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The common promoting worth of a newly constructed condominium in higher Tokyo reached ¥63,600,000 ($490,000 USD) in FY2021, exceeding asset bubble period highs and the best ever recorded by the Real Estate Economic Research Institute. The common worth per sq. meter was additionally a report excessive, at ¥953,000 per sq. meter.

Listed below are the opposite key takeaways from the REEI’s FY2021 market traits report for newly constructed condominiums within the Tokyo metropolitan space. The report covers the interval from April 2021 to March 2022

Builders in higher Tokyo launched 32,872 items on the market, a rise of 13.2% in comparison with FY2020. This was the primary time that the variety of items has exceeded the the 30,000 mark since 2018; and an enormous soar in comparison with 2020, which builders put the brakes on gross sales actions in response to the pandemic. In 2020, solely 29,032 items had been launched on the market.

The contract fee for FY2021 was additionally robust, coming in at 72.9%, the primary time that the contract fee has been within the 70% vary since FY 2015. The contract fee is the variety of items contracted on the market divided by the variety of items provided on the market. Seventy p.c is taken into account the dividing line between a vendor’s and purchaser’s market.

Looking behind the headline numbers, listed here are a number of factors value noting concerning the underlying numbers.

The Tokyo 23 Wards did many of the heavy lifting

Whereas it’s true that common gross sales costs for all the metropolitan area have reached a brand new excessive, it’s vital to know that by area, the Tokyo 23 Wards have an amazing affect on the general gross sales worth. On common about 40% of items launched on the market within the metro area are situated within the Tokyo 23 Wards. Right here is the breakdown of common gross sales costs by prefecture within the final seven years:

The common gross sales worth within the Tokyo 23 Wards in FY2021 was additionally 32.8% increased than the common worth for all the metro area.

The Tokyo western suburban cities and Kanagawa prefecture really had decrease common gross sales costs in FY2021 than FY 2018, in addition to having fallen versus FY2020. Chiba prefecture additionally fell versus the earlier 12 months.

Right here is how worth development appeared by prefecture on a per sq. meter-basis for the final seven years:

In FY2021, the per sq. meter worth of a brand new condominium offered within the Tokyo 23 Wards rose 11.7% versus the earlier 12 months. Saitama additionally noticed robust per meter worth development, up 7.8%. Each different sub-region noticed falling costs on a per sq. meter-basis, however total the higher Tokyo area was up 6.1% in FY2021 versus the earlier 12 months.

The share change within the common gross sales worth per sq. meter versus FY2015 was additionally spectacular, with the common worth for the higher Tokyo area up 20.2% for the interval.

Common gross sales worth change per sqm in FY2021 v FY2015

Tokyo 23 Wards 30.7%
Tokyo Western Suburbs 16.1%
Kanagawa Prefecture 9.6%
Saitama Prefecture 23.3%
Chiba Prefecture 24.2%
Better Tokyo Area 20.2%

Demand was robust throughout all prefectures

Each prefecture had a contract fee above 70%, indicating a sellers’ market, with demand exceeding provide. The contract fee in Chiba was near hitting 80%. Whilst extra builders are constructing within the prefecture in response to city redevelopment initiatives, rising land costs in central Tokyo, and a shift to individuals shifting to the suburbs, there’s nonetheless not adequate stock to satisfy demand.

FY2021 Contract Price Change v. FY2020
Tokyo 23 Wards 72.0% Up 3.4 Factors
Tokyo Western Suburbs 73.7% Up 24.5 Factors
Kanagawa Prefecture 72.1% Up 2.2 Factors
Saitama Prefecture 70.2% Up 7.1 Factors
Chiba Prefecture 79.8% Up 1.7 Factors
Better Tokyo Area 72.9% Up 5.2 Factors

Tight provide within the Tokyo metro area and the probability of ongoing traditionally low mortgage charges implies that purchaser demand will probably stay buoyant this 12 months. If that’s the case, there appears to be a powerful probability of continued worth appreciation.

Supply: REEI, FY2021 market traits report for newly constructed condominiums within the Tokyo metropolitan space (PDF in Japanese)

Lead picture: Sundown in Shinjuku through iStock 594936528

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