Tokyo residential occupancy rates slip to 96.5% in Q2

Analysts expect some slight softening in occupancy rates in the near term.

In a report, Savills revealed that occupancy rates in the Tokyo 23W decreased by 0.4ppts QoQ to 96.5% in Q2/2025, although sit 0.3ppt higher on an annual basis. Similarly, occupancy rates in the C5W dropped marginally by 0.3ppts QoQ and 0.2ppts YoY to 95.8%.

“Indeed, many centrally located wards have seen particularly bullish rental uplifts over the past year, with many asset managers capitalising on the tight demand for central units in the post pandemic period. As such, although occupancy rates are high in any case, the market may continue to see some slight softening in occupancy rates for the meantime,” the report said.

Here’s more from Savills:

In addition to many renters having been priced out of the for-sale condominium market, more companies are keen to bring employees back to their offices and the rate of office participation is at an elevated level, both of which should support firm residential leasing demand within the 23W moving forward. As recent migration statistics suggest, it appears that there has been a slight recalibration of tenant interest, with more demand shifting from central wards towards more affordable outer wards within the 23W, given the recent bullish rental growth.

Overall, steady population growth is anticipated throughout 2025, which should ensure that residential demand remains firm. Among the new residents, foreign nationals have consistently comprised a large proportion. This demographic is notably more likely to rent rather than purchase a residence, which should support renewed demand in the rental residential market moving forward.