Tokyo residential occupancy rates hit 96.6% in Q4

Occupancy rates are high but are still short of pre-Covid levels.

Occupancy rates in the Tokyo 23W improved slightly to 96.6% in Q4 2022, increasing 0.1ppts QoQ. Overall, Savills says occupancy levels are high, although they are still slightly lower than the high levels observed before the pandemic. Nonetheless, they have been gradually improving since the pandemic has progressed to an endemic state. 

Specifically, occupancy rates in Tokyo 23W are 0.5ppts higher than the same period in 2021, and 0.8ppts higher than in 2020. 

Here’s more from Savills:

Occupancy rates in the C5W observed a similar trend, increasing 0.2ppts over the quarter to 96.2%. Likewise, they have also improved over the past two years, and are 0.6ppts and 1.8ppts higher than the same period in 2021 and 2020, respectively. Meanwhile, occupancy rates in the South saw a slight downtick over the quarter, while the North and West saw a slight uptick. The East also saw a slight downtick, after the large increment in the previous quarter. 

Going forward, occupancy rates should remain stable as the population of the 23W should continue to grow on the back of some foreign nationals moving to Japan. Indeed, the high occupancy rates of J-REIT properties and quick absorption of new units on the market suggest that there is greater demand for quality units in the 23W. 

Nonetheless, remote work policies will likely remain in place, and this will have an effect on residential choices as some might feel less need to move to more central locations, especially with the inflationary environment present. Overall, while the market should improve steadily, it may not reach the recent peak observed in 2020 soon.