Tokyo Apartment Market Forecast: Trends to Watch for in 2022

The Real Estate Economic Research Institute (REERI) has released its 2022 forecast for supply and price trends for the new condominium market for the greater Tokyo area, which includes Tokyo and the prefectures of Kanagawa, Chiba, and Saitama.

Below are the key takeaways from the forecast.

Supply in Tokyo Greater Capital Region Forecast to Increase 4.6%

The REERI forecasts that supply will increase YoY in 2022 for the second consecutive year as developers see strong buyer demand amidst still unfolding COVID conditions. About 34,000 newly constructed units are expected to be released for sale next year.

The forecast 2022 rate of growth would be down from the 2021 full year forecast of 19.4% (or about 32,500 units) but if the 2022 forecast is met, it would take supply above the 2019 level of 31,238 apartments. Supply increase is expected to be concentrated in the Tokyo western suburbs, Saitama and Chiba prefectures.

Demand for larger and medium-sized apartments is forecast to be strong, in addition to apartments located outside the city center.

What buyers are interested in

Developers forecast that buyers will continue to be interested in large-scale developments in both the Tokyo 23 Wards and Tokyo bay area. Demand for high-rise “tower mansion” condominium buildings is also likely to lead sales.

Large-scale tower mansion projects are also expected to be released in Saitama and Chiba prefectures to cater to families and working professionals.

Supply by Area

Supply of new apartments in the Tokyo 23 Wards is forecast to decrease by about 1.4% year-on-year to 14,000 units, versus a full-year 2021 forecast of 14,200 units.

  • Tokyo western suburbs: 3,500 newly constructed apartments are forecast (+34.6% YoY)
  • Kanagawa: 7,500 units (-8.5%)
  • Saitama:  4,500 units (+21.6% YoY)
  • Chiba: 4,500 units (+18.4% YoY)

Average sales prices in 2021

From January to November 2021, the average sales price for a newly constructed apartment in greater Tokyo was ¥64,760,000 ($564,000 USD). This was the third time since 1990 that the average sales price was above the ¥60,000,000 mark (the second instance was in 2020).

Here is the breakdown by area for January to November 2021:

  • Tokyo 23 Wards: ¥83,270,000 (+8.0% YoY)
  • Tokyo western suburbs: ¥53,010,000 (-2.9% YoY)
  • Kanagawa: ¥52,810,000 (-2.9% YoY)
  • Saitama: ¥49,020,000 (+7.4% YoY)
  • Chiba: ¥44,810,000 (+2.4% YoY)

Average sales prices by square meter in 2021

  • Greater Tokyo as a whole: ¥968,000 (+4.6% YoY)
  • Tokyo 23 Wards: ¥1,291,000 (+3.2% YoY)
  • Tokyo western suburbs: ¥788,000 (-2.1% YoY)
  • Kanagawa: ¥782,000 (-4.4% YoY)
  • Saitama: ¥708,000 (+6.1% YoY)
  • Chiba: ¥622,000 (+1.8% YoY)

Trends to watch for in 2022

  • Overall, developers see buyers remaining optimistic in 2022.
  • In a continuation of we saw this year, in an environment where more people are working-from-home, a growing segment of buyers are looking to buy in the suburbs but a significant part of the market will continue to be attracted to city-center, high-rise buildings.
  • Changes in the rules for the housing mortgage deduction are forecast to have only a limited affect on homebuyer demand.
  • City-center high-grade properties will likely remain popular, which will continue to push prices upward.
  • However, prices for properties near major stations in the suburbs may see a flattening out.
  • In product development, developers are focusing on energy-saving and ZEH (Zero Energy Housing) condominiums and in-home amenities for people working-from-home.
  • The number of developers in the greater Tokyo area stayed the same in the period from January to November 2021 at 114 companies.

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Source: Real Estate Economic Research Institute, 2022 Tokyo New Condominium Market Forecast (PDF in Japanese)

Lead image: Tokyo city skyline, via iStock 109836843

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