Tokyo residential rents slip by 0.2% in Q2

Rents across all submarkets breached pre-pandemic levels.

According to a recent Savills report, following the period of strong rental growth in the previous quarter, which elevated the Tokyo 23W residential leasing market to new highs, the market appears to remain firm in Q2/2024. 

“Though there was some slight variation by submarket, average rents in the wider 23W market were stable overall, dipping by 0.2% QoQ to JPY4,229 per sq m, while rents in the C5W managed to keep following a growth trajectory, reaching a record JPY5,063 per sq m, at a modest quarterly increment of 0.7%,” the report said.

Here’s more from Savills:

Overall, rents among all submarkets in the 23W sit comfortably above their respective pre-pandemic levels and appear poised for further growth. This stability has been underpinned by strong demographic trends during the spring moving season, with a net increase in population of over 65,000 new residents between March and May 2024. 

This was notably larger than that of the previous spring moving season and was likely supported by both the growing normalisation of workstyle trends, as companies in Tokyo increasingly mandate a return to offices, in addition to sustained immigration, with foreign nationals comprising almost a third of this net influx. 

Furthermore, interest in the rental market should continue to be bolstered by demand from residents that have been priced out of the for-sale condominium market, which has witnessed unabated inflation over recent years, largely due to elevated materials, construction, and land prices. 

Overall, Tokyo’s undisputed appeal among residents for its employment, education, and entertainment offerings should underpin further rental growth and improvements in occupancy.