Tokyo Q3 residential occupancy rate dips to 96.1%

Despite the slight occupancy dip, demand remains sound.

Residential occupancy rates saw a dip of 0.4ppts QoQ to 96.1% across Tokyo’s 23 wards according to a Savills report, leading to a slight 0.2ppts decrease in YoY levels. The C5W followed a similar trend with occupancy rates continuing to loosen by 0.3ppts QoQ and 0.4ppts YoY to 95.5%.

“The softening in occupancy appears consistent with historical seasonal patterns as demand remains sound,” the report said.

Here’s more from Savills:

This cyclical trend implies that the latest dip may reflect timing effects linked to lease renewals and relocations. In addition, many asset managers have been prioritising rental uplifts over occupancy, and the market is likely to experience modest occupancy softening for now.

The divergence between rising rents and slightly loosening occupancy in both the C5W and the broader 23W suggests that landlords are exercising greater pricing discipline. Rather than rushing to fill vacant units, many appear willing to tolerate marginally higher vacancy in order to preserve higher rental levels. This strategy reflects confidence that demand remains fundamentally strong and that limited new supply will draw tenants back, even at an elevated price point, in due course. Alternatively, this also implies longer downtime due to labour shortage, especially in the construction sector.

The population of Tokyo is expected to continue its steady growth throughout the year, providing a stable foundation for firm demand in the residential leasing market. Although rising rents in the central wards may be prompting some households to consider more affordable locations, overall inflows remain firm and continue to support the broader market. 

With foreign nationals comprising a notable share of new residents and typically favouring rental accommodation, this demographic should further underpin the resilience of the residential leasing sector, supporting stable occupancy in the months ahead.