The average price of new condominiums sold in greater Tokyo hit near record levels in 2017, with developers significantly increasing their offerings of upscale units priced at 100 million yen or higher.
This is according to a recently released report by the Real Estate Economic Institute (in Japanese), which found that the average price of newly constructed apartments released for sale in the Tokyo metropolitan area in 2017 jumped to ¥59.08 million ($535,000), a year-on-year increase of 7.6%, and the highest level since 1990 (during the asset bubble years).
The record average sale price was set in 1990 at ¥61.23 million. However, unlike the bubble years, dramatic price increases have been concentrated in central Tokyo areas and re-development projects near major train hubs.
There were 35,898 new units put up for sale in greater Tokyo last year, a slight year-on-year increase of 0.4%, and the first increase in four years. Eastern and northern areas of Tokyo, especially, saw apartments released for sale.
This data covers newly constructed apartments offered for sale in the Tokyo metropolitan area, which includes Tokyo and the surrounding prefectures of Chiba, Saitama, and Kanagawa.
Bullish or Bearish?
The contract ratio (the proportion of units sold to the number offered for sale) was 68.1%, failing to reach the 70% benchmark in the greater Tokyo area. The 70% figure is considered the dividing line between a bear and bull market. In metropolitan Tokyo, the contract ratio has been in the sixties for the last two years. However, the contract ratio did exceed 70% in central Tokyo and Kanagawa prefecture.
The contract ratio was between 50% and 60% in suburban areas of Tokyo and Saitama Prefecture. It is thought that potential buyers found asking prices beyond their reach.
Number of High-end Units Surge
One key takeaway from the data is the number of units being offered at 100 million yen ($907,000) or above.
In sought after areas like central Tokyo and Yokohama, there were 1,928 units put on the market that were priced at 100 million yen or more. This was a year-on-year increase of 52.4%.
The previous record was set in 1990, when there were 3,079 units released for sale at this price point.
The most expensive unit sold in 2017 was an apartment in the Park Court Aoyama the Tower development (pictured in the lead photo), which was priced at 1.5 billion yen (13.6 million USD). With an exclusive use space of 234.04-sqm, this unit sold for 6,409,000 JPY per square meter.
The Park Court Aoyama the Tower is slated to be one of the most luxurious high-rise condo buildings in central Tokyo when it is completed this year. The 26-story building, with a total of 163 units, is situated in an exclusive location in Minami Aoyama in Minato ward, near Aoyama Itchome station. It has ultra high-end amenities including floor-to-ceiling windows, an infinity pool with a jet bath, movie screening room, and a sky lounge on the 25th-floor.
Competition in Central Areas
One of the causes behind the surge in highly priced units is the tough competition for land in central Tokyo neighborhoods, where developers have to compete with hotels and other businesses for land. Apparently, based on last year’s numbers, buyers are more than willing to snap up these upper end units.
It is expected that developers will release about 38,000 new units for sale in 2018, which would be a year-on-year increase of 5.0%.
Top photo: CGI rendering of the exterior of the Park Court Aoyama the Tower
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