Tokyo mid-market residential rents up 3.5% in Q4

In the central five wards, rents grew by 4%.

According to a recent Savills report, average mid-market rents in the 23W surpassed pre-pandemic levels, witnessing a moderate increment of 0.8% QoQ and 3.5% YoY to JPY4,071 per sq m in Q4/2023. 

“A closer look at the figures reveals that annual increments appear slightly inflated due to the trough experienced in Q4/2022 that was rooted in significant uptakes of brand new units with above-average rents,” the report said.

Here’s more from Savills:

Indeed, when compared to Q4/2021, the overall compounded annual growth rate was a steady 1.2%, which is a sign of a stable upward trend in mid-market rents. In addition, all constituent submarkets of the 23W experienced population growth between September and November, predominantly driven by the influx of foreign nationals. These positive migration trends have supported firm residential demand in the market. 

Average rents in the C5W increased notably, rising by 0.7% QoQ and 4.0% YoY to JPY4,920 per sq m, with the large annual increment stemming largely from the Q4/2022 trough. Looking at the ward level, most wards in the C5W experienced moderate rental increments over the quarter. 

However, Minato saw the largest quarterly contraction, decreasing by 1.7% QoQ from the highs observed in the previous quarter that arose due to the addition of expensive newly-built units to the market. Despite the contraction in rents over the quarter, annual growth stood at 5.2% in Minato, which was the largest among the constituent wards of the C5W, and reinforces the submarket’s reputation as a prime residential hub within Tokyo. 

New developments such as Azabudai Hills add further momentum to the ward. Furthermore, greater levels of office attendance should continue to enhance the C5W’s position as a residential area, appealing particularly to young professionals who have benefited from recent strong wage growth and who prefer to live closer to their workplaces in central business districts.