price increases for new homes in Tokyo and Osaka ranked first among 15 global cities this April as the weakening yen kept up its strong allure for overseas capital. According to Japan Real Estate Institute's international property price and rental index for the month, the price of primary-market properties in the nation's two biggest cities rose by 1.5 percent compared to October - exceeding Singapore's 1.
3 percent and New York's 0.3 percent. It is the first time since 2010 that Tokyo and Osaka ranked first at the same time, demonstrating the general upward trend of Japanese property prices.
Analysts believe there are three main reasons for it. First, the rising costs of land, construction materials and labor resulted in a 20 to 30 percent increase in overall construction costs, leading to knock-on effects for property prices. Second, data shows that supply of such properties in 23 districts of Tokyo was only 11,900, or 40 percent of that of 10 years ago.
Properties in prime locations were even scarcer as supply of development sites and new properties decreased. That is reflected, for example, in Mitsui Real Estate's new project in Tokyo, Nakano, whose presale launch in May was well received, with a three-room flat priced at around 150 million yen (HK$7.61 million).
A high-rise residential development by Sekisui House, Grand Green Osaka The North Residence, which is near the JR Osaka Station, caused an uproar due to its highest price of 2.5 billion yen. Last is the inflow of overseas capital.
Jones Lang LaSalle data shows that inbound investment, which affects the amount of Japanese real estate bought by overseas investors, was 177.3 billion yen in the first quarter. That was a nearly four time jump from the previous quarter, when it was 45.
1 billion yen. Buyers were mainly institutional investors, with traces of a trend starting to show that the number of individual purchasers rising. Overseas affluent and real estate investors tend to buy luxury residential Tokyo properties in Minato, Shibuya and other districts.
Eighty percent of them were from Asia and many, due to the yen's woeful state, paying in cash. The survey data shows that the level of property prices in Tokyo is still less than a half compared to Hong Kong and London, which are the highest among the 15 major cities. This indicates that Tokyo and Osaka still have room for further price increases.
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