Prices of large apartments in Tokyo fall in second half of 2011

The Japan Real Estate Institute (JREI) published their “Residential Market Index” report on price movements for apartments in Tokyo’s 23 wards for the first half of 2011.

According to the data, the prices of both new and old large* and standard-sized* apartments in Tokyo’s central 5 wards (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) have started to fall, with the prices of large apartments falling by as much as 17% from the previous period. Meanwhile, the average price of brand new small-scale* apartments increased by 2%.

Across all of Tokyo’s 23 wards, the average prices for new and old apartments has fallen, with large apartment seeing the biggest fall. JREI attributed this to the March 11 Tohoku disaster.

Large apartments are over 80 sqm (860 sqft), standard apartments are between 40 ~ 80 sqm (430 ~ 860 sqft) and small apartments are below 40 sqm (430 sqft).

Average rent falls by as much as 3.1%

The average rent for a large apartment (over 80sqm) fell between 2.6 ~ 3.1% in central Tokyo. The average rent for a large apartment ranged between 4,222 ~ 4,804 Yen/sqm/month, which means a 100 sqm (1076 sqft) apartment would have an average rent of 422,200 ~ 480,400 Yen/month.

Small apartments under 40sqm in central Tokyo were the only ones that saw an increase in the average rent compared to the previous period. The price of small apartments, both new and old, increased by 1.4%.

Rental yields show positive growth

The rental return increased for most apartment types. The average annual yield for a small apartment in central Tokyo ranges between 5 ~ 6.4%. The average gross yield for a brand new large apartment in central Tokyo was 4.6%, and 6.7% for an older apartment. Average yields for large apartments in central Tokyo have fluctuated wildly in the past, varying from a high of 8% pa in the first half of 2006 to as low as 3.5% in the second half of 2007.

Sources:
The Shinken Housing, September 14, 2011.
The Japan Real Estate Institute (http://www.reinet.or.jp/)

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