Demand for condominiums slows in Tokyo as Osaka gains momentum
Increasing supply of smaller and more affordable units pays off for developers in Osaka
Demand for condominiums in Osaka is growing, not just from wealthy people, but from family households, with the increasing supply of affordable rooms, in stark contrast to falling demand for property in central Tokyo.
The number of new condominiums listed for sale in Osaka, excluding single-room units provided as investment property, rose 6.4 per cent to 5,336 units last year, the second consecutive year of increase, according to data by the Haseko Research Institute.
The unit price in the city averaged 45.7 million yen (US$405,000), 31 per cent lower than in the 23 wards of Tokyo where supply dropped 20.1 per cent to 14,764 units, the lowest in a decade, the data showed.
Demand for types of condominiums “has shifted from three bedrooms to two bedrooms” in the central Osaka area, said Yukie Sasahara, an official of the Real Estate Economic Institute.
Developers had successfully appealed to customers with affordability by offering more smaller units, she added.
A woman in her 20s has decided to buy a unit in a high-rise condominium near JR Osaka Station where the starting price is 37 million yen, relatively low for the area around one of the largest terminal stations in the central part of the city.
“I thought I wouldn’t lose money even if I decide to sell or rent,” she said.
In Tokyo, consumers are becoming reluctant to buy property as prices of condominiums have been picking up on rising labour and construction costs ahead of the 2020 Tokyo Olympics and Paralympics.
Demand for condominiums in Osaka is strong even as new supply in the Kinki region, which includes Osaka, Kyoto, Hyogo, Nara, Shiga and Wakayama prefectures, declined 4.3 per cent last year from the year before to 15,247, falling for a third year.
An industry observer said consumers now preferred living in central Osaka to traditional upscale residential areas in Osaka and Kobe as they sought residences closer to their offices.
Roughly 15 high-rise condominium projects have been under way in Kita and Chuo wards, which include busy downtown Umeda, as well as more development plans in adjacent areas.
According to data compiled by the land ministry, the average land price in residential and commercial areas in Osaka rose 0.5 per cent and 9 per cent respectively at the beginning of 2017 from a year earlier.
“A lot of areas long used for parking spots are now being developed for hotels and condominiums,” a real estate appraiser said.
Prices of condominiums could surge on the back of increasing development projects, analysts said.