Tokyo prime retail rents rise by 13.5% in Q3 | Real Estate Asia
, Japan

Tokyo prime retail rents rise by 13.5% in Q3

Ground floor rents drove the growth during the quarter.

Average rents in Tokyo’s Prime retail market reached JPY 85,349 per tsubo per month in 3Q23, showing an increase of 4.7% q-o-q and 13.5% y-o-y. According to JLL, ground-floor rents were the driver of growth. 

Ginza surpassed its 2019 levels, commanding a unit rent of JPY 290,000, while Omotesando achieved a historic high for the third consecutive quarter with JPY 260,000.

Here’s more from JLL:

Capital values also experienced significant growth, increasing by 5.6% q-o-q and 15.4% y-o-y. This acceleration in growth can be attributed to the strong increase in rents, as cap rates remained stable. Notable transactions during the quarter included the sale of G-Bldg. Minami Aoyama 02 from Japan Metropolitan Fund to an undisclosed buyer for JPY 5,383 million.

Demand for high-quality space continues to come from luxury brands

In spite of overall sentiment declining entering 3Q23, as indicated by the downgrading of the status assessment for the consumer confidence index in August, sales of luxury goods remained strong, surpassing both the previous year and 2019, while foreign visitor arrivals were on the path to recovery, trailing 20% behind 2019 figures.

Demand for Prime retail space continued to come from international retailers in 3Q23, encouraged by strong sales coupled with favourable exchange rates. Notable new openings during the quarter included Boucheron on Chuo-dori and Onitsuka Tiger on Harumi-dori. Omotesando also experienced active new openings, featuring Bvlgari, Celine and Tiffany.

Tokyu Plaza Harakado completes at Jingumae Crossing

Tokyu Plaza Harakado, a nine-storey commercial facility with 20,000 sqm of GFA, completed construction in 3Q23. Located on the corner lot of Jingumae Crossing of Omotesando and Meiji-dori, the facility is scheduled to have its grand opening in spring 2024. The name “Harakado” translates to “corner of Harajuku” in Japanese.

There were no new additions to supply or pipelines in Tokyo’s Prime retail market in 3Q23. In the fringes, the Chuo-ku Ginza 7-chome Project has been confirmed. This project involves the construction of a six-storey above-ground F&B building with a GFA of 300 sqm alongside Ginza Corridor-dori, due for completion in 1Q24.

Outlook: Rents and capital values expected to continue growing

According to the economic outlook provided by Oxford Economics in October 2023, private consumption for 2023 was revised downwards to 1.1%, while for 2024, it was revised upwards to 1.0%. Consumption is expected to continue to recover as real incomes improve, but the pace of recovery is expected to gradually slow down.

Robust retailer demand is expected due to strong luxury goods sales, the anticipated full return of foreign visitor arrivals and favourable exchange rates. This, coupled with very limited supply, should contribute to an upward trend in rents. Capital values are expected to primarily reflect rent increases, with stable or slightly decreased cap rates.

Note: Tokyo Retail refers to Tokyo's prime retail markets of Ginza and Omotesando.


 

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.