Leasehold condominiums draw attention in Tokyo as housing costs soar

Tokyo is experiencing a surge in interest for fixed-term leasehold condominiums due to skyrocketing land prices and condominium costs. This trend is driven by the need for affordable housing options amidst the highest residential land price increase in 12 years. A new condominium in July saw a 96.0% increase in price to 265.2 million yen, setting a new monthly record. The Ministry of Land, Infrastructure, Transport and Tourism reported an 8.7% rise in residential land prices from a year earlier.

These leasehold condominiums offer residents ownership of their units without purchasing the land, which must be returned to the owner when the lease expires. The land is leased from a landowner for a set period, while purchasers own individual units in the building. Monthly ground rent and demolition reserve fees are added to mortgage payments, management fees, and repair reserve contributions.

Despite these additional costs, leasehold condominiums are more affordable than conventional condominiums, making them an attractive option for first-time homebuyers or those who plan to relocate within 10 to 15 years.

Leasehold condominiums have been gaining popularity due to lower purchase prices and flexibility for buyers planning to move. However, they also come with drawbacks. Reselling a unit becomes more difficult as the lease expiration date approaches, and buyers may struggle to secure mortgage financing with a short remaining lease term. Despite these challenges, leasehold condominiums have been on track to surpass 2,000 units in 2026, with supply reaching a record 1,281 units in 2008 and 1,502 units in 2025.