Tokyo mid-market residential rents up 0.1% in Q3

In the central five wards, rents grew by 1.8%.

Average mid-market asking rents in Tokyo’s 23 wards (23W) have experienced a slight uptick from the previous quarter, by 0.1% QoQ to JPY4,039 per sq m in Q3/2023, according to a Savills report. 

Despite witnessing a mild decline of 0.3% YoY, average rents are effectively on par with the pre-pandemic period in 2019, albeit still slightly lower than the pre-pandemic peak. 

Here’s more from Savills:

In terms of population, the 23W registered a positive increment of around 14,000 residents between June and August, mostly comprising foreign nationals, which should support firm residential demand in the 23W market. 

Looking ahead, the population of the 23W is likely to continue increasing as major developments and infrastructure improvements make the city an increasingly attractive place to live, suggesting rosier prospects for central Tokyo overall.

Average asking rents in the central five wards (C5W) have increased by 1.8% QoQ and 0.6% YoY to JPY4,885 per sq m. At the ward level, Chuo, Minato and Chiyoda saw rental increments of 3.7%, 3.6% and 2.8% QoQ, respectively, partially due to a number of new, expensive units released to the market over the quarter. 

On an annual basis, Minato saw the most prominent uptick, increasing by 5.2% YoY, while Chiyoda witnessed the largest contraction at 3.3% YoY, this was from its peak in the same quarter last year. Net-migration into the C5W continues to remain positive, reaching around 2,300 between June and August, which is 13% higher than that of the same period in 2019, although it should be noted that foreign migration is the primary driver of this. 

Overall, the C5W remains a popular choice for high income locals and foreign expatriates, and the upcoming pipeline of major developments looks to improve the attractiveness and liveability of the area. Furthermore, recent notable wage growth among young professionals will also support residential leasing demand going forward.