Rents and net migration continue to perform well backed by consistent wage growth.
- Average rents in the Tokyo 23 wards (23W) strengthened by 1.2% quarter-on-quarter (QoQ) and 5.9% year-on-year (YoY), reaching JPY4,278 per sq m.
- Similarly, rents in the central five wards (C5W) increased by 1.5% QoQ and 5.2% YoY to JPY5,137 per sq m.
- The C5W rental premium over the 23W average rose 0.3 percentage points (ppts) QoQ to 19.5%, slightly lower than the two preceding years.
- In the C5W, Shinjuku saw the largest rental increment of 2.7% QoQ while Minato experienced a 0.9% QoQ correction. All other wards displayed quarterly increases, while annual rental growth was recorded across the entire C5W.
- The smallest 15-30 sq m size band saw the largest increase of 2.5% QoQ, while units in the largest 45-60 sq m size band experienced a 0.3% QoQ contraction, narrowing the rental gap between larger and smaller units in Tokyo.
- Average occupancy rates in the 23W stayed flat over the quarter at 96.2%, while the C5W saw a slight dip of 0.2ppts QoQ to 95.8%.
- Japan’s branded residential market is expected to rapidly grow due to heightened demand from ultra-high-net-worth individuals (UHNWIs), and evolving market dynamics.