Investment Real Estate Market Report | 4Q FY2024

Foreword

   Thank you very much for your continued support and business.
   We, at Mitsui Fudosan Realty, have been providing a broad range of services in order for our valued clients to make the "Best Use" of precious assets, and attentive consultation about concerns and worries clients have with respect to assets in various conditions, not only through brokerage of business and investment properties but also by helping clients to utilize assets effectively for such purposes as estate and tax planning.
   As part of these efforts, we prepare an "Investment Real Estate Market Report" for reference to help clients grasp the situation affecting real estate holdings. Since the investment real estate market is susceptible to external factors such as economic trends, an objective point of view is essential to understand the current market conditions. It is our great pleasure if this report is instrumental for readers to develop asset building strategies.
  We will continue striving to deliver long-term support through development, implementation, and follow-up of plans that will satisfy clients, meet demands of each client on a "one to one" basis by making the most of professional expertise and experience gained over the years, and prove worthy of clients' trust.
   Please feel free to contact us at the office below with any comments or requests concerning this report, or any matters related to real estate assets.
   We look forward to opportunities to serve you soon.

Mitsui Fudosan Realty Co., Ltd.
Solution Business Division
■Toll-free Number: 0120-321-376
■Hours: 9:30 am - 6:00 pm Closed Wednesdays, Sundays
■3-2-5, Kasumigaseki, Chiyoda-ku, Tokyo 100-6019, Japan

  We, at Solution Business Division of Mitsui Fudosan Realty Co., Ltd., have been producing a "Investment Real Estate Market Report" to serve as an aid to hopefully assisting our valued clients formulate a medium-to long term asset building plan. 

  Please also take a look at our website, which is full of useful information such as properties for sale, various consultation services, and articles by real estate experts.

Areas subject to collection of data

Tokyo Central submarket: Minato-ku, Chiyoda-ku, Chuo-ku, Shibuya-ku, Shinjuku-ku, and Bunkyo-ku

Tokyo South submarket: Shinagawa-ku, Meguro-ku, Setagaya-ku, and Ota-ku

Tokyo North / West submarket: Suginami-ku, Nakano-ku, Nerima-ku, Toshima-ku, Itabashi-ku, Kita-ku, and Taito-ku

Tokyo East submarket: Koto-ku, Sumida-ku, Arakawa-ku, Edogawa-ku, Katsushika-ku, and Adachi-ku

Yokohama / Kawasaki region: Yokohama city and Kawasaki city
 

Detailed descriptions  

Pick Up Area: For investment real estate, trends in the average gross yields on contract price and initial asking price, together with the number of closed contracts by submarkets are represented in the graph. The details of the transition of actual market value and properties both for sale and sold in certain neighborhoods are also shown.

Market Overview: As an overview of all the submarkets, the trend from the past to this quarter is available. Trends in the average gross yields based on contract price and initial asking price together with the number of closed contracts by area are shown for comparison.

Data Source: Information is extracted from the database containing properties offered for sale and contracts concluded through Mitsui Fudosan Realty Network (En-bloc condominiums / office buildings / apartment buildings).
- Number of Transactions & Average Gross Yield on Contract Price: Number of contracts closed in a quarter (three months) and average gross yield of them (including estimated values)
- Average Gross Yield on Initial Asking Price: Quarterly average gross yield of closed contracts based on their asking price initially quoted
*Figures in each chart represent indices based on values for 1Q / FY2017 set at 100.
(Average Gross Yield on Contract Price is shown as an index to Average Gross Yield on Initial Asking Price for 1Q / FY 2017 set at 100.)
[Note] The historical data may be revised subsequently due to maintenance carried out from time to time, such as adding newly acquired data. 

Pick Up Area -Tokyo Central submarket-

(*)Tokyo Central submarket: Minato-ku, Chiyoda-ku, Chuo-ku, Shibuya-ku, Shinjuku-ku, and Bunkyo-ku

◆Movements by Quarter: Average Gross Yield on Contract Price / Average Gross Yield on Initial Asking Price / Number of Transactions

◆Brokered Transactions of Investment Real Estate in the Submarket

　The indices of the average gross yield on the asking price and on the contract price both fell QoQ (property prices rose) in Tokyo Central submarket in 4Q of FY 2024. The number of contracts made also showed an increasing trend YoY as market conditions remained steady. The leasing market in Tokyo Central submarket shows the following trends:

■ Residential buildings: The increasing trend in rents continued, centered on relatively newer properties and high-end properties (such as those with large floor areas and parking lot access).
■ Offices: The trends toward lower vacancy rates and higher rents continued amid booming demand from corporate relocations to improved locations while the new supply of large-scale office buildings was low.
■ Retail: Although rents continue to increase centered on street-level shops in well-known areas of Tokyo Central submarket, the pace of the increase is slowing.

　Because of the conditions described to the above, as in the previous quarter, contracts are being concluded even at comparatively low yields for properties with potential rent upsides regardless of asset type because current rents seem to be discounted in the investment real estate market. Regarding the future outlook for the investment real estate market in Tokyo Central submarket, some observers are relatively optimistic. They see a strong likelihood of steady maintenance of current conditions or a moderate improving trend backed by favorable conditions in the leasing market, booming inbound demand, and restrained new supply as a result of high building material prices and the labor shortage. At the same time, there are concerns about the possible impacts of such factors as continued rising interest rates as was experienced through the previous quarter, as well as the realization of such risk factors as financial market volatility and political uncertainty. Conditions will continue to require close observation.
 

Pick Up Area -Tokyo South submarket-

(*) Tokyo South submarket: Shinagawa-ku, Meguro-ku, Setagaya-ku, and Ota-ku

◆Movements by Quarter: Average Gross Yield on Contract Price / Average Gross Yield on Initial Asking Price / Number of Transactions

◆Brokered Transactions of Investment Real Estate in the Submarket

　The indices of the average gross yield on the asking price and on the contract price both fell to record lows since data collection began in 2017 in Tokyo South submarket at 73 and 79, respectively, in 4Q of FY 2024. The number of contracts made grew further from 3Q, remaining high throughout FY 2024, driven by large numbers of transactions. For the above reasons, market conditions appear to remain stable in Tokyo South submarket.
　In addition to the index of the average gross yield on the contract price remaining at a low level, rents on rental residences in the greater Tokyo area are in an increasing trend, while for office buildings in Tokyo Central submarket, the vacancy rate is decreasing, and rents are increasing. Increased inbound demand spurred by the low yen is also contributing to continued favorable conditions in the investment real estate market. At the same time, high building material prices and a severe labor shortage are pushing up construction costs, putting marked pressure on developers' bottom lines. Changing monetary policies and economic conditions in Japan and around the world, including the impact of the U.S. tariffs on Japanese economy, will require closer observation moving forward.
 

Pick Up Area -Tokyo North / West submarket-

(*) Tokyo North / West submarket: Suginami-ku, Nakano-ku, Nerima-ku, Toshima-ku, Itabashi-ku, Kita-ku, and Taito-ku

◆Movements by Quarter: Average Gross Yield on Contract Price / Average Gross Yield on Initial Asking Price / Number of Transactions

◆Brokered Transactions of Investment Real Estate in the Submarket

　In Tokyo North / West submarket in 4Q of FY 2024, both the index of the average gross yield on the contract price and the index of the average gross yield on the asking price fell QoQ (property prices rose) for the second consecutive quarter with each reaching its lowest level since data collection began in 2017. The number of contracts made has remained at a high level throughout the most recent year.
　At the same time, since the U.S. President Donald Trump announced reciprocal tariffs in early April 2025, the securities and foreign-exchange markets have been highly volatile, impacting Japanese financial markets as well. This situation is affecting important considerations in real estate investment as well. For example, in consideration of its impact, the Bank of Japan decided to maintain current policy interest rates and postpone additional increases in its May 1 monetary policy meeting.
While there are no signs of a major change in the investment real estate market as a whole at this time,* a movement toward caution regarding the economy and markets has begun among some investors and businesses. This includes the possible sale of properties. It can be expected that polarization of investment policies between bullish and bearish approaches will expand further. It can be expected to remain increasingly important to observe market trends closely and clarify and implement real estate investment strategies suited to investors' purposes. (*As of May 2025)
 

Pick Up Area -Tokyo East submarket-

(*) Tokyo East submarket: Koto-ku, Sumida-ku, Arakawa-ku, Edogawa-Ku, Katsushika-ku, and Adachi-ku

◆Movements by Quarter: Average Gross Yield on Contract Price / Average Gross Yield on Initial Asking Price / Number of Transactions

◆Brokered Transactions of Investment Real Estate in the Submarket

　The index of the average gross yield on the contract price was 85, and the index of the average gross yield on the asking price was 92 in the Tokyo East submarket in 4Q of FY 2024 as the increasing trend in each index has continued (prices fell) since 2Q of FY 2024. At the same time, as in the same period last year, the number of contracts was very high, reaching its highest level since data collection began in 2017. This shows that active transactions are taking place. 
While demand from buyers remains stable in this submarket, the polarizing trend by property characteristics (such as nearest train stations, distances from train stations, age, and compliance) remains unchanged.
　The increasing trend in building material prices also continues. Increasing numbers of buyers show reluctance to purchase properties for which it would appear to be difficult to achieve profitability, such as those with compliance issues or those for which redevelopment could be a consideration because of their age.
While as noted above the number of contracts itself is high and the market remains active, there is a need to observe trend in the market as a whole, including such external factors as construction costs, interest rates on debt, and stock prices and exchange rates, even more closely.
 

Pick Up Area -Yokohama / Kawasaki region-

(*) Yokohama and Kawasaki region: Yokohama city, Kawasaki city

◆Movements by Quarter: Average Gross Yield on Contract Price / Average Gross Yield on Initial Asking Price / Number of Transactions

◆Brokered Transactions of Investment Real Estate in the Submarket

　The number of contracts made in Yokohama / Kawasaki region in 4Q of FY 2024 has remained largely unchanged in the past two quarters. However, it was up YoY to reach a record high level since data collection began in 2017 as it did in 2Q. While the breadth of the increase is smaller than in Tokyo, the number of contracts made is growing steadily, as market conditions can be said to remain active.
　However, a look at individual transaction trends shows marked gaps in time until a contract is concluded and in contract yields (property prices) depending on property conditions and a pronounced trend toward polarization between the central and suburban areas. As the investment real estate market heats up, investors are expected to become more selective.
　There are no signs of an end to high building materials prices, and among transactions for development sites or for older properties intended for renovation, in an increasing number of cases, property prices are under pressure from construction costs. In Yokohama / Kawasaki region, where land prices are relatively lower than in Tokyo Central submarket, this is having a major impact. As a result, bearish price trends have started to appear, particularly on small commercial sites that involve higher construction cost ratios.
　Numerous uncertainties, including tariff policies, since Donald Trump took office as the U.S. President have led to considerable daily volatility in exchange rates and stock prices. These are factors that could have a major impact on buyers' investment decisions, and they will continue to require close observation.

General overview

◆Movements by Quarter: Average Gross Yield on Contract Price / Average Gross Yield on Initial Asking Price / Number of Transactions for the 5 Areas

◆Movements in Number of Transactions by Area

◆Movements in Average Gross Yield on Contract Price by Area

◆Movements in Average Gross Yield on Initial Asking Price by Area

　A look at the index of the average gross yield on the contract price on each region in 4Q of FY 2024 shows QoQ decreases of three to four points in Tokyo Central submarket, Tokyo South submarket, and Tokyo North / West submarket, and increases of two points in Tokyo East submarket and Yokohama / Kawasaki region as the total index for the region as a whole remained unchanged. The trend in the index of the average gross yield on the asking price is largely identical to that in the index of the average gross yield on the contract price as it fell by two points for the region as a whole.
　The number of contracts made is up over each of the past two quarters to a record high level since data collection began in 2017.
　Performance of the investment real estate market in the greater Tokyo area remains steady overall.
The number of contracts made has increased in many submarkets as a result of active transactions. At the same time, high building material prices and a severe labor shortage are pushing up construction costs, and the inflationary trend has grown even more pronounced. New external factors that could affect investors' decision-making, such as the U.S. tariff policies, have also appeared. The Solutions Business Division will continue to propose optimal plans for clients as specialists in successful real estate investment strategy based on our nationwide information-gathering abilities, highly specialized solutions, and the ability to take swift and appropriate action. Feel free to contact us.