Tokyo Property Surge: Why 2025 Is Just the Start
Tokyo’s real estate market is entering a powerful new phase, with 2025 poised to be a breakout year. Major development projects, resilient demand, and strong investor appetite are setting the stage for a sustained property boom in the Japanese capital.
Central Tokyo’s Skyline Is Evolving
According to the latest report by Mitsubishi Estate Real Estate Services, approximately 495,000 square meters of new A-class office space will be delivered in central Tokyo in 2025, followed by 429,000 square meters in 2026. By 2028 and 2029, additional landmark projects—especially near Tokyo Station—will push annual supply to unprecedented levels.
Office Market Resilience
Despite this new wave of supply, demand for office space remains firm. Japan’s ongoing labor shortage and the rising focus on quality workspaces are key drivers. Vacancy rates are projected to hover between 3% and 6%, while office rents are set to climb steadily, reaching 5% higher in 2025 and 14% above 2024 levels by 2028.
Housing Supply Tightens, Rents Rise
Tokyo’s residential construction pipeline is shrinking. Developers face rising construction costs, limiting new supply—particularly in the 23 central wards. Meanwhile, urban migration is picking up pace again, putting upward pressure on apartment rents. With limited new inventory and sustained demand, rental yields are expected to remain attractive.
REITs Are Doubling Down
Japanese REITs purchased ¥487.8 billion worth of Tokyo property in 2024—a 17% increase year-on-year. Offices, residential towers, and hospitality assets were among the top targets, reflecting investor confidence in the city’s long-term growth prospects.
Outlook: Optimistic, but Watch the Risks
Investor sentiment is bullish, but not without caution. Key risks include:
- Rising domestic interest rates
- Persistently high construction costs
- Geopolitical uncertainties, particularly in the U.S.
These factors could influence investment decisions in the short term, though Tokyo’s fundamentals remain strong.
Conclusion
From booming office demand to resilient residential rents and surging institutional investment, Tokyo’s property market in 2025 is more than just a rebound—it’s the beginning of a new growth cycle. For regional and global investors, the Japanese capital is once again proving to be a market to watch—and act on.
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