On March 25th, Savills Japan released their Tokyo Residential: Ultra Luxury report. REthink Tokyo has highlighted key excerpts from the original below with the report linked in its entirety at the bottom of this article.
Introduction
Over the next decade, more projects are in store and will continue to reshape the city’s physical and economic landscapes towards 2030 (please refer to our Japan’s Prospects Towards 2030 report).
The ultra-luxury residential segment is expected to evolve further while Tokyo is undergoing this transformation. While the market is still considered a niche one, it is expanding.
Japan is home to one of the largest ultra-high net-worth individual (UHNWI) populations, which provides a strong demand base for the ultra-luxury market.
Tokyo’s Ultra - Luxury Residential Market
Considering the high concentration of UHNWI in Tokyo, it is likely that the demand for ultra-luxury units has always existed, but remained dormant in the face of limited supply. This latent demand began to surface as some supply came to the market.
Additionally, this sector has been buttressed by growing interest from overseas investors. Japan’s resiliency and stable prospects are especially attractive during uncertain times.
New Developments
In 2023, the highly anticipated Toranomon Azabudai project is expected to further propel the growth of the ultra-luxury residential market in Minato with plans to introduce 1,400 residential units in its two main residential towers.
Furthermore, the main 330-metre tower of the project will house 91 hotel-branded residences affiliated with Aman on its top floors. The most expensive unit is rumoured to be on the market for JPY20 billion - easily exceeding the most expensive unit recorded to date.
Another project likely to house ultra-luxury units is the Mita 1-Chome project. The project will be developed by Mitsui Fudosan and Mitsubishi Estate and is expected to be completed in May 2025. The project will feature multiple buildings with over 1,000 residential units.
MARQ Omotesando One, which was developed by BPEA Real Estate, is in Shibuya and was completed in November 2021.
In 2020, The Kita was also built near Kitasando, an area slightly north of Harajuku. The architect of the project is Kengo Kuma, who designed the Japan National Stadium for the Tokyo 2020 Olympics.
By The Kita, Park Court Jingu Kitasando The Tower is also under construction and slated for completion in 2023
Mitsubishi Estate also plans to add about 50 rental residential units on some of the high floors in Torch Tower, which is expected to be the tallest building in Japan after its completion in 2027. The rents for the most expensive units are likely to be well over JPY5 million a month - comparable to other ultra-luxury residences.
Branded Residences
Branded residences are still new in Japan, but the concept is gaining popularity. The highly anticipated opening of Aman Residences Tokyo next year and many other mixed-use developments in the near future that are considered suitable to accommodate ultra-luxury residences have garnered a large amount of interest.
LOFT Niseko, affiliated with YOO, opened in 2014 in Niseko as the first YOO project in Japan, and features four loft-style residential units.
Additionally, Park Hyatt Niseko Hanazono Residences was completed in 2019 and comprises 113 residential units on a 24,000 sq m site in Niseko. Market rumours suggest that a studio of about 70 sq m was priced for about JPY150 million while a three-bedroom of about 150 sq m was priced for about JPY550 million.
Aman Niseko is a wellness resort slated for opening in 2023, which will feature 31 detached residential units along with 30 hotel guestrooms. The property also features multiple restaurants, a spa, and facilities where residents can engage in nature-related activities.
One example of a branded-residence development outside of Niseko is Four Seasons Kyoto, an exclusive property located in Higashiyama, Kyoto. The property opened in October of 2016 and features 57 luxury residential units along with 123 hotel units, a spa, a gym, a pool, as well as a 10,000 sq m Japanese garden. As of March 2022, some units in this project appear to be listed for close to JPY30 million per tsubo.
Outlook
Going forward, the market is likely to keep growing as Tokyo continues to transform through redevelopment. Presently, the two major developers leading the ultra-luxury sector are Mori Building and Mitsui Fudosan.
However, as the market matures and a proof of concept has been established for the sector, the market should become more diverse with more players and products, eventually leading to Tokyo becoming an established market.
Further Reading
Savills Japan Tokyo Residential: Ultra Luxury report (March, 2022)
Savills Japan Prospects Towards 2030 report (November, 2021)
