OSAKA – Demand for condominiums in Osaka is growing among family households as well as the wealthy, with the increasing supply of affordable properties a stark contrast to falling demand in central Tokyo.
The number of new condos listed for sale in the city of Osaka, excluding single-room units provided as investment property, rose 6.4 percent to 5,336 units in 2016, the second straight year of increase, according to data by the Haseko Research Institute.
The unit price in the city averaged ¥45.69 million ($407,000), 31 percent lower than ¥66.29 million in the 23 wards of Tokyo, where supply dropped 20.1 percent to 14,764 units — the lowest in a decade, the data showed.
Demand for types of condos “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 have successfully appealed to customers with affordability by offering smaller units, she added.
A woman in her 20s said she decided to buy a unit in a high-rise condo near JR Osaka Station, where the starting price is ¥37 million — a relatively low figure for 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 condos have been picking up on rising labor and construction costs ahead of the 2020 Tokyo Olympics and Paralympics.
Demand for condos in Osaka is strong, even as new condo supply in the Kinki region, which includes Osaka, Kyoto, Hyogo, Nara, Shiga and Wakayama prefectures, declined 4.3 percent in 2016 from the year before to 15,247, falling for the third straight year.
An industry observer said consumers now prefer living in central Osaka to traditional upscale residential areas in Osaka and Kobe, as they seek residences closer to their offices.
Roughly 15 high-rise condo development projects have been underway in the Kita and Chuo wards, which includes busy downtown Umeda as well as more development plans in adjacent areas.
According to land price data compiled by the land ministry, the average land price in residential and commercial areas in Osaka rose 0.5 percent and 9.0 percent, 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 condos,” a real estate appraiser said.
Prices of condos could surge on the back of increasing development projects, analysts said.