Housing starts in Kyoto drop 13.1% in 2017 as hotel construction overtakes apartments

Housing starts in Kyoto Prefecture saw a year-on-year drop of 13.1% in 2017 to 14,790 units, the second lowest level seen in the past 10 years. This is also the second year in a row to see a decline in new construction.

This has been attributed to a steep rise in the construction of hotels in Kyoto’s city centre, with developers choosing to focus on building hotels rather than apartment buildings. Construction of apartments has halved as a result. The tourism boom and demand for hotels has put pressure on land prices, causing them to reach a level where the land is no longer profitable for an apartment development. 

The most expensive districts in Tokyo to buy a new home or apartment

Tokyo Kantei has issued a ranking of the districts across greater Tokyo based on the average price of a brand new home or apartment in 2017.

Minato Ward

MINATO

In top spot for both lists was Minato ward in central Tokyo where a brand new house had an average price of 120,120,000 Yen (approx. 1.09 million USD) and an average floor area of 106.58 sqm (1,147 sq.ft). A new apartment had an average price of 140,450,000 Yen (approx. 1.28 million USD) and an average size of 75.02 sqm (807 sq.ft).

Tokyo apartment sale prices increase for 67th month

According to REINS, 3,237 second-hand apartments were reported to have sold across greater Tokyo in April, down 15.2% from the previous month but up 2.3% from last year. March is typically the busiest month of the year for apartment sales, so it is normal to see a drop in transactions in the following month. The average sale price was 33,640,000 Yen, down 0.1% from the previous month but up 3.7% from last year. The average price per square meter was 520,400 Yen, down 0.1% from the previous month but up 3.3% from last year. This is the 64th month in a row to see a year-on-year increase in sale prices.

1,679 apartments were sold in the Tokyo metropolitan area, down 15.4% from the previous month but up 4.4% from last year. The average sale price was 41,840,000 Yen, down 1.0% from the previous month but up 2.5% from last year. The average price per square meter was 689,300 Yen, down 1.8% from the previous month but up 1.6% from last year. This is the 67th month in a row to record a year-on-year increase in sale prices.

Price-Earnings Ratios for New Apartments in Tokyo in 2017

According to Tokyo Kantei, the price-earnings ratio (PER) for brand new apartments in the greater Tokyo region was 24.49 in 2017, down from a record high of 28.66 seen in 2016. A PER of 24.49 indicates a gross yield of approximately 4.04%. A PER above 20 will imply a gross yield below 5.00%. In this survey, 90% of locations had PERs of over 20.

The average price of a 70 sqm (753 sq.ft) new apartment in 2017 was 66,840,000 Yen, up 2.9% from 2016, while the average monthly rent was estimated at 224,905 Yen, up 2.5%.

New apartment starts in 2017 reach lowest level in 7 years

Apartment starts in the greater Tokyo area in 2017 reached the lowest level seen in seven years. According to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), apartment starts were 57,591 units, down 12% from 2016. The Ministry cites an early rush by developers to get large-scale projects off the ground in the lead up to the 2020 Olympics and difficulty in securing sites for residential developments as the two contributors to a recent slow down in residential construction.

Japan’s high-rise apartment market from 2018 to 2022 onwards

According to the Real Estate Economic Institute, there are currently 108,757 apartments in 294 high-rise buildings planned for completion across Japan from 2018 onwards. This is an increase of 9 buildings and 2,436 apartments from the previous survey point in March 2017.

73.8% of these apartments are centered in the greater Tokyo area, a 4.8 point decrease from 2017. Tokyo’s 23 wards accounted for a 51.1% share of the nationwide total, a 2.5 point decrease from last year. Chuo ward has the largest forecast supply with 12,514 apartments planned in the coming years, 22.5% of the total. This supply is limited to just 14 buildings, with an average of 894 apartments per building. Minato ward was in second place with 11,401 apartments planned in 33 buildings (an average of 345 apartments per building).