand. Indeed, the number ofavailable units, especially newer ones withhigher rents, has decreased by a significant
amount, suggesting that this contraction
can be largely attributed to many premium
units being taken off the market, lowering
average listed rents. Owing to its proximity
to workplaces, availability of public
transport and amenities, and premium
status within Tokyo, the C5W submarket’s
appeal as a residential area looks to continue,
demonstrated by its net influx of over 10,000
residents between March and May.
On the other hand, average rents in theSouth submarket decreased moderately by
1.5% QoQ to JPY4,308 per sq m in Q2/2024,
following the significant rental growthexperienced in the previous quarter. Allconstituent wards in the South submarket
recorded rental contractions, the mostnotable of which took place in Meguro
and Ota, at 3.0% QoQ and 1.8% QoQ,
respectively. Nevertheless, the situation ismore positive when viewed on an annual
basis, with average rents in the South
submarket in Q2/2024 around 4.1% higher
than those in the same period in 2023.
Considered a popular residential submarket,
the South recorded a large net population
inflow of over 15,000 people between Marchand May, a large proportion of whom moved
to Ota and Setagaya wards. All in all, theSouth submarket remains a popular choice
for renters, due to its close proximity andconvenient access to many central business
districts, while simultaneously boasting
many quiet, liveable neighbourhoods withplenty of green space.

3

Similar to the South submarket, the Inner
North recorded a modest rental contraction,
following strong growth in the previous
quarter. On a quarterly basis, average rents
fell by 0.9% to JPY4,307 per sq m, although
sit at 3.2% higher on a yearly basis. Rents inboth Bunkyo and Toshima contracted by
0.9% QoQ. In particular, Bunkyo has been
receiving positive attention, having enjoyedstrong population growth compared to prepandemic times. Indeed, rents in Q2/2024
are 4.2% higher than those of the previous
year, and a large number of new units wereintroduced to the ward during Q2/2024,
which should be well received and signal
confidence in the trajectory of the local
residential market. Overall, the Inner Northsubmarket recorded moderate population
growth in Q2/2024, benefitting both from its
close proximity to central business districts
such as Ikebukuro, Shinjuku, and Chiyoda,
and from its residential atmosphere, which
offers various amenities, several public parks,
and leading educational institutions, andshould remain a popular option for residents.
Rents in the Inner East submarket grewby 1.2% QoQ in Q2/2024 to JPY4,102 per
sq m, while sitting 4.7% higher on a yearlybasis. Rental growth was evenly spread
between constituent wards, increasing by
1.4% QoQ in Koto, by 1.1% QoQ in Taito, andby 1.0% in Sumida. The Inner East attracted
a net influx of nearly 5,000 people between
March and May, though this was moderately
lower than the spring migration trend in
2023. Nonetheless, the market remains a
popular and affordable alternative to livingin the C5W, with strong public transport
connections to central Tokyo, and a slewof new residential developments should
reinforce its strong appeal among workers
and residents going forward.
Likewise, average rents in the Westsubmarket increased by a moderate 1.2%
QoQ to JPY3,872 per sq m, translating to a
yearly increment of 3.6%. At the ward level,
Nerima witnessed the largest quarterly rental
growth at 2.1%, while Nakano and Suginami
also enjoyed positive growth at 0.9% QoQ
and 0.6% QoQ, respectively. Indeed, thesubmarket welcomed a large net influx of
12,000 residents between March and May,
among the largest in the 23W market, andremains a popular choice for residents due
to its convenient public transport links tocentral business districts, while retaining a
liveable suburban atmosphere, with plentiful
access to green space and schools.
The Outer North recorded anotherquarter of sound rental growth at 1.5% to
JPY3,696 per sq m, translating to an annual
increment of 5.2%, and sits firmly above its
average pre-pandemic level. A majority ofResidential Leasing

GRAPH 4: Percentage of Companies in Tokyo that
Implement Remote Work by Number of Employees,2022 to 2024*
2022

COMPANIES WITH REMOTE WORK

100%

2023

2024

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
30-99

100-299
300 or more
NUMBER OF EMPLOYEES

Source Tokyo Metropolitan Government, Savills Research & Consultancy* Data was taken in March of each respective year

GRAPH 5: Average Occupancy for J-REIT Residential
Assets, Q1/2016 to Q2/2024*
23-ward average
South
East

100%

Central 5 wards
North & West

98%

96%

94%

2017

2018

Q1
Q2

Q1

Q3

Q1

2021

Q3

Q1

2020

Q3

Q1

2019

Q3

Q1

Q3

Q1

Q3

Q1

2016

Q3

Q1

Q3

92%
2022 2023
20232024
2024

Source Savills Research & Consultancy* Q2/2024 is as of May 2024

GRAPH 6: Rents by Unit Size, C5W, Q1/2016 to
Q2/2024
15-30 sq m

30-45 sq m

45-60 sq m

5,400

JPY / SQ M / MONTH

5,200
5,000
4,800
4,600
4,400
4,200
4,000

Q1
Q2

Q1

Q3

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q3

Q1

Q1

Q3

3,800
2024
2016 2017 2018 2019 2020 2021 2022 2023
20232024
Source Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

this growth took place in Kita ward, whererents grew by 2.3% QoQ, while averagerents in Itabashi also increased by 0.5%
QoQ. The submarket benefits from a stablesupply of quality residential units, withnew residences completed within the past
12 months currently comprising a large
proportion of the total available stock andshould be a particular draw for potential
residents. Overall, the Outer North enjoyedencouraging net migration of 7,500 residents
between March and May, and remains anever-popular, affordable choice for renters.
Lastly, the Outer East submarket
experienced the largest rental growthamong the Tokyo 23W submarkets, at 2.4%
QoQ to JPY3,488 per sq m, also recording
the greatest annual increment at 5.8%.
Katsushika ward saw the largest increment
in rents at 5.9% QoQ, with a large increase in
the number of above average units available
on the market over the past quarter. The
Outer East enjoyed a large population
increment of over 12,000 people between
March and May, and it is likely that thisheightened population has accelerated
rental growth in the submarket. Indeed, as
the submarket with the cheapest averagerents in the 23W, the Outer East is a popular
option for those on more modest incomes,
who have felt the effects of inflation moreacutely, and for families who seek greater
amounts of living space. Moreover, given
the ever-increasing price of for-sale units inTokyo, residents priced out of buying havelikely strengthened the demand for rental
units, which should be a positive sign for thegrowth trajectory of the residential leasing
market looking ahead.
OCCUPANCY RATES
Occupancy rates in the Tokyo 23W loosened
moderately by 1.0ppts QoQ to 96.2% in
Q2/2024, while decreasing by 0.4ppts on a
yearly basis. Similarly, the occupancy rates
in the C5W submarket loosened by 0.8ppts
QoQ to 96.1%, likewise translating to anannual decline of 0.2ppts. That said, these
downticks in occupancy appear in line withthe past annual cycle.
The Tokyo 23W market saw a net influxof over 65,000 new residents between
March and May 2024, a notably larger
figure than the previous year. Indeed, living
closer to central areas has become moreof a priority in the post-pandemic Tokyo
market, given the phasing back of flexible
work arrangements. Moreover, Japanese
corporate performance has been strong
over the past year, with many companies
reporting record profits, leading to robust
wage growth in 2024, which should boost
interest in moving to the Tokyo 23W.

4

In addition, the foreign population
continues to grow in earnest, with nearlya third of the total net population influx to
the Tokyo 23W between March and May
comprising non-Japanese nationals. This
looks to continue unabated as Japan welcomes
more foreign workers in order to deal with thelabour crunch situation. Overall, while averageoccupancy rates in Q2/2024 are still slightly
shy of the pre-pandemic level, the market has
made consistent progress over the past year,
and we predict that this positive momentum
should continue in 2024 with some further
improvements in occupancy rates a possibility.
RENTS BY UNIT SIZETokyo’s rental market is principally made up
of compact single-occupier units, typicallyless than 45 sq m (13.6 tsubo) in size. Such
units can often make up as much as 75% ormore of the 23W area’s rental listings. Unlike
Western major global cities such as New Yorkand London, house or apartment sharing
does not form a major segment of the rental
market. As a result, there is a large, stable
market for small- to mid-sized units.
Larger units of the 45-60 sq m size bandin the C5W retain a notable premiumin terms of average rents over smaller
categories. However, average rents for such
units contracted by 1.3% QoQ in Q2/2024,
causing this premium to shrink over thequarter. Indeed, there was a modest increasein the number of available units in thelarger size band, suggesting that such units
have somewhat fallen out of favour for the
meantime. Indeed, with growing rates of officeparticipation, home offices may have becomeless of a priority for residents. Moreover, larger
units that have been rapidly becoming more
expensive might appear overpriced.
On the other hand, units in the smaller
15-30 sq m size band and medium 30-45
sq m size band have continued to perform
well on a quarterly basis, with averagerents increasing by 0.8%, and by 0.4%,
respectively. More workers appear to bemoving closer to central business districts
with the phasing back of flexible work
arrangements. Moreover, with many young
professionals migrating as part of the spring
moving season, demand for cost-effective
smaller units nearer to their places of work
appears to have become particularly strong,
as demonstrated by the nearly 10% drop in
the number of available smaller units overthe quarter. Overall, the demand for units ofall size bands in the C5W remains strong andshould be bolstered by both the phasing backof flexible work arrangements in addition tomultiple mixed-use redevelopment projects
that should improve the liveability ofTokyo’s central wards.

Residential Leasing

GRAPH 7: Tokyo 23W Population by Submarket,
January 2019 to April 2024
C5W
Inner North

South
Outer EastWest
Outer North

Inner East

106

APRIL 2019 = 100

105
104
103
102
101
100
99

Source Tokyo Metropolitan Government,
Savills Research & Consultancy

DEMOGRAPHIC TRENDS IN TOKYOTokyo 23W’s population has grown from
9.6 million in May 2019 to 9.9 million in
May 2024. As the economic powerhouseof Japan, the city has seen strong growth
as it is able to attract large numbers ofyoung migrants in search of employment
and education opportunities. Within the
23W, some submarkets have demonstrated
considerably stronger population growththan others. Indeed, recent population
trends have seen greater focus on the
Inner East, the C5W, and the Inner Northsubmarkets. More specifically, on Chuo,
Chiyoda, Taito, Sumida, and Bunkyo.
Looking ahead, other major large-scale
projects in Yaesu and Nihonbashi, together
with Torch Tower in Tokiwabashi, which
will serve as another centrepiece ofthe redevelopments in the area, should
generate further interest in Chuo ward andsurrounding areas as a place to live.
Meanwhile, other wards surrounding
central areas have also seen amicable
population growth, although many
constituents in the South submarket,
namely Setagaya, Ota, and Meguro, and theWest submarket’s Suginami have performed
below average. Elsewhere, the Outer East
submarket has seen the slowest population
growth between January 2019 and April
2024 (Graph 7). Indeed, the post-pandemic
environment appears to have shifted mostof the attention back to central areas,
probably due to a combination of dwindlinglevels of flexible work arrangements and thepost-pandemic environment breathing life
back into central business districts. Thatsaid, some cities west of the 23W have seencommendable population growth between
2019 and 2024, like Kokubunji at 3.7%, andInagi at 3.4% - almost on par with the C5W
average. Many other cities in Tokyo havealso performed around the same level as
peripheral members of the 23W. Indeed,some paradigm shifts that materialised
during the pandemic like greater
preferences for larger room sizes appear
to continue lingering, and inflationarypressures may have driven some to seek suchapartments that are more affordable in areas
away from central locations. Going forward,
the central wards will likely receive the lion’sshare of attention.

MAP 2: Tokyo Population Change, April 2019 vs April 2024

Source Tokyo Metropolitan Government, Savills Research & Consultancy

savills.co.jp/insight-and-opinion/

5

Residential Leasing

MAP 3: Tokyo Foreign National Population, Change in Proportion of Foreigners by Constituency, April 2019 vs April 2024

Source Tokyo Metropolitan Government, Savills Research & Consultancy

In addition, foreign nationals have grown tobecome an integral component of this population
growth. In January 2019, there were around 550,000
foreign nationals in Tokyo prefecture or 4.0% of the
population, which has grown to almost 650,000 in
January 2024, comprising 4.6% of the population.
In fact, the National Institute of Population andSocial Security Research forecasts suggest that by2035, more than 10% of people in Japan between
18 and 34 years old will comprise foreign nationals,
up from 5.7% in 2020. In this light, Tokyo is likely
to attain this level much faster than the national
average. As seen in Map 3, strong performers
include eastern and northern submarkets, alongwith a few members of the C5W, which have seen
the largest changes in terms of proportion offoreign nationals relative to the total population.
One prominent factor at play could be the cluster
effect where people of similar backgrounds
tend to congregate in the same area, and thismanifestation could further propagate the foreign
national populations of these areas.
Overall, we predict that Tokyo’s population willcontinue to grow moving forward. While Japanesenationals will continue to congregate in thecapital, it appears that foreign migrants will likely
comprise an increasing proportion of this growth,with a particular concentration in central and east
Tokyo. Furthermore, many of these residents will
likely be renters, which should shore up demandsavills.co.jp/insight-and-opinion/in the rental residential market and raise theprospects for further rental growth. For a moredetailed analysis of Tokyo’s demographic outlook,please refer to our “A Closer Look at Tokyo
Demographics” report.
OUTLOOK
This spring moving season has been a welcome
development for the market. Net migration
between March and May 2024 has exceeded thatof the same period in 2023, as well as the prepandemic level. In particular, the foreign national
population has been comprising a growing
proportion of this net population growth, whichlooks to become an ever larger driver of demandin the sector.
Several factors look to be tailwinds for the
Tokyo residential leasing market moving ahead.
Firstly, companies in Tokyo appear to continue
phasing out flexible work arrangements, leading tohigher office attendance. With this shift, a greater
emphasis will likely be placed on smaller units
that are more cost effective, rather than requiring
large residences for creating home offices.
Furthermore, workers will likely choose locations
with better connection and easier commutes tocentral districts, hence bolstering rental demandin more centrally located submarkets, with theC5W market seeing sustained rental growthover the quarter. Secondly, recent robust wage

6

growth in Tokyo is positive, off the back of record
corporate profits over the past year, and real
wage growth is likely to become positive soon.
Moreover, heightened for-sale condominium
prices will likely divert some new demand
towards the rental market, raising the prospects
for sustained rental growth. Admittedly, while theaverage price of for-sale condominiums in Tokyo
23W recently sees a dip from last year, this isbecause 2023 saw several exceptionally expensive
units came to the market, propping up the
average price level. Indeed, prices are expected toremain at elevated levels due to a combination of
inflation, sound demand, and the strong balance
sheets of developers that have little incentive to
discount prices. As such, many people will still
likely be priced out of this market.
Though heightened materials, construction,and land prices threaten to eat away at developerand investor bottom lines, the broad room for
growth in the residential leasing market indicatesthat rental growth should be meaningfully larger.
Overall, prospects are bright for the Tokyo 23W
rental residential market. Although the market has
encountered a temporary pause in Q2/2024 after
previous quarters of strong growth, this should beconsidered a normal annual cycle. Furthermore,
Tokyo’s stable economic and demographic
fundamentals should help the market to perform
well over the course of the year.