Small vs large residential units: What’s performing better in Tokyo?

Smaller units range from 15-30 sqm whilst larger units range from 45-60sqm.

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 75% 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 major segment of the rental market. As a result, there is a large, stable market for small- to mid-sized units,” the report said.

Here’s more from Savills:

Larger units of the 45-60 sq m size band in the C5W retain a notable premium in terms of average rents over smaller categories. However, average rents for such units contracted by 1.3% QoQ in Q2/2024, causing this premium to shrink over the quarter. Indeed, there was a modest increase in the number of available units in the larger size band, suggesting that such units have somewhat fallen out of favour for the meantime. 

Indeed, with growing rates of office participation, home offices may have become less of a priority for residents. Moreover, larger units that have been rapidly becoming more expensive might appear overpriced.

On the other hand, units in the smaller 15-30 sq m size band and medium 30-45 sq m size band have continued to perform well on a quarterly basis, with average rents increasing by 0.8%, and by 0.4%, respectively. More workers appear to be moving closer to central business districts with the phasing back of flexible work arrangements. 

Moreover, with many young professionals migrating as part of the spring moving season, demand for cost-effective smaller units nearer to their places of work appears to have become particularly strong, as demonstrated by the nearly 10% drop in the number of available smaller units over the quarter. 

Overall, the demand for units of all size bands in the C5W remains strong and should be bolstered by both the phasing back of flexible work arrangements in addition to multiple mixed-use redevelopment projects that should improve the liveability of Tokyo’s central wards.