Japan may be in recession, but it's hard to tell from the booming luxury housing market.
The Abenomics-inspired rally in stock markets has deepened the pockets of the country's wealthiest, who are snapping up Tokyo's high-end apartments in a big way.
Last September, the Parkhouse Gran Chidorigafuchi, the most expensive newly-built apartments to come to market since the 2008 financial crisis, saw huge interest from buyers.
"We sold out all the apartments in one day," said Kazuki Sakata, project sales manager at Mitsubishi Estate Group's residential division, who was in charge of the sales.
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The property, located in a prime location overlooking the Imperial Palace gardens and Tokyo's financial district, fetched between 160 and 542 million yen, or around $1.34 – $4.54 million.
Over this summer, another major developer, Nomura Real Estate Development, sold most of its eighty-one luxury apartments at an average 100 million yen a pop, in one day.
Meanwhile, property developer Mori Building Co. has found buyers for almost all its seventy prime Toranomon Hills apartments that came to market in June, a year-and-a-half before schedule, according to Kosei Ajima, the developer's general manager of the residential business promotion unit.
There is no shortage of buyers. Mitsubishi Real Estate's Sakai, who is now in charge of selling the Parkhouse Nishishinjuku Tower60 complex, located near the Tokyo Metropolitan Government Building in Shinjuku with prices starting at 31 million yen for one room studio flats, said "we've already received several offers" for the most expensive penthouses that will be sold for around 350 million yen.
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The strong demand by luxury home buyers is a bright spot in the property sector, which has taken a beating following the nationwide consumption tax rate hike to 8 percent from 5 percent in April.
"We believe the stock market rally since Shinzo Abe came to power in December 2012 has increased the wealth of the richest Japanese," says Hiroyuki Miyamoto, senior consultant at Nomura Research Institute (NRI). The Nikkei, the benchmark stock index, has surged 72 percent since the end of November 2012.
Nearly one million households in Japan owned financial assets of between one and five hundred million yen ($837,830 – $4.2 million) in 2013, up 25.4 percent on 2011, according to NRI's figures. Combined with the 8 percent rise in the number of "super-rich" households, the value of assets held by the wealthy has surged 28.2 percent to 241 trillion yen.
And they are putting a chunk of that money into the small number of newly built luxury apartments coming to market in prime Tokyo residential areas, according to Miyamoto.
Abenomics not the only reason
Analysts say a supply shortage is also fueling the strong sales. "The availability of plots large enough to build new apartment complexes in central Tokyo is very limited," said Daisuke Kitai, spokesperson at Nomura Real Estate Development.
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Nomura Real Estate's next luxury project, for example, with apartments at up to 500 million yen, will only come to market in the middle of 2015, while Mori Building's next residential project is currently under construction, with sales slated to begin in September.
Another factor is demand from other parts of Asia.
"Tokyo prices look relatively reasonable compared with similar quality properties in Hong Kong and Singapore," said Kitai.
Of the seventy properties sold in the Toranomon Hills complex this summer, 30 percent were sold to foreigners, many from Hong Kong and Taiwan.
"They see it as an investment," said Mori Building's Ajima, "whereas many Japanese are buying an apartment as a gift to their children to minimize the eventual inheritance tax burden."