Foreign Investors Snap-up Tokyo’s Used Condos
Existing condominiums in downtown Tokyo are now selling for more than 100 million yen ($695,000) as overseas investors snap them up, seeing the properties as undervalued. The influx of foreign demand has transformed condos in prime locations from places of residence to investment vehicles for owners with no intent to live there full-time. "Even so-called power couples, who are relatively well-off, cannot afford pre-owned condos now," said Masayuki Takahashi, chief researcher at real estate consultancy Tokyo Kantei. Solid appetite among international buyers is pushing up prices of both new construction and existing units, a new phenomenon in Japan where houses and condos -- not land -- have depreciated rather quickly. Real estate brokerage company List Sotheby's International Realty has been fielding inquiries from affluent individuals and property investors in Asia about listings in sought-after areas like Azabudai and Aoyama. Interest remains strong for luxury properties in central Tokyo, said Mugi Fukushima, a director at List. Comparing list prices for existing condos with what they sold for when first built about 10 years ago shows a boom for resales. Average resale value for condos in greater Tokyo was 132.5% of the new-construction price, according to 2022 data from Tokyo Kantei. The figure was up 12.7 percentage points on the year. The resale value used to be below new-construction prices, coming at 91.4% in 2018. The number crossed the 100% milestone in 2020 and has continued to climb. The neighborhood around Roppongi-itchome Station, a short walk from the U.S. Embassy in Japan, topped the resale value ranking at 251.6%. Japanese properties, particularly pre-owned ones, are seen as undervalued by international investors. Real estate in Japan was already considered a good deal compared with Hong Kong and Singapore, and the yen's weakening in 2022 made prices even cheaper. Investors are betting the market still has room for an upturn, anticipating fat gains in the future. A relatively buyer-friendly environment also adds to Japan's appeal. Investors are increasingly passing China over because of instability concerns due to stricter regulations. Many properties are bought and sold sight unseen because of the ease of obtaining good information. Many overseas investors do not rent the properties, preferring to keep them as pied-a-terres in Japan because they want to be able to close a sale at a moment's notice. This is fueling an upturn for the broader market. Existing condos in Tokyo's six most central wards -- Chiyoda, Chuo, Minato, Shinjuku, Bunkyo and Shibuya -- were valued at 102.56 million yen per 70 sq. meters in May, according to Tokyo Kantei. The number marked a fresh high since the company began tracking such data in 2002. Because demand had softened, housing inventory has been on the rise since mid-2021. A total of 4,099 existing condo units were on the market in downtown Tokyo's six wards in May, up 16% from a year earlier.
Tags : condominiums downturns Tokyo selling overseas investors properties foreign demand prime locations residence investment vehicles owners Masayuki Takahashi chief researcher Real Estate Consultancy Tokyo Kantei Sotheby's International Realty