Market Trends of Japan Luxury Residential Real Estate Industry
This section covers the major market trends shaping the Japan Luxury Residential Real Estate Market according to our research experts:
High Concentration of UHNWI in Tokyo Driving the Sales of Luxury Homes
Considering the high concentration of Ultra High Net-Worth Individuals (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.
In October 2021, sales started on a luxury project not far from Shibuya Station, with 13 apartments released for sale. The most expensive apartment was priced at almost 600 million Yen (approx. USD 5.3 million), or around 3.6 million Yen per square meter (USD 2,950/sq.ft). The sales office has already received over 1,200 inquiries. In Chiyoda Ward, another developer released a new project for sale back in January 2021, where the average apartment price was over 200 million Yen (USD 1.76 million). Half of the apartments had sold out in the first six months.
It's not just new apartments that are seeing an uptick in demand, with second-hand sales over 100 million Yen reaching new highs. According to the Real Estate Information Network System (REINS), apartments priced over JPY 100 million represented 5.9% of all transactions in the Tokyo metropolitan area in the third quarter of 2021, up from a 4.2% share in 2020 and a 2.1% share for the same period in 2016. Quarterly transactions in 2020 are double or even triple what they were five years ago.
New Developments Propelling the Growth of Ultra-luxury Residential Market
In 2023, the highly anticipated Toranomon Azabudai Project is expected to 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-meter tower of the project will house 91 hotel-branded residences affiliated with Aman on its top floors. The most expensive unit is rumored to be on the market for JPY 20 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.
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 JPY 5 million a month - comparable to other ultra-luxury residences.
