Rent growth was solid in both the C5W and the 23W, with the latter leading the way over the quarter and year. That said, given current market conditions, growth looks likely to pause until the impact of COVID-19 becomes clearer.
- Rent growth in the Tokyo 23 wards (23W) was solid during Q1/2020. Rents now stand at JPY4,155 per sq m – an increase of 2.7% quarter-on-quarter (QoQ) and 5.8% year-on-year (YoY).
- Average mid-market rents in the central five wards (C5W) continued their ascent towards JPY5,000. They are now at JPY4,928 per sq m after growth of 1.8% QoQ and 5.4% YoY.
- The C5W saw its premium over the 23W average contract to around 19%. Elsewhere, discounts widened in most other submarkets.
- Minato, in the C5W, was the top performer this quarter following growth of 5.6% QoQ. Otherwise, over the year, Kita impressed, with rents surging 11.6% YoY.
- Units in the 15-30 sq m size band still represent the majority of listings in the 23W. Yet, the larger units (45-60 sq m) have seen the strongest rent growth over the year, perhaps because of the growing demand from families.
- Average occupancy across the 23W and C5W rose in Q1/2020. Adachi is now the only ward in the 23W to have close to no vacancy.
- Apartment price growth shows little sign of abating. This phenomenon, as well as the current high level of rents, appears to have weighed on the number of tenants relocating. As such, occupancy should remain high, though further rent growth may be more limited.