The impact of COVID-19 continued to be felt significantly in 2021. A state of emergency was declared for long periods and the Japanese economy continued to face difficult conditions. Meanwhile, diversification of values, advancement of DX and other structural changes that had been underway from before the pandemic accelerated significantly, and with such the environment surrounding the real estate industry and roles which are required have seen dramatic change.

• LAND PRICE TRENDS

The land prices published in 2021 showed that the average for all-usage land decreased for the first time in six years, while residential land fell for the first time in five years and commercial land for the first time in seven years. Land prices were weak overall due to the impact of COVID-19 and such, but the degree of change in trends differed by region and usage. Year-on-year change was greater for commercial land than for residential land and also for the three major metropolitan areas than for less urban areas. Thanks in part to economic measures and other government initiatives, the slump in land prices is small compared with that published in 2009 and 2010 following the global financial crisis.

Source: Ministry of Land, Infrastructure, Transport and Tourism

• OFFICE MARKET

The office building markets of major Japanese cities in 2021 saw the overall vacancy rate trending upwards. The vacancy rate in Tokyo’s five central wards was increasing up until October, but has been decreasing since November.
The average rent has been decreasing for 17 consecutive months as of December. While working remotely has become widespread during the pandemic, the importance of in-person communication and such is being reaffirmed and there is a global movement of returning to offices. Offices need to become places for not only doing office work but also generating innovation, improving productivity and allowing versatile and flexible work styles.

Source: Miki Shoji Co., Ltd.

• HOUSING MARKET (HOUSING STARTS AND NEW APARTMENTS)

Housing starts in 2021 increased by 5.0% year on year to 856,484 units, increasing from the previous year for the first time in five years. By category, owned houses increased 9.4% year on year, rentals increased 4.8%, condominiums increased 6.1%, stand-alone houses increased 7.9% and condominium housing overall increased by 1.5%.
Furthermore, new condominium supply in the Tokyo metropolitan area increased 23.5% year on year to 33,636 units, recovering above 30,000 units for the first time in two years and also exceeding the level in 2019 before the pandemic (31,238 units). The annual average contract rate for initial month was 73.3%, climbing to the 70% range for the first time in six years. Supply in the Kinki region increased 24.7% to 18,951 units and the average contract rate for initial month was 69.8%, down 1.9% from the same period last year.

Source: Ministry of Land, Infrastructure, Transport and Tourism; Real Estate Economic Institute Co., Ltd.