Tokyo residential asset managers prioritise rental increases over filling vacancies

Occupancy rates in 23W dipped to 96.8% in Q1.

According to a Savills report, residential occupancy rates in Tokyo 23W increased by 0.3ppts QoQ to 96.8% in Q1/2025, while declining by 0.4ppts on an annual basis. Occupancy rates in the C5W remained flat over the quarter while dipping by 0.9ppts YoY to 96.0%.

“While the change in occupancy rates is small, and properties are generally close to full occupancy, asset managers appear to be in no rush to fill vacancies, instead prioritising rental increases amid a strengthening rental market. The tight demand-supply conditions should support further improvements to occupancy across all submarkets moving forward,” the report said.

Here’s more from Savills:

Strong wage growth should continue to support rental demand, with 2024 seeing the highest increase in wages in three decades and 2025 expected to continue this trend.  

Moreover, foreign nationals have and will continue to comprise a growing proportion of net migration in the Tokyo 23W, and should drive residential rental demand, given the higher tendency of this demographic to rent.

Overall, steady population growth is expected to continue in 2025 and beyond, especially with the upcoming spring moving season, and occupancy should see improvements looking ahead.