Convenience guaranteed

Jun 2, 2016
Illuminations of Roppongi, which is one of Tokyo's more desirable districts.

Just five years ago, Toranomon was an unremarkable part of Tokyo on the periphery of the capital's more desirable Azabu and Roppongi districts, and with the ministries of Kasumigaseki and the bright lights of Shimbashi on its other flanks.

The opening in June 2014 of the 52-storey Toranomon Hills skyscraper changed the profile of the district and brought with it office space, 25 restaurants, retail outlets and the Andaz Tokyo, the first Hyatt-produced boutique hotel in Japan.

Mori Building in April announced the addition of three new towers, including the tentatively named Toranomon Hills Residential Tower.

"This development will be the signature property for the Mori Living brand, with 600 luxury units, some of which will be serviced apartments," says Moichi Watanabe, a spokesman for Mori Building. "The interior will be designed by Tony Chi, who is based in New York and also created the interiors of the Grand Hyatt Tokyo and The Andaz Tokyo."

The exterior design will be in the hands of Christoph Igenhoven, who will also craft the adjacent Toranomon Hills Business Tower to ensure a harmonious balance. The plans for the 56-floor block envisage large and airy properties with Western-style en-suite bathrooms, a spa and fitness centre, childcare facilities and a 24-hour bilingual concierge on site. When it opens around 2019, residents will be able to order room service from the Andaz Tokyo.

"In order to make Tokyo the number one city in the world, we are focusing on providing mixed-use developments as there is a need for space for more people to live and work in the city," Watanabe says.

"For residents, this part of the city is convenient because it is central - 25 per cent of the 3,000 foreign companies have their Japan headquarters in Minato Ward, along with the embassies of 81 countries," he points out. "We also have more than 1.4 million square metres of parks, the most in Tokyo, and 85 of the 217 Michelin-starred restaurants in Tokyo - more than New York, London or Hong Kong."

It helps that the complex will have its own underground station and easy access to Haneda International Airport.

The evolution of a new, upmarket residential district will help take the pressure off other areas of Tokyo - where the "Three As" of Akasaka, Azabu and Aoyama are still seen as the most prestigious areas in which to live. There is, however, a shortage of living space in the city, which has seen its population rise 12 per cent to 13.5 million people since 2000. The national population has begun to decline in that time.

As a consequence, the outlook for the residential property sector is good, according to Savills Research. "We expect further urbanisation to continue to drive strong demand in Tokyo's central five wards, especially for smaller household sizes," Savills says in its report on the state of the market in the first quarter of 2016.

"The Tokyo residential sector should remain stable for the foreseeable future," it adds. "We expect occupancy rates to continue their strong trend, driving stable rent revenues in this core sector."

Average mid-market asking rents in Tokyo's 23 wards came to 3,633 yen (HK$261.40) per square metre in the first quarter of 2016, up 0.3 per cent on the previous quarter and a full 1 per cent on the year. Rents in the prime five central wards were up 0.6 per cent year-on year, to 4,187 yen per square metre.

Savills statistics show that average occupancy rates have remained above the 95 per cent threshold.

And, while all the statistics appear positive for developers, investors and landlords, ordinary people are finding it increasingly difficult to afford to purchase a home in Tokyo.

In its annual land report for 2016, the Ministry of Land, Infrastructure, Transport and Tourism confirmed that prices were rising in Tokyo and the central areas of other key cities and remaining steady in the suburbs, although they continue to fall in the countryside. The average price of a new, 70-square-metre condominium in Tokyo and surrounding prefectures came to 49.85 million yen in 2014, a 10 per cent increase on the previous year. More significantly, it is also around 10 times the average salary for residents of the Kanto region. In addition to rising land prices, the cost of labour and construction materials have climbed. As a consequence, there has been an increase in the number of people buying second-hand homes.

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