Next up for condominiums: Nagoya. Real estate companies intensify development competition
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Real estate companies engaged in condominium development are intensifying their efforts in the Nagoya area. This is because the demand for urban living nationwide is increasing, leading to continued price hikes. Nagoya is seen as a market for growth next to the Tokyo metropolitan area and the Kansai region. Companies that previously did not have a presence in Nagoya are now entering the market one after another, leading to intensified development competition.
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Kanden Real Estate Development, a subsidiary of Kansai Electric Power, established a new office in the central area of Nagoya in April to handle condominium projects. Although the company completed its first condominium project in Nagoya about a year and a half ago, it is now stepping up its expansion efforts. In the future, it plans to supply approximately 650 units across five buildings in the city, including joint ventures with other companies.
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Aichi Prefecture, which is the hometown of Toyota Motor Corporation, has a high rate of car ownership, and there is a strong demand for parking spaces even in condominiums in the city center. "Shiera Showa Iri-naka," located a 4-minute walk from the nearest station, is equipped with parking spaces for nearly 90% of its 70 units, addressing local needs. An official expressed enthusiasm, saying, "Although competition is fierce in popular areas, we aim to supply 100 to 200 units annually in the Tokai region, with Nagoya at the center."
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Nagoya area: three consecutive years of growth.
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In the announced public land prices on the 26th March 2024 (as of January 1st), the Nagoya area (excluding eastern Mikawa in Aichi Prefecture and northern Mie Prefecture) saw commercial land prices rise by 4.3% compared to the previous year, while residential land prices rose by 2.8%, both for the third consecutive year. The progress of redevelopment in downtown Nagoya and the expansion of demand for restaurants, apartments, and other amenities have had a significant impact.
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"The 'Toyota Home Sakae Building' in Higashi-ku, Nagoya City, topped the list for the highest increase in commercial land prices in the Nagoya area. Plans for reconstruction, including adjacent buildings, were revealed last year." "In the Sakae area and its surroundings, redevelopment projects are underway, and in April of this year, the 33-story 'Chunichi Building' in the central part of Nagoya City is scheduled to fully open, with preparations also underway for the opening of a 41-story high-rise building developed by Mitsubishi Jisho Group in 2026. Real estate appraiser Takafumi Matsubara states, 'The anticipation of changes in the city has contributed to the rise in land prices.'" "The Nagoya Station area, an office district, is also performing well. The 'Midland Square' in Nakamura-ku, Nagoya City, which topped the price list (¥19.5 million per square meter), saw a 2.6% increase compared to the previous year. The area is experiencing significant economic activity, such as office expansions and store expansions. Nakamura-ku occupies four of the top five spots in terms of prices, including the same building."
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"According to Sanzaburo Shiki of Mikiko Shoji Nagoya Branch, the vacancy rate for rental offices in the Nagoya area (as of December last year) remained almost unchanged compared to the same month of the previous year, at 5.49%, despite the successive opening of new buildings. The person in charge states, 'Although the supply of office space is increasing, demand remains strong.'" "New store openings are also on the rise in bustling areas. Nagoya City's Naka-ku, Nishiki district, which ranked fifth in the rate of increase for commercial land, saw 'Nitto Nishiki Building' join the list. Mr. Yasuhisa Yamamoto, President of Nishiki Seibu Building, which operates over 10 rental buildings in the area, says, 'Since the transition to the fifth phase of the new coronavirus, new store openings such as izakayas have increased.'"
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"The 'Tatsumiya Building' in Saka, Ichinomiya City, which ranked third in the rate of increase, is also close to the station, and the increase in store openings has contributed to the rise in land prices. Mr. Matsubara, a real estate appraiser, analyzes, 'Land transactions by developers have become more active.'"
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"New demand for condominiums centered on Nagoya City is also supporting the rise in land prices in commercial areas. 'Taimei Building' in Ikeshita, Chikusa-ku, Nagoya City, which ranked second in the rate of increase, has a tower condominium with 39 floors under construction nearby. According to Shinto Tsushin, which handles real estate advertisements, the average price of newly built condominiums sold in the Tokai region in 2023 was ¥50.66 million, an increase of over ¥7 million from five years ago (¥42.97 million). The average floor area is less than 70 square meters, and there is a trend to compress the floor area to keep prices down, with an increase in small units for single occupants. Mr. Hirofumi Sato, a marketing planner, says, 'There is a trend to reduce the floor area to keep prices down and increase small units for single occupants.'"
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Written by Tsuyoshi Hikichi
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