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  • Writer's pictureAdam German

Tokyo 23 ward average new condo prices surpass 100 million yen for first time ever

On January 25th, the Nikkei Shimbun reported on the accelerating surge in newly built condominium prices. 


Citing Tokyo's Real Estate Economic Research Institute data, also released on the 25th, which stated the average 2023 price in the 23 wards for a brand new condo reached a historic 114.83 million yen, surpassing 100 million yen for the first time since prices started being tracked in 1974, marking a 39.4% Year-on-Year (YoY) increase. 


Rising land and construction costs are driving up selling prices. Major developers like Nomura Real Estate are shifting supply to suburban areas where sales are anticipated even at higher prices.


In the Greater Tokyo Area (Tokyo, Kanagawa, Saitama and Chiba collectively), the average price rose by 28.8%, reaching 81.01 million yen. 


The number of units released fell to a level not seen since 1992, decreasing by 9.1% compared to the previous year to 26,886 units.


Over the past five years, prices in Tokyo's 23 wards surged by 60.8%, standing out compared to Kanagawa Prefecture's 11.2% and Saitama Prefecture's 13.1%.


The first-month contract rate in Tokyo's 23 wards surpassed the favorable indicator of 70% for the first time in two years, reaching 71%. 

First-month contract rate refers to the number of new condos sold in a development during the first phase of sales, not to be confused with the total number of units in the building.  A first-month contract rate above 70% is considered a healthy real estate market.

In contrast, Kanagawa Prefecture (68.5%) and Saitama Prefecture (61%) fell below 2022’s rates. 


Matsuda Tadashi, Senior Chief Researcher at the Real Estate Economic Research Institute, explains, "Due to the surge in prices, some regions are experiencing a slowdown in demand, such as an extended period from listing to full sales."


In central areas, high-priced properties targeting affluent individuals are appearing one after another. Mitsui Fudosan Residential's 40-story high-rise condominium, Park Tower Nishi Shinjuku, released in April of 2023, sold all 280 units within the same year, with an average price per unit of around 140 million yen.


Nomura Real Estate established a specialized department in 2022 to handle ultra-luxury properties. In terms of product design, the company is considering the sale of properties that introduce services for high-income individuals, such as concierge and valet parking provided by attendants.


Tokyu Real Estate opened a sales office in Tokyo's Omotesando at the end of September 2023, targeting high-priced condominiums in central Tokyo. They plan to handle four properties within the fiscal year, including Branz Jiyugaoka, where the average price exceeds 200 million yen.


Despite support from low-interest rates, even dual-income couples with a household income exceeding 10 million yen find it challenging to make a purchase. 


Yoshiwa Funakubo of Mitsubishi UFJ Trust Bank stated, "Even in the suburbs, areas with easy access to the city center are experiencing price increases, and the purchase of new condominiums is becoming a luxury."


Source:

Nikkei Shimbun (Japanese only; paywalled)

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