What you need to know about Tokyo’s branded residence market

The concept is increasing in popularity despite its novelty.

In a report, Savills said the branded residence market operates predominantly within the prime end of local residential markets, combining the traditional features of ultra-luxury residences, namely privacy, luxurious amenities, and round-the-clock concierge services, among other features, with reputable luxury brand names which can distinguish these properties and help them to command premium prices. 

Here’s more from Savills:

The branded residences market is still new and small in Japan, but the concept is increasing in popularity. The Park Residences at The Ritz-Carlton is recognised as one of the most successful forerunners for rental branded residences in central Tokyo, having penetrated the market nearly two decades ago, and recent developments including Aman Residences Tokyo have further paved the way for the market. 

Looking ahead in 2028, Torch Tower, which will also host Dorchester Collection, is expected to have ultra-luxury residences on its upper floors, with reported monthly rents of JPY5.0 million. Properly executed branded residences can command rental premiums over offices in the same space, and thus present an enticing avenue for owners/ developers to add value. 

Japan is home to a large number of UHNWIs, both domestic and of foreign nationality. Recent years have also shown a growing number of younger members, many of whom have amassed wealth from the IT industry and multiple IPOs, and tend to lean more towards active and urban lifestyles. In this light, branded residences that have options to lease provide both the flexibility, and level of luxury and prestige likely desired by such clientele. 

In addition, Japan’s emergence as a tourist hotspot along with its positioning as a high-end destination would likely attract more pied-a-terre non-residents to the market. The low stock of such residences, together with a large potential pool of tenants and buyers, could prop up significant demand. 

Going forward, the branded residence market will likely continue to see new entrants, and more supply will likely generate more demand. Certainly, the success of each project will depend highly on the developer's and operator’s abilities to establish relationships with high-profile clients, and the delivery of levels of service that can satisfy tenant expectations. 

Luxury units of this calibre are typically on fixed-term leases of two to three years, unlike the traditional leases seen in most of the mid-market. The nature of these leases for branded residences would support more robust rental growth, which could indirectly drive rents up in higher-end spectrum of mid-market residences.