Rental gap between Tokyo’s large- and small-sized units continues to widen

Large residential units with up to 60sqm saw the biggest increase of 2.7% in Q4.

Tokyo’s rental market is principally made up of compact single-occupier units, typically less than 45 sq m (13.6 tsubo) in size. According to a Savills report, such units can often make up as much as 75% or more of the 23W area’s rental listings. 

Unlike Western global cities such as London and New York, house or apartment sharing does not form a major segment of the rental market. As a result, there is a large, stable market for small- to mid-sized units. 

Here’s more from Savills:

In Q4/2023, average rents across all size bands in the C5W have increased, but the gap between the largest and smaller size bands continues to widen. 

The largest 45-60 sq m size band saw the most significant uptick, growing by 2.7% QoQ, hovering above the pre-pandemic peak. Meanwhile, rents in the smallest 15-30 sq m size band, and the medium 30-45 sq m size band, increased by 0.7% QoQ and 0.4% QoQ, respectively, and have recovered to their respective pre-pandemic levels. 

The strong performance of units in the C5W is two-pronged, stemming from the broad return to office participation by workers in the post-pandemic environment, and the limited stock of larger units in the submarket. Indeed, larger units that can accommodate home offices have thus remained popular. 

Nonetheless, this gap should narrow somewhat as we progress deeper into post pandemic territory, and single-occupier units that appeal to young professionals working in the city should do well moving forward.