A corporate worker in his 40s who lives in a rental apartment in Tokyo’s Chuo Ward had dreamt about buying a secondhand condominium in the area. But he now has nightmares of being forced to leave the downtown area.

When the lease came up for renewal in September, his 250,000-yen ($1,600) monthly rent increased by 20,000 yen, or 8 percent, to 270,000 yen.

“I may have to move out of central Tokyo if the rent gets higher than 300,000 yen,” he said.

As real estate prices in the capital continue to soar, rental fees have followed that trajectory.

Rents have risen by more than 10 percent year-on-year in several areas of Tokyo.

The corporate worker lives with his wife in a two-bedroom unit with a floor space of about 60 square meters.

He said his dreams of buying a condominium were dashed after the price for properties in the ward exceeded 100 million yen each.

For now, he will stay put.

“The 270,000-yen rent is cheaper than other apartments,” he said. “I also thought about all the hassle that comes with moving.”

But he is anxious about his future prospects because he wants to have children.

BULLISH RENTERS

Daiwa Real Estate Asset Management Co. owns a nine-story apartment complex built in 2023 in Tokyo’s Sumida Ward within an eight-minute walk from Ryogoku Station on the Toei Oedo Line.

The complex contains 40 one- and two-bedroom units.

“It stands in a tricky location: not too far and not too close to the station,” said Kentaro Azumi, a general manager at the company. “But there aren’t many recently built properties around the station that come with decent features and can accommodate not only single persons but also families.”

With apartment units almost fully occupied, Daiwa Real Estate’s rents reflect strong demand.

A two-bedroom unit with a floor space of 58 square meters was previously rented for 220,000 yen per month.

When the company solicited tenants for 236,000 yen, an increase of 16,000 yen (7.2 percent), after an occupant moved out in late September, the new tenant moved in within a month.

Under the Law on Land and Building Leases, landlords are not allowed to raise rents in a one-sided manner upon lease renewal and on other occasions.

But the rent can be raised based on a mutual agreement between the landlord and the tenant if there are “legitimate reasons,” such as rising consumer prices.

The average rent of the company’s properties at the end of March was up by 6.8 percent for new tenants compared with six months ago, and by 1.4 percent when the lease comes up for renewal.

Azumi said it has become easier to negotiate rents due to rising real estate prices in recent years.

The ratio of tenants who accepted rent hikes when the leases were renewed grew from 20 percent to 50 percent over the same period, he added.

RENTS UP ACROSS JAPAN

Advertised rents for apartments hit a record high in many parts of Japan in September, according to a survey conducted by real estate information provider At Home Co.

Rents for single-person properties with a floor space of under 30 square meters in Tokyo, Saitama Prefecture and the cities of Kyoto, Osaka and Fukuoka reached record highs.

Records were also set for family-oriented properties with a floor space between 50 and 70 square meters in Tokyo, Chiba Prefecture and the cities of Osaka and Hiroshima.

In Tokyo’s 23 central wards, advertised rents for single-person properties rose by 10.7 percent from a year earlier to 104,359 yen, while the figure for family-oriented properties increased by 9.7 percent year-on-year to 248,032 yen.

FAMILIES GIVING UP ON CONDOS

According to At Home, the average price of a used condominium has increased for 14 straight months to September in the Tokyo metropolitan area, resulting in a more than 20-percent rise from a year earlier.

The cost also reached record highs in Sapporo, Kyoto, Osaka, Kobe and Fukuoka cities.

“Many families choose rental properties after giving up on buying because of the high prices,” said Junko Iwasaki, an At Home Labo executive officer. “There is a limited supply of family-oriented rental properties, leading to rent hikes.”

RENT OUTLOOK AND ALTERNATIVE

Hirokazu Fuchinoue of Condominium Asset Management Inc., which specializes in services for real estate investors, said areas within 30 minutes from the heart of Tokyo continue to be popular largely because of the recent trend of placing importance on the efficient use of time.

Consequently, rents will rise as condominium prices soar, he said.

Although improvements are needed to enhance the quality of life for tenants of low-cost rental apartments, he recommends that people consider moving to areas where rents remain relatively low amid inflation outside the 30-minute radius.

But for condominium buyers, Fuchinoue said it is important to ensure the area is within 40 minutes from central Tokyo and has promising prospects.

His recommendations in the greater Tokyo area include Saitama’s Omiya Ward, places along the Keihin-Tohoku Line in Yokohama and Kawasaki, and areas along the Sobu Line in Chiba as far as Chiba Station.