Tokyo central five wards’ residential rent premium hits a record 20.1%

The premium seems to be on an upward trajectory.

In a recent report, Savills said average residential rents in the Tokyo 23W experienced moderate growth overall in Q4/2023, amounting to a steady rebound from a modest trough in Q4/2022, with a majority of wards seeing rental increments, particularly on an annual basis. 

The overall market sentiment continues to improve as a growing number of people are returning to Tokyo, fuelled partly by a greater rate of in-person office attendance generally mandated by companies in the post-pandemic era. 

Here’s more from Savills:

Net migration into the 23W throughout September and November 2023 surpassed 21,000 people, which is around 45% higher than the level of migration over the same period in 2019 before the pandemic. The foreign population increased by about 20,000 people, which is more than double the figure recorded during the same period in 2019. 

On the other hand, the net migration of Japanese nationals remains lacklustre following the peak spring moving season, with an increase of only 1,000 people recorded, around one-fifth of 2019 figures. While net migration has recovered, its constitution appears to be considerably different than in pre-pandemic times. 

The C5W rental premium over the 23W average stands at 20.1%, hitting a historical peak, and appears to be on an upward trajectory. High-income professionals who have benefitted from recent wage growth and the tight labour market will be increasingly drawn to live closer to their workplaces in central areas. 

The C5W has upheld its reputation as a premier location to live, with the recent opening of the large-scale Azabudai Hills development, which houses Aman Residences Tokyo, further transforming the urban landscape of central Tokyo and enhancing its competitiveness with other global cities.