#Japan #Tokyo #Real Estate #LIFULL HOME'S #Leasehold Apartments

Introduction

As property prices continue to soar, leasehold apartments, known as "定期借地権付きマンション" in Japanese, have started to gain significant attention in the Japanese real estate market. Operated by LIFULL, a company dedicated to addressing social issues through their business, the LIFULL HOME'S platform has conducted a thorough investigation into the latest trends surrounding these unique housing options.

What are Leasehold Apartments?

Unlike conventional condominiums where buyers acquire ownership of the land along with the unit, leasehold apartments allow individuals to purchase the ownership of the structure while leasing the land for a specified duration. This arrangement generally results in a lower sale price compared to traditional apartments, making leasehold properties particularly appealing in the current climate of skyrocketing real estate prices. However, potential buyers should also consider the drawbacks, such as the requirement to return the land after the lease period ends and the occurrence of additional costs like ground rent.

Supply and Demand Insights

Recent data showcases that the supply of leasehold apartments has been increasing over the past five years, particularly in the Tokyo and Chiba regions. In a study covering the period from January 2020 to September 2025, it was found that leasehold apartments made up only about 1% of the total new and used apartment listings on LIFULL HOME'S, despite their growing popularity. Specifically, in Tokyo, new leasehold apartment listings accounted for 1.5% and used for 0.5%. Chiba also displayed similar ratios, although much lower for used properties.

Top Areas for Leasehold Apartments

An analysis of the top ten regions for leasehold apartments unveiled that four areas actually offer better deals with conventional ownership apartments. For instance, Inagi City led with a leasehold share of 4.2%, largely due to ongoing developments by the Urban Renaissance Agency. Chiyoda City followed, boasting an average age of only seven years for leasehold apartments, indicating a recent surge in their availability. Shibuya exhibited a curious trend where average prices for leasehold apartments surpassed those of standard ownership apartments, suggesting that, while initially cheaper, they may not always be the ideal economic choice.

Expert Insights

Toshiyuki Nakayama, Chief Analyst at LIFULL HOME'S, comments on the nature of leasehold apartments, stating that they can be about 10% cheaper. However, buyers must also keep in mind additional expenses such as ground rent and maintenance fees, which can accrue over time. Initially introduced in Japan in 1992 following the real estate bubble, leasehold apartments are now experiencing a resurgence spurred by rising prices overall. The company recorded its highest ever listing for leasehold apartments in the Tokyo metropolitan area, indicating a clear shift in market dynamics.

Economic and Societal Implications

The beneficial side of leasehold apartments is that they allow landowners to monetize their land without selling it outright, while developers can invest in high-demand areas without the hefty price tag often associated with land acquisition. This model provides opportunities for potential homeowners to access more affordable options amidst rising costs driven by economic factors such as the yen depreciation and increased construction expenses.

Despite their advantages, leasehold apartments come with complexities. As the lease period nears its end, the market value can diminish, leading to concerns for potential investors. Furthermore, costs like ground rent can persist long after the mortgage is paid off, evidencing the necessity for careful financial planning when considering these options.

Conclusion

As the property market continues to evolve, the growing awareness and supply of leasehold apartments could provide much-needed affordable housing options in Japan. However, prospective buyers must weigh the pros and cons judiciously, ensuring they fully understand the lease terms and associated costs. By conducting thorough research and evaluating their personal circumstances, buyers can navigate this increasingly competitive market effectively.