Rents have posted a slight decline for a second consecutive quarter, though occupancy remains at a high level.
- Rents in the Tokyo 23 wards (23W) saw a slight pullback during Q3/2020, now standing at JPY4,076 per sq m – a decrease of 1.5% quarter-on-quarter (QoQ), but still 0.8% higher year-on-year (YoY).
- Average mid-market rents in the central five wards (C5W) also fell – albeit at a slower pace. Rents for Tokyo’s top submarket are now at JPY4,835 per sq m after a decline of 0.5% QoQ, though rents are still up 1.8% YoY.
- The C5W saw its premium over the 23W average expand back to around 18.5%, with only the South and Outer East submarkets outperforming.
- At the ward level, Edogawa marked the strongest growth this quarter, posting an 8.7% QoQ gain. Shibuya took the top spot on an annual basis, displaying robust growth of 8.0% YoY.
- In the C5W, average rents for units in the 15-30 sq m size band remained flat, while units in the 45-60 sq m size band or with 2-to-3 bedroom layouts saw growth.
- After suffering a mild blow during the April and May lockdown, the average occupancy rate for the 23W recovered slightly, rising 0.2 percentage points (ppts) QoQ to 96.6% as of Q3/2020. That said, occupancy in the C5W has contracted once again, falling 1.4ppts QoQ to 94.7% - its lowest level since 2014.
- With work-from-home arrangements remaining the norm, there are indications that preferences for unit type are undergoing a shift, as more residents are prioritising spaciousness over location.