It says something that the big economic buzz word in Trumpworld—affordability—has entered the Japanese lexicon as a katakana term, though it seems to be restricted to real estate in Tokyo, which, as we’ve mentioned so many times, is the only real estate story that the Japanese media cares about. But while everybody knows that prices of residential properites in the capital are skyrocketing, less is said about rents, which are going up even more.

In February, the real estate portal site At Home announced that the average rent in Tokyo’s 23 wards had increased for 21 months in a row, a new record. Moreover, the average rent for a unit for one person, meaning a condo or apartment of 30 square meters or less, had exceeded ¥110,000 a month for the first time. In fact, the exact amount, ¥110,177, marked a 12 percent increase from the previous year, another record. One of the reasons for this massive increase is the replacement of old wooden apartment buildings with concrete ones, with the new units being made smaller so that more of them can be fit into the space the former ones once filled. But larger apartments also saw startling year-to-year increases: two-person units (30-50 square meters) averaged ¥124,378 a month, a 10.7 percent increase; and family units (50 square meters and larger) averaged ¥174,082 a month, an 8.2 percent increase. Tokyo apartments outside the 23 wards went up less, but still went up: ¥87,887 for a two-person unit, an increase of 5.7 percent.

The Tokyo Metropolitan Government anticipated these developments and, according to Asahi Shimbun, will start providing “affordable housing” in the prefecture starting this year. One of the related measures will be to levy a special tax on residential properties that remain vacant, though so far no details or timeline has been announced. 

What has been rushed into realization is ¥10 billion in investments from Tokyo in new affordable housing in partnerships with four foundations set up by major real estate companies like Nomura Fudosan. These funds will be used to operate rental housing that on average will be about 20 percent cheaper than current market rates. This year 350 units throughout the city will be made available starting next month. All these units are existing apartments that have been renovated. In principle, Tokyo is not going to build any new housing for the project but rather use existing structures with the help of private partners and investors, who will earn dividends on the returns, though lower than other real estate investments since such investments are pegged as “social contributions.” Tokyo is currently studying a system that could create more rental units by easing capacity rates in order to encourage developers to build more affordable housing. (Though it should be noted that easing capacity rates was the scheme of the Koizumi administration to increase construction, which lead to the boom in high-rise condos.)

One affordable rental property has already opened. Neuvono Kikukawa, operated by Mitsui Real Estate, as a kind of model for the project. It is two buildings in Sumida Ward comprising about 100 units, each about 55 square meters in size. The target is families and all the units were quickly rented out. There is a licensed nursery school on the first floor that is always open. 

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