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Tokyo Rental Market: Evolving Resident Needs and Trends
2025.06.15
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It has been approximately a year and a half since COVID-19 was reclassified as a Category 5 infectious disease under Japan’s Infectious Diseases Control Law. As society adapts to the post-pandemic environment, rental needs and market trends in Tokyo have also evolved.
This article, we introduce the major changes in the Tokyo rental market.
Continued Demand for Homes with Telework Spaces
The COVID-19 pandemic accelerated the widespread adoption of remote-work across Japan. However, many companies have since shifted to a hybrid work model, requiring employees to commute few days a week to maintain operational efficiency and productivity.
Despite this shift, there remains strong demand for rental properties that can accommodate teleworking — such as homes with multiple rooms or built-in electrical outlets in closets to create dedicated workspaces.
In short, while there is a trend toward returning to city centers, the need for telework-friendly homes remains high, reflecting a new hybrid lifestyle.
Increasing Demand for Rental Apartments
Land prices across the Tokyo metropolitan area continue to rise, coupled with increasing construction costs, material prices, and labor expenses. Although land values temporarily dipped during the pandemic, they have since surpassed pre-COVID levels. These factors have driven up the prices of newly built condominiums, making rental apartments a more attractive option for many.
The increasing demand for rental housing has been accompanied by a rise in rents. According to the Ministry of Internal Affairs and Communications’ "Consumer Price Index (Base Year 2020)," rents (private-sector housing) recorded a year-on-year increase in 2023 for the first time in 25 years, reaching 100.*¹
This trend has continued into 2024, with August and September each showing a 0.3% year-on-year increase. In Tokyo’s 23 wards specifically, rents rose by 0.7% in September and 0.8% in October year-on-year, indicating a particularly strong upward trend in central Tokyo.
*¹ Source: Ministry of Internal Affairs and Communications
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As a result, more property owners are raising rents at the time of lease renewal or new tenancy contracts. However, failed negotiations during lease renewal risk tenant turnover. For instance, if a landlord attempts to raise rent from 80,000 yen to 84,000 yen (a 5% increase) but loses the tenant as a result, even if a new tenant is found within a month, it would take at least 20 months of stable tenancy to recover the loss from the one-month vacancy.
Therefore, landlords must carefully consider whether to implement rent increases during renewals or only for new leases.
Addressing the Growing Presence of Foreign Residents to Prevent Vacancies
According to the Immigration Services Agency of Japan, there were 3,410,992 foreign residents in Japan at the end of 2023, an increase of 335,779 from the previous year, marking a record high for the second consecutive year. In Tokyo alone, the number reached 663,362, an increase of 67,214 from the previous year.
Foreign residents are individuals who are permitted to stay in Japan for a set period — such as three months, one year, three years, or five years — for purposes like study or technical training.
For property owners, concerns about visa expiration dates may arise when renting to foreign nationals. However, it is worth noting that approximately 1.17 million foreign residents nationwide hold permanent resident or special permanent resident status.
Given the growing foreign population, especially in urban areas, property owners currently restricting tenancy to Japanese nationals may find value in reconsidering their policies. Opening properties to foreign tenants under certain conditions could be an effective strategy to mitigate vacancy risks.
Source: Immigration Services Agency
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