- Tokyo’s residential market has been resilient during the pandemic and has started exhibiting recovery in recent quarters.
- Although the pandemic has changed demographic trends in Tokyo, the capital’s population will likely resume its long-term growth trend, albeit gradually.
- While the residential market is supported by stable market fundamentals, investors should be cautious about the limitations and risks inherent in the residential sector, as well as potential interest rate increases.
- There is heightened competition for residential properties, and some overseas investors appear particularly keen on this sector.
- As concerns over interest increases grow, some investors may reconsider the sustainability of the compressed cap rates currently present in this sector, although overall fundamentals should remain stable.
Tokyo's residential market is stable, but warrants caution
Tokyo’s residential market has demonstrated its defensive nature, supported by the capital’s stable residential demand. With the pandemic transitioning to an endemic state and the economy regaining its footing, the residential market is likely to continue steadily recovering. However, there are signs of caution with some overseas investors looking particularly more keen than others. Concerns over interest hikes may cause some investors to assume a more cautious market outlook.
Savills Research & Consultancy