2019-12-30

Tokyo Real Estate Reaching Bubble Era Pricing

News

32,000 condominiums are scheduled to be released into the Greater Tokyo market in 2020. This will be a 2.2% increase from the number of condos released onto the market last year, the JiJi Press has reported. This increase will mainly be in part to the many large scale developments under construction in the Greater Tokyo Metropolitan Area (Tokyo, Chiba, Saitama and Kanagawa).

Condominium prices in Tokyo across the first 11 months of this year averaged ¥60 million, only slightly below the ¥61 million price which was recorded during the 1990 Tokyo Real Estate Bubble. The current condominium price can be attributed to the high cost of land, Japan's labor shortage, and the current cost of construction in the Tokyo area.

Some experts have warned that Japan could be nearing a price bubble like the one seen during Japan's Financial Crisis in the 90s, which has been dubbed "The Lost Decade." It was during this time that Tokyo's Imperial Grounds were valued higher than all of the real estate in the U.S. state of California, which encompasses pricey areas such as Beverly Hills and San Francisco. The highest price per tsubo (Japan's unit of land measurement) was recorded at 3.08 million yen in 1990 shortly before the economic bubble burst. The current price per tsubo stands at 2.87 million yen.

However, experts at the Bank of Japan have stated that there are no signs of an economic bubble like that in the 90s. "Real Estate is still green on Bank of Japan's heat map," which indicates a low level of risk. "If it moves close to red, then I think it may signal a warning." Tokai Muto of BOJ told the Asian Nikkei Review.

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