Japan's Fixed-Term Leasehold Apartments Hit Record Supply

Supply of fixed-term leasehold apartments in Japan is expected to reach a record high in 2026 ^[1].

This shift reflects a fundamental change in urban real estate, as both landowners and buyers move away from traditional permanent ownership due to economic pressures. The trend is most visible in major city centers, including Tokyo [2, 3].

These properties differ from standard condominiums because the buyer does not own the land. Instead, they purchase the right to use the land for a specific period. Typical contracts for these apartments are set for 70 years ^[3]. Once the lease expires, the building must be demolished, and the land returned to the owner as a vacant lot ^[3].

Several factors are driving this growth. Landowners are increasingly reluctant to sell their plots entirely to avoid the heavy tax burdens associated with land sales ^[2]. Simultaneously, the skyrocketing cost of land in urban areas has made traditional ownership prohibitively expensive for many buyers ^[2].

Market data indicates that the supply of these units has been trending upward over the last one to two years [1, 2]. Some current model rooms are showcasing developments on a scale of 500 to 600 units ^[3].

This rise also coincides with a broader cultural shift in Japan. There is a diminishing desire among younger generations to own homes permanently, favoring flexibility and lower entry costs over long-term equity ^[2]. By opting for leaseholds, buyers can secure residency in prime locations that would otherwise be unaffordable.