Tokyo C5W residential rents rise for fifth straight quarter in Q3

Rents grew by 5.2% to reach new highs during the quarter.

The Tokyo 23W residential leasing market continues on its path of growth according to a Savills report, with average mid-market rents surpassing previous highs observed in Q1/2024, following a slight dip in the previous quarter. 

Average mid-market rents in the 23W climbed by 1.2% QoQ and 5.9% YoY to JPY4,278 per sq m, with a majority of wards recording quarterly rental growth, and all wards seeing annual growth. 

Here’s more from Savills:

Average rents in the C5W strengthened for a fifth consecutive quarter, reaching new highs with a 1.5% QoQ and 5.2% YoY increase to JPY5,137 per sq m. Net migration into the C5W remains positive, with a net increment of 2,500 residents between June and August 2024. The rental gap between the C5W and 23W widened nominally in Q3/2024 to 19.5%, albeit remaining slightly below 2023 levels. 

At the ward level, Shinjuku was the strongest performer, increasing by 2.7% QoQ. Average rents in Chiyoda, Shibuya and Chuo also saw increments of 2.3% QoQ, 2.2% QoQ and 1.3% QoQ, respectively. Conversely, rents in Minato contracted by 0.9% QoQ, although it still possesses the highest average rents among the central wards by a considerable margin. 

Average rents in the South submarket increased moderately by 1.6% QoQ and 5.3% YoY to JPY4,376 per sq m. Setagaya saw the largest quarterly increase of 4.1% while rents in Shinagawa contracted by 0.9% QoQ. In the Inner North submarket, average rents climbed by 2.0% QoQ and 5.6% YoY to JPY4,395 per sq m, evenly spread out between Toshima and Bunkyo. 

The Inner East submarket grew by 1.5% QoQ and 6.7% YoY, reaching JPY4,166 per sq m. While rental growth was observed in all three constituent wards, Koto achieved the largest quarterly gain of 2.0%. Average rents in the West submarket experienced marginal growth of 0.2% QoQ and 3.3% YoY to JPY3,878 per sq m. Suginami rents grew by 1.6% QoQ, while Nakano and Nerima both contracted 0.6% QoQ, although still showing growth on an annual basis. 

Average rents in the Outer North submarket witnessed growth of 2.3% QoQ and 7.2% YoY to JPY3,782 per sq m. Itabashi and Kita both observed an increase of 3.2% QoQ and 1.6% QoQ, respectively. The Outer East submarket saw an increase of 0.6% QoQ and 5.8% YoY to JPY3,510 per sq m. Arakawa and Katsushika experienced growth of 1.2% QoQ and 1.0% QoQ, respectively, while the other constituent wards recorded marginal growth over the quarter.

Note: In order to illustrate trends in the central Tokyo residential market, Savills has segmented Tokyo’s 23 wards (23W) into seven distinct geographical areas: Central (or “central five wards”), South, West, North (Inner and Outer) and East (Inner and Outer).