Japan - June 2020

S P OT L I G H T
Savills Research

Yokohama

Retail sales in Beijing were up 4.4% year-on-year to RMB539.8 billion in 1H 2018

YokohamaAn old fishing village takes
centre stage once more

Yokohama
Long Term Average (RHS)

2010

2011

2012

2013

2014

2015

2016

2017

2018

Q1

Q1

Q3

0%
Q3

0
Q1

5%

Q1

1

Q3

10%

Q1

2

Q3

15%

Q1

3

Q3

20%

Q1

4

Q3

25%

Q3

5

Q1

• Much of Yokohama’s future
success depends on a sustained
economic recovery in Japan.
Regardless, solid demand
fundamentals should underpin
the market’s resilience for thetime being.

Tokyo
Investment in Yokohama (%) (RHS)

Q1• The positive demographic
outlook should continue todrive Yokohama’s growth overthe longer term, despite thechallenges faced by the country
as a whole.

INVESTMENT
Against a backdrop of rock-bottom interest
rates and uncertain global prospects, theJapanese real estate market continued to
entice investors in search of stable yields.
Meanwhile, when looking at the major cities,
it’s safe to say that Tokyo finds itself as thenumber one location. Based on data provided
by Real Capital Analytics (RCA), on average,
the capital was home to around 60% of total
investment flows across all asset classes
between 2010 and 2019. In reality, however,this figure had been on a downtrend before the
COVID-19 outbreak due to the limited number
of affordable opportunities in Tokyo.
As such, with the intense competition for
quality assets stretching valuations in Tokyo, lessfinancially capable market participants had nochoice but to look elsewhere for opportunities.

Graph 1: Rolling Annual Investment Flows into Tokyo and Yokohama, 2010 toQ1/2020

Q3• Both the retail and hospitality
sectors in Yokohama havesuffered the same fate as therest of Japan. Yet the types ofprojects in progress could bewell-positioned to benefit in
future.

Q1• With a strength in R&D, theoffice market in Yokohama is
an attractive proposition forbusinesses. Meanwhile, as the
pandemic continues to change
working culture, the emergenceof satellite offices for example
could be a boon for the city.

Q3• As well as the amenities
available and its accessibility toTokyo, the lower cost of living
found in Yokohama makes it apopular residential hub, and thislooks set to continue.

Q1• Investment volumes into
the capital have slowly been
decreasing as valuations andopportunities become lessfavourable. Consequently,
some of these flows have been
directed to peripheral markets
such as Yokohama, which has
seen steady increases since 2017.

Q3• Following numerous
redevelopment projects, suchas The Minato Mirai 21 Project,
Yokohama has reinvented
itself since its post-war slump,
becoming a genuine alternative
to Tokyo.

JPY TRILLIONS

Summary

increasingly drawn to the area. Tokyo officerent premiums – driven by strong demand – inaddition to the generous economic incentive
programs have made the city an attractive
alternative. The office sector is not alone inreaping the rewards of redevelopment, however.
Rising corporate activity has also increased
demand for residential assets, adding to theestimated 3.8 million people already living in
the city. As such, with the city proving popularfor locals and visitors alike, the recently muchmaligned retail and hospitality sectors should see
better days.
Whilst touching on the impact of COVID-19,
given the above, this report will focus more on
the longer-term trends that should see Yokohama
emerge as a credible alternative to Tokyo.

OVERVIEW
Yokohama has come a long way since Japan
opened to the world in the late 19th century.
Initially a small fishing village, it cameto serve as the primary port and gateway
to the country, eventually becoming thecentre of foreign trade. Thanks in part to its
proximity to Tokyo, Yokohama prospered
over the following decades. Things swiftlychanged, however, as a result of the large-scale
destruction and confiscation of the downtown
area during and after World War II. Without
the required redevelopment, many companies
consequently relocated to Tokyo, taking
with them the economic drive that had beenprevalent in the city up until then. Indeed, by
the time Japan’s post-war economic boom had
arrived, Yokohama had been somewhat left on
the side-lines, relegated to a residential hub forTokyo commuters.
In 1965, however, with the intention of remodelling itself as a major city once more, six
strategic projects aimed at reconnecting thevarious districts were announced. A core tenet ofthe strategies was The Minato Mirai 21 Project – ahuge 186-hectare land reclamation, building, andinfrastructure project, conceived as a means ofregaining the city’s status as a business centre.
Since construction began in 1983, 76 hectaresof land have been developed with the area now
hosting more than 1,800 companies and over
110,000 employees. Given the city’s international
background, this figure includes almost 200
international corporate HQs, second only toTokyo.
Today, Yokohama has largely reclaimed its
status as an economic hub and companies are2019 2020

Source RCA, Savills Research & Consultancy

savills.co.jp/research

2

YokohamaIn truth, they did not have to look far. Whenlooking at rolling annualised investment
volumes specifically into Tokyo and Yokohama,since early-2017, the latter has seen a notable
uptick, ensuring that its share of annual
investment sits above its long term averageof around 8%. To put this into perspective,
Yokohama represented a mere 2% of thetotal transacted volume at the start of 2010
(Graph 1).
This competition for real estate assets
has also led to cap rate compression over theperiod. Indeed, when using completed J-REIT
transactions as a proxy for the broader
market, the attractiveness of Yokohama
becomes evident. Despite tightening inlockstep with Tokyo, across all asset classes,
the cap rate remains around 50 basis points
higher than its larger counterpart (Graph 2).
Looking at offices in particular,
underpinned by strong investment demandfor prime assets, cap rates in Tokyo haveThanks in part to the success of
its many redevelopment projects,
Yokohama has once again establisheditself as a major economic hub.
Moreover, the onset of COVID-19
could see its popularity rise further
owing to its favourable work-life
environment. Meanwhile, the relative
youthfulness of the city should help
ensure that real estate fundamentals
remain firm in the years to come,despite Japan’s demographic
challenges.

GRAPH 2: J-REIT Transaction Cap Rates* and Spreads Across Asset Classes andCities, 2010 to Q1/2020
Tokyo 23 Wards (23W) (LHS)
Yokohama City (LHS)
Residential Spread vs Tokyo 23W
Office Spread vs Tokyo Central Five Wards (C5W)

7.0%

2.0%

6.0%

1.5%

5.0%

1.0%

4.0%

0.5%

3.0%

0.0%
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source J-REIT DB, Savills Research & Consultancy* Cap rate information was not available for transactions involving office assets in Yokohama during 2012.

TABLE 1: Major Transactions in Yokohama, 2017 to Q1/2020
BUILDING
GFA
USE(TSUBO)PRICE(JPY BIL)

BUYER

28,80098.0

GK Zest Leasing(SPC of Goldman Sachs)

Office,Retail,Hotel

30,90066.5 (c70:30- Building:Land)

Fuyo General Lease(Building)and Hulic (Land)

MHI Yokohama
Building

Office,Retail33,10064.0

GK YMM Investment(SPC of Kenedix Office
REIT, Kenedix Private
REIT, Kenedix)

Sep 2018

Ocean Gate
Minato Mirai

Office,Retail

16,80045.0

PLC8 GK (SPC of LaSalle
Investment Management)

May 2017

Concurred
Yokohama (75%)

Office,Retail39.2

GK Yokohama Office
Management (SPC of
Daiwa Office REIT and
Daiwa PI Partners)

ANNOUNCEDPROPERTY

Jan 2020

Minato Mirai
Center Building

Office,RetailMar 2017

TOC Minato Mirai

Dec 2017

12,200Source Nikkei RE, Savills Research and Consultancy

3continued to tighten, whilst the equivalentin Yokohama has remained relatively flat.
Consequently, the spread between the twoin this sector has reached a decade high ofaround 150bps in Q1/2020. Meanwhile, themultifamily residential sector in Yokohama
remains stable and rents notably showed
as much resilience as Tokyo following the
Global Financial Crisis. Given this defensive
nature, the spreads between residential assets
remain close to nil, implying Yokohama’s
attractiveness, especially for residents.
Under the current uncertainty, therefore,
the discrepancy in valuations within certain
sectors may accelerate the flight to quality.
Alternatively, the “new normal” after
COVID-19 may also present fresh demands
and opportunities such as satellite offices.
RESIDENTIAL
As well as an economic hub, Yokohamacontinues to be a popular location for wouldbe residents, and a big reason for this is theconvenience of Yokohama Station. With achoice of around ten train lines, the station
sees an estimated 2.3 million daily passengers,
400,000 of which are locals making the
30-minute commute to Tokyo. Popular lines
include the Tokyu Toyoko Line going throughShibuya and the Tokaido Line, which connects
the city with Shinagawa and Shinbashi – apopular destination for office workers– as well as Tokyo Station itself. Meanwhile,
being within half an hour to other popular
destinations, such as Kamakura to the south,
as well as Shinkansen stations and Haneda
Airport to the East, certainly adds to theappeal.
Though convenience is important, anothervital consideration is the cost-of-living, and inYokohama

GRAPH 3: Average Rent as a Proportion of Average Annual Taxable Income*, 2010
to 2019
Yokohama City

Tokyo 23W

Osaka City

23%
22%
21%
20%
19%
18%
17%
16%
15%
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Average Annual Taxable Income (JPY million)
YEAR

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Tokyo C5W

6.74

6.75

6.74

6.84

8.05

7.41

7.88

8.03

8.34

8.82

Tokyo 23W

4.57

4.59

4.59

4.62

5.03

4.87

5.03

5.10

5.22

5.39

Yokohama City

3.88

3.90

3.91

3.89

3.97

3.99

4.01

4.04

4.07

4.11

Osaka City

3.13

3.13

3.15

3.15

3.24

3.26

3.29

3.32

3.37

3.41

National

2.77

2.76

2.75

2.75

2.78

2.80

2.83

2.86

2.89

2.91

Source Tokyo Kantei, Ministry of Internal Affairs and Communications, Savills Research & Consultancy*Based on an average unit size of 25 sq m.

GRAPH 4: Average Second-hand Condo Price-to-Income Multiple by Prefecture,2009 to 2018
Tokyo Prefecture

Kanagawa Prefecture

Japan

2013

2016

11x
10x
9x
8x
7x
6x
5x
4x
3x
2009

2010

2011

2012

2014

2015

2017

2018

Source Tokyo Kantei, Savills Research & Consultancy

this context, Yokohama once again comes out
favourably. A key component of this measure,namely taxable income, is unsurprisingly thehighest in Tokyo. This is especially true inthe central five wards (C5W) where average
earnings are just shy of JPY9 million – overdouble that of Yokohama. Nonetheless, aswith other asset classes, there is a premium
to being in the capital. For instance, as ofMarch 2020, average rents in the Tokyo 23
wards (23W) were over 50% higher than in
Yokohama according to data provided by
Tokyo Kantei. As such, when combining these
two metrics, the affordability of Yokohama
becomes apparent (Graph 3). To wit, forresidents of Yokohama, rent accounted
for 16% of taxable income, on average,
in 2019 compared to 20% in the capital.
Surprisingly, this figure was surpassed by
the 22% observed in Osaka city – anothermajor residential hub. In fact, the premiumsof these two cities over Yokohama in 2019of 4.1% and 5.4%, respectively, were at theirhighest in a decade.
For those hoping to buy rather thanlease, the story is somewhat similar. Here,the average price-to-income multiple forsecond-hand condo developments1 as of 2018
in the Tokyo Prefecture stands at around10.5x, whilst in Kanagawa Prefecture, thefigure is closer to 7.5x (Graph 4). To put
these figures into perspective, the national
average is around 5.5x. On the proviso thatmultiples between 6x to 10x have historically
been assumed reasonable, Yokohama
seems relatively more affordable. Indeed,this dynamic looks set to continue, withmeaningful income growth looking unlikely
in the foreseeable future, especially in a post
COVID-19 world.
Meanwhile, a study conducted by SUUMOin March, whereby 7,000 participants wereasked about their ideal station to live near in
the Kanto Region, ranked the city as number
one, ahead of the other top-3 stalwarts:
Ebisu and Kichijoji (both in Tokyo). In fact,
Yokohama has topped the table for threeconsecutive years, whilst it has also beenin the top three since 2015. With further
redevelopments in the pipeline, it would
not be a surprise to see Yokohama retain its
crown once again in 2021.
(Please refer to our Spotlight Report“Tokyo Periphery and Rail Transit” forfurther analysis on the residential market in
the Tokyo periphery).
OFFICE
Along with the modernisation of the areasurrounding the station, the success of theinitial Minato Mirai 21 Project has seen
Yokohama regain its status as an economic
hub. Yet, with multiple eye-catching new
1 Based on the average value of a 70 sq m condo built 10
years ago.

savills.co.jp/research4

Yokohamadevelopments and the significant levelsof demand for Tokyo offices, much of theattention had been stolen, and with goodreason. Corporate profits had been expanding
consistently – particularly in the technology
sector – and, as a result, Grade A office rents
had been trending higher. Meanwhile, facedwith labour shortages, a focus on retaining

talented staff by improving the working
environment had further enhanced theappeal of the modern, open-spaced, highgrade office – a spec found more commonly inTokyo’s C5W. None of this is to say Yokohama
office rents have lagged, however. On anannualised basis, rental growth in Minato
Mirai has actually outpaced the C5W average

GRAPH 5: Grade A Office Rents and Tokyo’s Premium over Yokohama, 2014 toQ1/2020
Minato Mirai Average

C5W Average

Tokyo's Premium (RHS)

100%

2014

2015

2016

2018

Q1

Q3

2019

Q4

Q1

Q2

Q3

Q4

Q1

2017

Q2

60%
Q3

0
Q4

65%

Q1

5,000

Q2

70%

Q3

10,000

Q4

75%

Q1

15,000

Q2

80%

Q3

20,000

Q4

85%

Q1

25,000

Q2

90%

Q3

30,000

Q4

95%

Q1

35,000Q2

JPY PER TSUBO

40,0002020

Source Savills Research & Consultancy

by an additional 2% p.a since 2014. In turn,the capital’s premium has narrowed from justunder 100% to around 75% over the period(Graph 5). Yet, rents remain at an affordable
level, with good potential for further upside –especially compared with the C5W.
With Kanagawa Prefecture’s Keihan
industrial zone long recognised as a major
R&D centre in Japan, nearby Minato Mirai
has also attracted interest as an R&D hub forinternational companies, partly due to theprovision of generous financial incentives.
Starting with the completion of Fuji Xerox
R&D Square in 2010, global players suchas Shiseido and Kyocera have recently
established themselves in the area, bringing
the total number of R&D bases to over 20.
In order to accommodate this growing
demand, therefore, Minato Mirai has been
undergoing large development of late – muchof it owner occupied. In fact, the total GFA
set to come online over the next four years
could eclipse the total witnessed in theprevious decade (Table 2). With much of thisnew supply expected around Shin-Takashima
Station, however, it should have a limited
impact on existing supply. More broadly,
although this surge in office supply presents
a potential headwind, current vacancy rates
are extremely low – contracting from highsof 14% in 2011 to around 0.8% as of Q1/2020.
As such, along with the increased demand,

TABLE 2: Office Supply in Minato Mirai, 2010 to 2024

BUILDING NAME

NEAREST STATIONCOMPLETIONYEAR

GFA (TSUBO)*

Minato Mirai Center Building

Minato Mirai

2010

28,800

Yokohama Mitsui Building

Shin-Takashima

2012

27,300

MM Grand Central Tower

Minato Mirai

2012

34,600

Yokohama i-Mark PlaceShin-Takashima

2014

29,400

Yokohama Nomura Building

Shin-Takashima

201724,800Ocean Gate Minato Mirai

Minato Mirai

2017

16,800Shiseido Global Innovation Center

Shin-Takashima

2019

17,500

Murata Manufacturing MM Inovation Center

Shin-Takashima

2020

18,100

Yokohama Grangate

Shin-Takashima

2020

30,600

Yokohama Gate Tower ProjectShin-Takashima

2021

25,400LG Global R&D Center

Shin-Takashima

2021

11,200Metropolitan Expressway Kanagawa Bureau Development Project

Takashimacho

2021

4,200

MM21 District Block 37 Development Project

Minato Mirai

2023

36,900MM21 District Block 53 Development ProjectShin-Takashima

2024

54,400TOTAL GFA

179,200

180,800

Source City of Yokohama, Savills Research and Consultancy*The GFA relates to the entire building.

5

Yokohama

the rise in office supply should be somewhat
manageable going forward.
In a COVID-19 world, the valuations
given to a previously robust C5W officemarket may instead make Yokohama seem
even more attractive, due to its relative
affordability and proximity to residential
hubs. The pandemic, it would seem, has not
only accelerated the requirement to be able
to work from home, but has also potentiallymade this nascent trend a permanent
part of corporate policy. For instance, in areport published by the Tokyo Metropolitan
Government relating to remote work (394responses), from March to April, the ratioof firms using, or planning to use, workingfrom-home policies more than doubled tojust under 70%. Indeed, with many firms
anticipating the potential cost savings fromhaving the policy in place, and with social
distancing requirements remaining for thetime being, a paradigm shift in the officesector may be emerging. Without the need tocram employees into a large central location
with lofty rents attached, previous plans
to expand office space, especially in theC5W, are, in most cases, being put on ice. In
its stead, a focus on cost effective satellite
offices with easy access from residential
hubs such as Yokohama. Indeed, the deep
discount to Tokyo as well as the “newnormal” in a post-COVID-19 world should
be a recipe for success for this semi-regional
market.
RETAIL
Yokohama is a popular destination for locals
in addition to well over 80 million visitors
per annum, and the resulting level of footfall
has been a boon for retail rents in the main
shopping districts adjacent to the station.

In fact, rental growth has been strong since
2018, with 1F rents in particular exhibiting
exceptional year-on-year change. Whilst
still markedly behind the levels of rent
found in prime retail districts in Tokyo,
such as Ginza, this recent uptick has led toa noticeable narrowing in rents between thetwo cities (Graph 6).
That said, with the prospects of the retailsector intertwined with the outcome of the
COVID-19 pandemic, the immediate outlook
for the sector is certainty unnerving. The
impact from the substantial drop in footfall
following the declaration of the state of
emergency in early April is striking to say
the least. Having previously been delayed tothe end of May, the date at which the newly
completed NEWoMan Yokohama is set toopen its doors is now undecided. Housed in
the retail portion of JR Yokohama Tower, the
10F structure, with around 20,000 tsubo of
GFA, was supposed to be the centrepiece ofthe station redevelopment project but has
instead remained out of operation.
Yet, the relationship with the outbreak
could also provide a tailwind going forward
for this sector. Namely, the emergence ofworking-from-home as a permanent part ofcorporate life could see an added vibrancy
in the city, and not just on weekends.
What’s more, assuming the economic
recovery begins in earnest, the time andmoney usually spent on commuting could
be diverted towards improving work-lifebalance, possibly spilling over into the retailsector. As such, with the facilities currently
available, as well as those in the pipeline, thepotential for Yokohama to emerge as a major
retail hub gives some confidence in the
sector’s longer term prospects.
HOSPITALITY

GRAPH 6: Listed Retail Rents and Tokyo’s Premium over Yokohama, 2010 to 2019

JPY PER TSUBO

60,000Tokyo's Premium* (RHS)

Tokyo 1F

Yokohama 1F

Yokohama Non-1F

Tokyo Non-1F
200%

50,000190%

40,000180%

30,000170%

20,000160%

10,000

150%

0

140%
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source JREI, BAC Urban Projects, Savills Research and Consultancy*Based on overall retail rents, including both 1F and non-1F.

savills.co.jp/research

6

According to the Japan Tourism Agency(JTA), based on a questionnaire provided toinbound visitors, around 8% of respondents
visited Kanagawa Prefecture during theirtrip in 2019. In contrast, Greater Tokyo wasvisited by over 47% of those asked. Hence,with the Tokyo Olympics on the horizon
there was plenty of upside for the city,and in order to capitalise from the surge
in visitors, a significant number of hotel
developments were underway. Unfortunately,
the COVID-19-induced postponement of theTokyo Olympics, as well as the subsequentdecimation of the tourism industry, has dealt
a significant blow. With the recovery of theindustry expected to outlast the pandemic
itself, there are major hurdles going forward.
As for Integrated Resorts (IR), despiteremaining in the running alongside Osaka,
Wakayama and Nagasaki, the prospect of one
opening in Yokohama now appears less clear.
Indeed, the restrictions to movement andthe subsequent drop in revenue have led tooperators shifting their focus from expansion
to survival. What’s more, the recent decision
by Las Vegas Sands – a supporter of Yokohama– to drop its pursuit of a licence due to theinauspicious framework around Japan’s futurecasino industry certainly does not help. All thatbeing said, if an IR were to be built, it could
potentially generate 100,000 jobs and provide
economic benefits of JPY1 trillion, according to
the City of Yokohama.
Nonetheless, despite the gloomy outlook
over the shorter term, the fundamentals in
Yokohama appear relatively stable. For instance,compared to international peers, luxury hotels
are somewhat of a rarity in Japan and, here,
Yokohama is once again positioned to profit.
For that reason, projects such as the recently
completed Intercontinental Yokohama Pier 8, as
well as projects in progress such as The Westin
Hotel, The Kahala and Yokohama Baycourt
Club give a glimmer of hope for the future.
YOUTHFUL YOKOHAMA
The demographic challenges facing Japanas a result of both an aging and shrinking
population is well known. According toforecasts made by the National Institute ofPopulation and Social Security Research in2015, the population is anticipated to shrink
by around 16% between 2015 and 2045. Actual
figures make for slightly better reading,however. Namely, the actual population in
2020, based on provisional data, is around
2% higher than forecasted, whilst the rate of
decline since 2015 is also slightly less severe.
That said, the drop in numbers remains along-lasting issue.
The problems resulting from a shrinking
population notwithstanding, major cities
typically have younger demographics, driven byvarious economic and social factors, including

Yokohama

TABLE 3: The Number of University Students by City, 2019

LOCATION

NO. OF STUDENTS% OF TOTAL

1Tokyo 23W

539,470

38.2%

2

Kyoto City

144,713

10.2%

3

Nagoya City

102,626

7.3%

4

Yokohama City

82,389

5.8%

5Fukuoka City

72,980

5.2%

Total

942,178

66.7%

Source Ministry of Education, Culture, Sports, Science and Technology (MEXT),
Savills Research and Consultancy

GRAPH 7: Actual* and Forecasted Population in Cities of People Aged Between 20-49
and the Share of Those Living in Tokyo and Yokohama vs National, 2015 to 2045F
Yokohama

Tokyo 23W

7MILLIONS OF PEOPLE

6

Current
Estimates

Share of Tokyo and Yokohama vs National Population (RHS)
16%

Forecast
Based on 2015
Census

15%

5

14%

4

13%

3

12%

2

11%

1

10%

0

9%
2015A 2020A 2015E

2020F

2025F 2030F 2035F 2040F 2045F

Source National Institute of Population and Social Security Research, Municipal Data,
Savills Research and Consultancy*These estimates are made by municipalities based on the “Jumin Kihon Daicho” registration system.
Therefore, estimates are subject to change once the 2020 census has been conducted.

migration for employment and educational
opportunities. For instance, come 2045, the
20 to 39 cohort in Tokyo and Yokohama is
forecasted to be around 30% and 10% higher,
respectively, compared to the national average.
As such, aided by these demographic tailwinds,
the outlook for these major cities appear morepositive than first thought.
One factor that may further drive this trend
going forward relates to those even younger
than the aforementioned demographic. With
multiple competitive universities, Kanagawa
Prefecture is an appealing destination foryoung people. Specifically, when looking at the
proportion of students attending universities
located in cities, Yokohama ranks fourth
overall with around a 6% share (Table 3).
Unsurprisingly, Tokyo leads the way with 38%.
With labour shortages to persist even after
the pandemic, the combined pool of well-educated students in these two neighbouring
cities, therefore, appears very attractive
for prospective employers, mitigating theissues of talent acquisition. Subsequently,
if these students end up working in Tokyoor Yokohama, the latter should be strongly
considered as a place to live, given its amenities.
Alternatively, looking a little deeper into
the SUUMO study mentioned above may alsopresent some potential clues on the prospects
for Yokohama. Around 10% of respondents,
all aged between 20 and 49 who live in either
Tokyo or Kanagawa Prefecture, had the stationin their top three. What’s more, two of the five
most popular stations after Yokohama, namely
Meguro and Shinagawa, are located on train
lines between the city and the capital. With
rents in these locations typically at a noticeablepremium, Yokohama should appear an
acceptable substitute for those without deeper

7

pockets.
Meanwhile, when looking at this 20 to 49
demographic for the 23W and Yokohama City
together, this group currently accounts foraround 13% of the national total (Graph 7).
Despite the forecasted number of people inthis age band declining, the share attributed
to the two cities is forecasted to actually
increase to around 15% by 2045. Indeed, with
COVID-19 accelerating the desire for a better
work-life balance, especially in the younger
generation, and if the results of the SUUMO
study are anything to go by, Yokohama has thepotential to maintain its relative youthfulness
going forward, despite the broader population
shrinking.
OUTLOOK
Leading up to the end of 2019, rents had
continued their seemingly unstoppable rise
across most core asset classes in Tokyo, andsubsequently the financial capacity of tenants
had started to be tested. Meanwhile, intensecompetition for assets had also stretchedvaluations in the capital, bringing with itcap rate compression. Amid the upswing,
however, having previously been somewhat
overshadowed by the capital, Yokohama
has re-emerged as a credible and affordable
alternative following the success of its many
redevelopment projects. Whilst COVID-19
may be a turning point for the property
cycle, as well as a key reagent in reshaping
the ideal lifestyle, many of these trends
had emerged before the outbreak, and havesince gained further traction. As such, thesegrowth catalysts, allied with the demographic
tailwinds, should drive Yokohama’s appeal forthe foreseeable future.
That said, Yokohama’s prospects are largely
interwoven with those of Tokyo. Accordingly,
given the presence of various unknowns in the
post-COVID-19 world, there is no guaranteethat the themes discussed above will cometo fruition. Indeed, with many predicting along road to recovery, difficulties along theway are expected. Nonetheless, the soundfundamentals built from the progress madethus far should stand Yokohama in good steadfor the time being.

Tokyo Periphery - Yokohama

For more information about this report, please contact us
Savills Japan

Savills Research

Christian Mancini
CEO, Asia Pacific(Ex. Greater China)+81 3 6777 5150
cmancini@savills.co.jp

Tetsuya Kaneko
Director, Head of Research& Consultancy, Japan+81 3 6777 5192
tkaneko@savills.co.jp

Simon Smith
Senior Director
Asia Pacific+852 2842 4573
ssmith@savills.com.hk

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