Developers in Tokyo are focussing on sales for current stock as the pipeline of new apartments for sale dried up across greater Tokyo in July, sinking to almost the lowest level in 43 years.

At a Glance:

• Tokyo’s supply of new apartments for sale fell to an almost 43 year low in July.
• The average price for a new apartment across Tokyo’s 23 wards, fell to just JPY 65,400,000, a drop of 10.0% from the same time last year.
• According to Japan Property Central, the dwindling figures reflect developers focusing on shifting their existing stock ahead of Autumn projects.

According to Real Estate Economic Institute, a total of 1,932 apartments were released for sale in July, down 35.3% from last year and close to the record low of 1,571 of July 1976.

In an age of easy monetary policy, rising labour costs and scarce land supply, developers are now looking at an average new apartment sale price of JPY 56,760,000, a drop of 8.3% from last year.

Shifting inventory

According to Japan Property Central, the dwindling figures reflect a renewed focus for developers on shifting their existing stock before some of the planned large-scale projects going on sale heading into winter reinvigorate supply.

The average price per square meter was JPY 1,067,000, down 6.9%, while the contract ratio was 66.4%. 

The contract ratio for apartments priced over JPY 100 million was 82.2%.

At the same time, the average price of Tokyo’s new condominiums fell 1.65% y-o-y in Q2 2019, a landmark slide from growth of 9.71% a year earlier, new data from the Land Institute of Japan shows. 

The Nikkei Asia Review reports that prices for new condos in the greater Tokyo area last year averaged JPY 2.87 million per ‘tsubo’ - 3.3 square meters.

While property prices have been rising sharply over the last few years, as previously reported by REthink Tokyo, rich veins of opportunity still exist across  many of Tokyo’s 23 wards, where the average price was just JPY 65,400,000, a fall of 10.0% from last year.

A confidence takeover

Confidence in the sector remains strong despite the fluctuations in top end condominium values.

On Sunday, the very first hostile takeover in Japan’s $US130 billion real estate investment trust sector saw Star Asia acquire $US 300 million Sakura Sogo Reit Investment, a move the Financial Times described as “stunning.”

Shibuya Ward, the second most expensive ward in Tokyo after Minato, remains a potential sweet spot for investors.

“Property prices may be steep in Shibuya, but if you can get hold of a place, chances are that the returns on it will be high.”

Source: Japan Property Central, Real Estate Economic Institute, Land Institute of Japan, Nikkei Asia Review

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