Number of Tokyo Leasehold Condos Surge Due to Rising Land Prices

The Yomiuri Shimbun

14:45 JST, October 31, 2025

The number of condominiums built on leased land under fixed-term contracts is rising sharply. In the Tokyo metropolitan area, the total number in 2025 may reach an all-time high. Amid surging real estate prices in urban centers, this model has become increasingly popular as it offers clear benefits to homebuyers, landowners and developers alike.

A leasehold condo is built on land leased for the long-term. Buyers only own the building itself and pay monthly land rent to the landowner. While initial costs are generally lower compared to properties that include owning the land, it becomes more difficult for condo owners to sell their units as the land lease contract nears expiration.

Mitsui Fudosan Residential Co. is currently building Park Tower Shibuya Sasazuka, a condominium with 659 units located about a four-minute walk from Sasazuka Station on the Keio Line in Tokyo’s Shibuya Ward. The leasehold contract is roughly 70 years.

A three-bedroom unit that is about 70 square meters is priced around ¥160 million, with monthly land rent at approximately ¥2,000 — about 20% cheaper than comparable condos in the area that include land ownership. The project has proven particularly popular with families who are first-time homebuyers, and all 230 units offered in the initial sales phase sold out on the first day.

The development of leasehold condos is accelerating nationwide. In Tokyo, Nippon Steel Kowa Real Estate Co. is constructing one in Bunkyo Ward, while Mitsubishi Estate Residence Co. is developing another in Koto Ward. In Osaka, Kanden Realty & Development Co. is building a condominium in the Nakanoshima district — each one has a leasehold contract of about 70 years.

According to the Real Estate Economic Institute Co., the number of newly built leasehold condos units in the greater Tokyo area reached 634 during the first half of 2025 — a 3.7-fold increase from a year earlier — while the total number of traditional condo units for sale fell for the fourth consecutive year. Based on current construction activity, the annual total for 2025 is expected to hit around 1,500 units, the highest on record.

With land prices continuing to climb, both landowners and developers see major advantages in the leasehold model.

Park Tower Shibuya Sasazuka is being built on the former factory site of Nakamuraya Co., the restaurant and food manufacturer best known for its Shinjuku Nakamuraya brand. A company representative said the decision to lease the land rather than sell it outright stemmed from the view that “retaining ownership would preserve its higher long-term value.”

For developers, leasehold projects open new opportunities at a time when suitable plots for large-scale development in city centers are becoming scarce. The arrangement allows them to propose alternatives to selling when approaching landowners.

“Many homeowners consider relocating within 10 to 20 years after purchase,” said a senior chief researcher at Tokyo Kantei Co., a real-estate data firm. “In today’s inflated real estate market, leasehold condominiums offer meaningful advantages to all parties — buyers, landowners and developers.”