Tokyo's average apartment cost exceeded 100 million yen in FY23

Tokyo real estate: In a historic development, the average price of new apartments in Tokyo surpassed 100 million yen annually for the first time in 2023, according to data from the Real Estate Economic Institute released on Thursday. The surge, marking a 39.4 per cent increase from the previous year, pushed the average price to a record 114.8 million yen.

This milestone reflects the confluence of factors contributing to Japan's current investment boom, including a rebound in property and stock markets after decades of deflation and stagnant growth. The surge in apartment prices is notably fueled by rising labor and construction costs and an influx of foreign investors leveraging the yen's multi-decade low.

Japan's low interest

Foreign buyers are capitalising on Japan's low interest rates and weak yen, currently near a 33-year low. Additionally, investors are redirecting funds from China due to a real estate crisis and geopolitical concerns, further contributing to the demand for Tokyo real estate.

The 114.8 million yen average price tag signifies that owning an apartment in Tokyo now costs approximately 25 times the country's nationwide salary average of 4.6 million yen.

In 2023, the Tokyo metropolitan area witnessed the availability of over 4,000 luxury apartments priced over 100 million yen. Notable examples include Mita Garden Hills in central Tokyo, where a 4,052 sq ft unit was sold for 4.5 billion yen.

As demand extends beyond the central districts, apartment prices in the greater Tokyo area also experienced a surge, reaching a record average of 81 million yen, a notable 28.8 per cent increase, according to the report. The shift in buyer preferences is reshaping the real estate landscape, prompting both developers and investors to adapt to evolving market dynamics.

(with Reuters inputs)