Central Tokyo’s tower-condo market has entered a correction phase, and stories of Chinese investors selling at a loss are spreading on social media. Harumi Flag units are also remaining unsold, with discounts of around ¥100 million reportedly under consideration.
Tokyo’s resale condominium market has entered a correction phase following its surge. Data from the East Japan Real Estate Information Network show that the number of completed transactions in September fell sharply year on year, while the contracted price per square metre also declined. Tokyo Kantei’s release likewise shows asking prices for properties in Tokyo trending lower. Tower condominiums in the waterfront area have seen particularly large price declines overall, with prices for 3LDK units on a 70 sq. m. basis also down from the start of the year.
Among Chinese investors living in Japan, a term referring to “cutting one’s losses” has spread on Chinese social media, while deteriorating yields from short-term rental operations and rising interest rates are putting pressure on cash flows. One Harumi Flag unit was reportedly purchased on a high floor from a resale operator. Its asking price was said to be just under ¥100 million, but it failed to attract a buyer, and a reduction to around ¥120 million was reportedly expected.
As one specific example involving a Chinese investor, an individual operating short-term rentals in the waterfront area saw the business deteriorate as yields fell and loan interest rates rose, and began considering selling all 3 units. While there was a case in which 1 unit sold at a high price, the remaining units reportedly incurred losses of several million yen.
The situation is affecting cash flows across the central Tokyo tower-condo market, not only at Harumi Flag, and the possibility has been raised that pressure from excess inventory and falling prices could persist over the long term.