As expected, rental growth has taken a pause in Q2/2020 following solid growth in the previous quarters, even as the population of Tokyo Prefecture encouragingly reached the 14 million mark for the first time.

• Rents in the Tokyo 23 wards (23W) saw a slight pullback during Q2/2020, now standing at JPY4,138 per sq m – a decrease of 0.4% quarter-on-quarter (QoQ), but still 3.0% higher year-on-year (YoY).
• Growth in average mid-market rents in the central five wards (C5W) also halted during the quarter. Rents for Tokyo’s flagship submarket are now at JPY4,859 per sq m after a decline of 1.2% QoQ, though the average is still up 1.7% YoY.
• The C5W saw its premium over the 23W average contract to around 17%, as five of the six outer submarkets still managed to post rental growth.
• At the ward level, Meguro was the top performer this quarter following growth of 5.2% QoQ. Otherwise, Sumida marked impressive growth on an annual basis, with rents surging 12.5% YoY.
• In the C5W, average rents for units in the 15-30 sq m size band – which represent the majority of listings – remained flat, while larger units faced a pullback. Interestingly, the nearopposite appears to have occurred across the 23W at large.
• With leasing activity suspended during the April and May lockdown, the average occupancy rate for the 23W fell 1.5 percentage points (ppts) QoQ to 96.4% as of Q2/2020. Looking ahead, occupancy should be bolstered as some latent demand emerges over the coming months.
• Even in the face of a pandemic, young residents continued to flock to Tokyo during the quarter, leading the prefecture’s population to achieve 14 million for the first time in history.