Large apartments in Tokyo record highest rental growth of 4.4% in Q4 | Real Estate Asia
, Japan

Large apartments in Tokyo record highest rental growth of 4.4% in Q4

Apartments measuring 45-60 sqm maintained their premium over the smaller ones.

According to a Savills report, Tokyo’s rental market is principally made up of compact single-occupier units, typically less than 45 sq m (13.6 tsubo) in size. Such units can often make up as much as 70% or more of the 23W area’s rental listings.

Unlike Western major global cities such as New York and London, house or apartment sharing does not form a meaningful segment of the rental market. As a result, there is a large, stable market for small- to mid-sized units.

Here’s more from Savills:

The larger 45-60 sq m size band in the C5W experienced the highest increase of 4.4% QoQ in average rents, maintaining its premium over its smaller counterparts. The medium 30-45 sq m size band and the smaller 15-30 sq m size band, priced at similar levels, recorded rental increases of 2.2% QoQ and 1.0% QoQ, respectively. The larger 45-60 sq m size band overall retains some rental premium over its smaller counterparts, while the 15-30 sq m and 30-45 sq m size bands have moved mostly in tandem.

Overall, larger units in the 45-60 sq m size band appear to remain popular, likely driven by demand from employees in companies with established hybrid work arrangements who prefer slightly larger spaces to accommodate home office setups, and families that remain priced out of the expensive for-sale market. Furthermore, a majority of rental housing stock in the C5W has typically been geared toward single occupiers, making larger units scarcer overall.

At the same time, it appears that some developers have caught on to this trend and look to increase the average size of rental units. Indeed, in 2023, smaller rental units less than 30 sq m in the C5W only comprised 10% of housing starts, which is considerably less than the previous 5-year average of 18%. As such, with more supply of comparatively larger units expected to enter the market, this premium could possibly narrow.

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