Surge in Prices of New Offices and Apartments in Tokyo
Rising Raw Material Costs Due to Weaker Yen and Middle East Instability
Extended Construction Periods and Revised Redevelopment Plans
Editor’s NoteAn international affairs reporter based in Tokyo shares insights and stories observed in Japan over the past week. Updated every Saturday.
‘Korean real estate will eventually end up just like Japan.’
This is a phrase you often hear when looking for a house in Korea. During the bubble economy of the 1980s, massive speculative capital flowed into Japan’s real estate and stock markets. There was even a saying that you could buy the United States with the land value of Tokyo. However, after the bubble burst, Japan experienced a prolonged stagnation, known as the so-called “lost 30 years.”
Recently, however, there have been notable changes in Japan—especially in Tokyo. Office building rents in Tokyo have risen to their highest level in 33 and a half years, and the price of new apartments in Tokyo’s 23 wards has increased by more than 15% compared to the previous year. This is because construction material costs have surged and labor shortages have reduced the overall supply. While speculative capital is not flooding in as it did in the past, a new form of overheating, driven by supply shortages, has emerged.
According to an office building rental survey released this week by Nihon Keizai Shimbun (Nikkei), the rent index for new office buildings in Tokyo reached its highest level in 33 and a half years in the first half of this year—since 1992, right after the end of the bubble economy.
![Tokyo Real Estate Soars to 33-Year High, but New Construction Remains Challenging [Mwonilissyu]](https://www.asiae.co.kr/news/img_view.htm?img=2026050717062454011_1778141184.png)
The survey aggregated rent data from four major office brokerage firms and calculated the index by setting 1985 as 100 and assessing changes compared to that year. In the first half of this year, the rent index for office buildings in Tokyo less than one year after completion reached 239.98, up 18.2% from the same period last year.
There is strong demand from companies aiming to enhance their competitiveness by moving into newly built large-scale office buildings or by consolidating multiple departments into spacious new buildings.
By region, the Otemachi district in Marunouchi recorded 80,000 yen (741,944 won) per pyeong. The Yaesu, Kyobashi, and Nihonbashi districts—located opposite Otemachi across Tokyo Station—also saw a sharp rise to 75,000 yen (695,415 won) per pyeong, up 50% from the same period last year. Especially in Yaesu, a large office building was newly constructed through redevelopment in February this year, and pharmaceutical companies have already signed contracts and are preparing to move in.
The Shibuya to Harajuku area is a hub for IT companies and startups, and it also saw strong demand from new businesses, reaching 52,500 yen (486,790 won) per pyeong, up 5% from the same period last year.
Even as prices rise, supply is not keeping up with demand. According to office brokerage firm Mikishoji, the office vacancy rate in Tokyo’s five central wards (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya) stood at 2.22% as of March, far below the 5% level considered the benchmark for supply-demand balance.
According to real estate firm CBRE, about 80% of the buildings to be supplied in Tokyo this year already have tenants confirmed. Furthermore, starting next year, the supply volume is expected to decrease by nearly 40% compared to the past, leading to comments that rent prices are now “name your price.”
The newly constructed building “TOFROM YAESU TOWER” located in Yaesu, Tokyo. Tokyo Datemono.
General apartment (mansion) prices are also on the rise. According to data released last month by the Real Estate Economic Institute of Japan, the average price of new condominiums offered for sale in Tokyo’s 23 wards for fiscal year 2025 (April 2025–March 2026) exceeded 130 million yen (1,205,380,000 won) for the first time. The average price reached 137.84 million yen (1,278,210,000 won), up 18.5% from the same period last year. This is also analyzed as a result of rising prices amid declining supply.
One reason behind rising prices is the sharp increase in construction material costs. Recently, instability in the Middle East has driven up prices of petroleum-based products such as naphtha. Additionally, challenges in procuring building materials like paint and adhesives are intensifying. The weakening yen has further increased the burden of importing these materials.
In central urban areas, a shortage of new development sites has further limited available land for supply. For these comprehensive reasons, there have been numerous instances of significantly extending construction periods or revising redevelopment plans. For example, the Nihonbashi redevelopment project, in which Mitsui Fudosan is participating, has postponed its completion date by several years compared to the original schedule. As a result, supply shortages are expected to persist going forward.
This Week’s Japan Economic & Industry Briefing▶Nikkei 225 Hits Another All-Time High
Following the end of the Golden Week holiday, the Nikkei Average (Nikkei 225) once again set a new all-time high. On the 7th, the Nikkei 225 closed at 62,833.84. Analysis suggests that improved investor sentiment, driven by rising share prices of big tech companies in the United States during the holiday period, strengthened buying by overseas investors in the Japanese stock market.
▶Japan-Australia Summit
Japanese Prime Minister Sanae Takaichi and Australian Prime Minister Anthony Albanese held a summit on the 4th (local time). The two leaders agreed to continue economic security cooperation in key mineral sectors such as energy and rare earths. Australia is Japan’s largest supplier of liquefied natural gas (LNG). As Japan relies heavily on energy imports, the country is actively seeking to diversify its supply chains in the wake of the US and Israeli strikes on Iran.
This content was produced with the assistance of AI translation services.
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