Tokyo residential rental growth and occupancy to remain stable through 2025

Find out what the key market drivers will be.

According to a Savills report, the Tokyo 23W residential market continued to display healthy momentum in Q3/2025. Average rents rose across all submarkets in Q3/2025, spearheaded by the Outer and Inner East submarkets.

“The seasonal dip in occupancy rates appears consistent with historical lease renewal patterns, and the willingness of landlords to maintain rental levels at the expense of marginally higher vacancy suggests confidence that demand will remain firm,” the report added.

Here’s more from Savills:

Strong net migration over the first three quarters of 2025, with inflows on track to match 2024 levels, continues to underpin leasing demand, and the steady inflow of foreign nationals is adding to this resilience.

Prices of for-sale condominiums remain high due to rising construction and land cost pressures. According to the Real Estate Economic Institute, 8,275 new condominium units came to market in the 23W in 2024, which is about 32% lower than the five-year average between 2019 and 2023. The number of new units is likely to continue to dwindle, with the first half of 2025 recording 2,964 new units, 11% lower than the same period of the previous year.

Furthermore, the average price of new condominium units has been on an upward trend, and the 2025 average price appears to be on track to hit an all-time high. With more residents likely to be priced out of the for-sale condominium market, more people are likely to rent than to buy, contributing to the solid demand of the rental-market.

Elevated borrowing costs are also likely to further rise with potential future policy rate hikes in the near future. These factors combined could redirect more prospective homeowners towards the rental market, sustaining elevated demand for rental accommodations across the 23W.

Going forward, Tokyo’s demographic fundamentals should continue to provide a firm base for the residential leasing market. Although affordability concerns are beginning to push more residents, especially younger households, further outwards, this redistribution of demand may serve to spread rental growth more evenly across the metropolitan area rather than erode overall strength.

With inbound foreign nationals expected to remain a significant driver of leasing activity, and landlords maintaining pricing discipline in a supply-constrained environment, the Tokyo 23W residential market is likely to see sustained rental growth and stable occupancy through the remainder of 2025.