Photo/Illutration A concept drawing of an apartment unit priced at 100 million yen or more at The Residence Takamatsu Park Front Tower, a high-rise residential complex under construction in Takamatsu, with views of the Seto Inland Sea (Provided by Central General Development Co.)

Although out of reach for most people, new condominiums priced at 100 million yen ($635,300) or more have been sprouting in major cities for a while, courtesy of soaring real estate prices.

Now, they are also popping up in smaller regional cities as developers steer clear of the fierce competition in metropolitan areas, industry experts say.

The intention is to stimulate demand for holiday homes among wealthy locals.

In Takamatsu, a 20-story condominium complex with the grand name of The Residence Takamatsu Park Front Tower is under construction along the Chuo-dori main street about three minutes on foot from JR Takamatsu Station.

Tokyo-based Central General Development Co., which is developing and selling the condo units, said the sprawling Seto Inland Sea with its many islands can be viewed from the balconies, and Tamamo Koen park, in which the ruins of Takamatsu Castle are located, is nearby.

The condominium will have a total of 54 units.

Of them, four on the 19th and the 20th floors are three-bedroom units with a total floor space in excess of 120 square meters. The starting price is 129 million yen.

Three have already been sold. The complex will be completed in late February.

“Standing in front of the park, people have begun to realize the view is unlikely to be blocked in the future,” said a representative from the company’s Shikoku branch.

While wealthy residents in Kagawa Prefecture are buying pricey condo units as residences or to utilize their assets, those living outside the prefecture use the units as holiday homes, the representative added.

COMPETITION IN MAJOR CITIES

Central General Development also sells apartment units with price tags of at least 100 million yen in Matsuyama and Kochi in the Shikoku region. Sales are said to be brisk.

In Takamatsu, five high-end condo units went on sale after the Kagawa prefectural capital’s first apartments priced at 100 million yen and up were introduced in 2022.

Kaoru Nabuchi, a member of the Kagawa Association of Real Estate Appraisers who runs a real estate appraisal office in Takamatsu, explained the rush by developers from outside the Shikoku region continue to sell luxury condos even though the population there is declining.

“In recent years, many developers have made inroads into prefectural capitals and elsewhere in outlying regions with relatively large populations that have room for growth due to fierce competition in the Tokyo and Kinki metropolitan areas.”

He said it is possible that growing expectations for redevelopment projects completed or currently under way in areas surrounding Takamatsu Station led builders to set bullish prices for their condos.

Takamatsu Orne, a commercial facility that serves as the station building, opened in spring 2024, while Tokushima Bunri University’s new campus and a prefectural-run arena are slated to open this coming spring.

A high-end Mandarin Oriental hotel will also open in 2027.

Industry members cite soaring land prices in the Tokyo metropolitan area as a key reason for the redevelopment boom in regional cities.

According to Real Estate Economic Institute Co., the average price of new condos in Tokyo’s 23 wards between April and September 2024 rose 4.5 percent from the same period of the previous year to a record 110.51 million yen, led by rising labor and construction costs after the COVID-19 pandemic.

“Popular lots in the metropolitan area are so high-priced even in suburban zones that we can’t afford anymore,” said an employee of a developer based outside Kagawa Prefecture, adding that the company has taken note of development projects elsewhere.

OUTSIDE SHIKOKU

In fact, 100-million-yen apartments are on the rise also outside the Shikoku region.

According to real estate assessment firm Tokyo Kantei Co., 17,412 new condos priced over 100 million yen were sold during the five-year period from 2019 through 2023 across the country.

By contrast, 14,484 expensive condo units were sold in the five-year window between 1988 and 1992 during the asset-inflated economy.

A total of 38 new condo units priced at 100 million yen or more were sold in 2019 in five of 37 prefectures, excluding those in the Tokyo metropolitan area and the Keihanshin region, as well as Aichi, Fukuoka and Hokkaido.

But in 2023, a total of 75 high-end condo units were sold in 14 prefectures, including Aomori, Akita, Nagasaki and Kagoshima.

However, luxury condos are in limited supply in regional cities for now and are mostly located on the top floor or other parts of apartment buildings instead of occupying the entire structure, according to the company.

“Demand (for luxury condos in regional cities) from foreign investors is limited except for those in resort areas, but it is quite possible that even 100-million-yen apartments will take root in those cities mainly among wealthy local residents if supply is appropriate for demand,” said Takako Suzuki, a senior researcher and director at Haseko Research Institute Inc.