Apartment Construction Costs in Japan 2026: Full Price Guide

In Japan, apartment construction costs in 2026 run roughly ¥750,000 to ¥950,000 per tsubo (approx. USD 5,000–6,300) for wood-frame construction, ¥850,000 to ¥1,050,000 (approx. USD 5,700–7,000) for light-gauge steel, and ¥1,100,000 to ¥1,450,000 (approx. USD 7,300–9,700) for reinforced concrete, measured on the hontai kōji-hi (本体工事費, the core building works alone). The tsubo (坪) is the unit in which essentially every Japanese construction quote is written: 1 tsubo ≈ 3.3 m² ≈ 35.6 sq ft. On a 70-tsubo site (approx. 231 m²) with a 60% building coverage ratio and a 200% floor area ratio, a two-storey wood-frame apartment yields about 71 tsubo of gross floor area and eight units, and the all-in total including ancillary works and soft costs comes to ¥67–85 million (approx. USD 447,000–567,000).

You own the land — so what does it actually cost to put an apartment building on it? Answer that with a per-tsubo rate alone and you will understate the real figure by 20–30% almost every time. Land tsubo and gross floor area tsubo are two entirely different numbers, and the quoted per-tsubo rate includes neither ancillary works nor soft costs. This guide is built so that you can reach a total for your own project from four different entry points: land area, number of storeys, number of units, and budget.

Three features of this market have no direct equivalent in the US, UK or Australian markets, and they shape every figure below. First, the small wood-frame rental building — the apāto (アパート), typically two storeys and four to ten compact units — is a mainstream, bankable investment product in Japan, not a marginal asset class the way small timber-frame rental blocks are in most Western markets. Second, buildable volume is capped by two separate ratios at the same time: kenpeiritsu (建蔽率, building coverage ratio, which caps the footprint) and yōsekiritsu (容積率, floor area ratio, which caps total floor area). Third, the hōtei taiyō nensū (法定耐用年数, statutory useful life) that Japanese tax law assigns to each structure type — 22 years for wood, 47 years for reinforced concrete — is the figure Japanese banks anchor their loan tenor to. In Japan, the structure you choose determines how long you can borrow.

Key takeaways

Apartment construction costs in Japan run ¥750,000–¥950,000 per tsubo (approx. USD 5,000–6,300) for wood-frame and ¥1,100,000–¥1,450,000 (approx. USD 7,300–9,700) for reinforced concrete on a core-works basis. The all-in total is 1.25 to 1.33 times the core works figure.
To get from land area to buildable floor area, work in this order: land tsubo → building coverage ratio for the footprint → storeys and floor area ratio for gross floor area → a practical efficiency factor of about 85%. A 70-tsubo site yields roughly 71 tsubo of gross floor area.
Cost per unit barely moves with scale. Whether you build 4 units or 10, each costs roughly ¥8.4–10.8 million (approx. USD 56,000–72,000). Japanese apartment construction offers very little economy of scale.
A construction budget of ¥100 million (approx. USD 667,000) buys about 10 units in a two-storey wood-frame building, or 6–7 units in a three-storey reinforced concrete one.
On the 国土交通省 (Ministry of Land, Infrastructure, Transport and Tourism, MLIT) construction cost deflator, with FY2020 = 100, the May 2026 readings were 126.7 for wooden housing, 126.8 for reinforced concrete housing and 128.8 for steel-frame housing. Divide an older quote by the ratio between the two index readings to restate it in today's money.

How much does apartment construction cost per tsubo in Japan in 2026? (by structure)

As of 2026, apartment construction in Japan costs roughly ¥750,000–¥950,000 per tsubo for wood-frame, ¥850,000–¥1,050,000 for light-gauge steel, ¥1,000,000–¥1,300,000 for heavy-gauge steel and ¥1,100,000–¥1,450,000 for reinforced concrete, all on a core-works basis. The critical point is that these are rates for the core building works only. What you actually pay is that figure plus futai kōji-hi (付帯工事費, ancillary works such as ground improvement and external works) plus shohiyō (諸費用, soft costs such as taxes, registration and insurance). Unlike the US or UK convention of quoting an all-in cost per square foot, the Japanese headline per-tsubo rate is deliberately narrow, and every experienced owner mentally grosses it up.

Structure	Core works, per tsubo	All-in per tsubo (incl. ancillary works and soft costs)	Suitable storeys	Statutory useful life (residential)
Wood frame (木造)	¥750,000–950,000 (USD 5,000–6,300)	¥950,000–1,200,000 (USD 6,300–8,000)	2–3	22 years
Light-gauge steel (軽量鉄骨造, frame members 3 mm or less)	¥850,000–1,050,000 (USD 5,700–7,000)	¥1,100,000–1,350,000 (USD 7,300–9,000)	2–3	19 years
Heavy-gauge steel (重量鉄骨造, frame members over 4 mm)	¥1,000,000–1,300,000 (USD 6,700–8,700)	¥1,300,000–1,650,000 (USD 8,700–11,000)	3–5	34 years
Reinforced concrete (鉄筋コンクリート造, RC)	¥1,100,000–1,450,000 (USD 7,300–9,700)	¥1,400,000–1,850,000 (USD 9,300–12,300)	3 and above	47 years

These per-tsubo ranges are practical market guidance, not figures you can pull directly from an official statistic. What 国土交通省 (MLIT) publishes is an index of construction costs, not a per-tsubo rate. The statutory useful lives, by contrast, are fixed values set by ministerial ordinance, grounded in 国税庁 (National Tax Agency) "No.2100 減価償却のあらまし (Outline of Depreciation)" and the 減価償却資産の耐用年数等に関する省令 (Ministerial Ordinance on Useful Lives of Depreciable Assets). Your choice of structure therefore drives not only the build cost, but the depreciation schedule and the loan tenor a Japanese lender will consider. For an overseas investor this is the single most under-appreciated point: a 22-year wooden building will rarely attract a 35-year loan from a Japanese bank, however strong the rent roll.

How much do per-tsubo rates vary by region in Japan?

For the same structure and the same floor area, per-tsubo rates move by around 20% depending on where in Japan you build. The main drivers are trade labour rates, haulage distance for materials, and site conditions such as narrow plots and restricted deliveries. No official statistic publishes regional per-tsubo rates, so read the table below as practical market guidance.

Region	Level, with the national benchmark set at 100	Main drivers of variation
Tokyo's 23 special wards and central urban districts	110–125	High trade labour rates, constrained work on narrow plots, restricted material deliveries
Greater Tokyo outside the 23 wards (Kanagawa, Saitama, Chiba)	103–112	Tight labour supply
Major cities of Kansai and Tokai (Osaka, Kyoto, Kobe, Nagoya)	98–108	Competition for urban trades
Regional core cities (Sapporo, Sendai, Hiroshima, Fukuoka and similar)	92–102	Capacity of local contractors
Suburban and rural areas	88–98	Travel distance to site, sourcing trades across a wide area

If you are planning a project in central Tokyo, applying the national average per-tsubo rate leaves you more than 10% adrift. Conversely, in suburban and rural Japan a lower per-tsubo rate comes with lower rents, so the yield does not automatically improve — a trap for foreign investors used to markets where build cost and rent are less tightly coupled. If you are weighing a mid- or high-rise manshon (マンション, the Japanese term for a concrete-framed apartment building) rather than a low-rise apāto, both the cost level and the design-and-build team you need are different again.

Cost by land size: what does an apartment cost on a 30, 40, 70, 90 or 100-tsubo site in Japan?

To answer directly: on a 70-tsubo site with a 60% building coverage ratio and a 200% floor area ratio, a two-storey wood-frame apartment gives you about 71 tsubo of gross floor area and a total construction cost of ¥67–85 million (approx. USD 447,000–567,000). Before any of that, though, one point has to be nailed down: land tsubo and gross floor area tsubo are completely different numbers. In markets where a plot's development potential is negotiated case by case through planning permission, this distinction is fuzzy. In Japan it is arithmetic, fixed in advance by the zoning attached to your land.

Four steps from land area to buildable floor area

"How much does it cost to build on 70 tsubo?" can mean 70 tsubo of land or 70 tsubo of floor area. The totals differ by nearly a factor of two, so settle which one you mean first. The sequence from land area to buildable floor area has four stages.

Take the land area in m² from the tōkibo (登記簿, the official land register) and divide by 3.306 to convert it into tsubo.
Land tsubo × building coverage ratio = the maximum footprint you may build at ground level.
Compare maximum footprint × number of storeys against land tsubo × floor area ratio. The smaller of the two is your gross floor area ceiling.
Take about 85% of that ceiling as the floor area you can realistically plan.

The 85% factor in step four exists because you can never build right up to the coverage ratio limit: separation from neighbouring plots, road setbacks, parking and access routes, and exterior wall setbacks all eat into the footprint. Once design work begins, that gap is where the first divergence from your original assumption appears. Building coverage and floor area ratios are set by the yōto chiiki (用途地域, zoning use district) applying to your land, so read this alongside our guide to Japan's 13 zoning use districts and why Category I Residential suits rental development.

Land area	Maximum footprint (60% coverage ratio)	Gross floor area ceiling, two storeys	Realistically plannable floor area	Total cost, two-storey wood frame
30 tsubo (approx. 99 m²)	18 tsubo	36 tsubo	approx. 30 tsubo	approx. ¥29–36 million (USD 193,000–240,000)
40 tsubo (approx. 132 m²)	24 tsubo	48 tsubo	approx. 41 tsubo	approx. ¥39–49 million (USD 260,000–327,000)
50 tsubo (approx. 165 m²)	30 tsubo	60 tsubo	approx. 51 tsubo	approx. ¥48–61 million (USD 320,000–407,000)
70 tsubo (approx. 231 m²)	42 tsubo	84 tsubo	approx. 71 tsubo	approx. ¥67–85 million (USD 447,000–567,000)
90 tsubo (approx. 297 m²)	54 tsubo	108 tsubo	approx. 92 tsubo	approx. ¥87–110 million (USD 580,000–733,000)
100 tsubo (approx. 330 m²)	60 tsubo	120 tsubo	approx. 102 tsubo	approx. ¥97–122 million (USD 647,000–813,000)

Totals are calculated at an all-in per-tsubo rate of ¥950,000–¥1,200,000 (USD 6,300–8,000), inclusive of ancillary works and soft costs. If you are planning in reinforced concrete, the same floor area is priced at ¥1,400,000–¥1,850,000 per tsubo (USD 9,300–12,300), so a 70-tsubo site works out at approximately ¥99–131 million (USD 660,000–873,000).

How to adjust when your coverage and floor area ratios differ

The table above assumes a 60% coverage ratio and a 200% floor area ratio, the most common combination in Japan's residential zoning districts. Where your conditions differ, adjust as follows.

50% coverage ratio: your maximum footprint falls to 0.83 times. On 70 tsubo of land that means a 35-tsubo footprint, a 70-tsubo two-storey ceiling, and roughly 59 tsubo in practice.
80% coverage ratio: 70 tsubo of land gives a 56-tsubo footprint and a 112-tsubo two-storey ceiling. That falls short of the 140 tsubo the 200% floor area ratio would permit, leaving 28 tsubo of unused volume. Capturing it means considering a third storey.
150% floor area ratio: 70 tsubo of land gives a 105-tsubo ceiling. At two storeys (84 tsubo) the floor area ratio is not the binding constraint.
Corner-plot relaxation and fire-resistant construction in fire prevention districts: each may add 10 percentage points to your coverage ratio. Your municipal city planning department will confirm which apply.

Owners of 70-tsubo sites often open the conversation with "about ¥100 million, isn't it?" For a two-storey wood-frame building the figure is ¥67–85 million (USD 447,000–567,000); ¥100 million (USD 667,000) is the level you reach by choosing three storeys or reinforced concrete. Change one assumption and both the equity you need and the debt you can raise move with it. If you are at the stage of putting a rough total against your own land, INA can work through the land register and zoning designation with you in a free consultation.

Cost by storeys: how much more does a three-storey apartment cost than a two-storey one?

For the same gross floor area, a three-storey building costs 10–20% more per tsubo than a two-storey one. Adding a storey does not merely add floor area — it raises the required standard for structure, means of escape and foundations by a full step. Put the other way round: if the floor area is the same, there is no reason to build three storeys. Three storeys make sense only when the site is tight and the floor area ratio still has headroom. This is a distinctly Japanese calculation, because the ceiling is a numerical ratio rather than a negotiated planning outcome.

Structure	All-in per tsubo, two storeys	Total for 60 tsubo	All-in per tsubo, three storeys	Total for 60 tsubo
Wood frame	¥950,000–1,200,000 (USD 6,300–8,000)	¥57–72 million (USD 380,000–480,000)	¥1,100,000–1,400,000 (USD 7,300–9,300)	¥66–84 million (USD 440,000–560,000)
Light-gauge steel	¥1,100,000–1,350,000 (USD 7,300–9,000)	¥66–81 million (USD 440,000–540,000)	¥1,220,000–1,500,000 (USD 8,100–10,000)	¥73–90 million (USD 487,000–600,000)
Heavy-gauge steel	Rarely chosen for two storeys	Not applicable	¥1,300,000–1,650,000 (USD 8,700–11,000)	¥78–99 million (USD 520,000–660,000)
Reinforced concrete	Uneconomic at two storeys	Not applicable	¥1,400,000–1,850,000 (USD 9,300–12,300)	¥84–111 million (USD 560,000–740,000)

What extra costs a third storey brings

The higher per-tsubo rate breaks down into the following items. When you compare quotes, check that each of these has actually been priced.

Structural calculation and structural conformity assessment: three-storey wood-frame buildings in Japan require full structural calculation, and above a certain scale a separate conformity assessment as well. Expect the design programme to lengthen by one to two months.
Fire-resistance requirements: a three-storey apartment building in a jun-bōka chiiki (準防火地域, quasi-fire prevention district) must be fire-resistant or meet a defined quasi-fire-resistant specification, which raises the specification of external walls, eave soffits and openings.
Two means of escape and a direct staircase: the position and number of staircases begins to drive the plan. Common area increases, and the share left for lettable floor area falls.
Heavier foundations and ground improvement: the building weighs more, so the same ground conditions may now require a ground improvement method or piling.
Water supply system: at three storeys and above, a direct-connection booster system or a storage tank may be required, adding both equipment cost and maintenance cost.
Temporary works and lifting: scaffolding runs to more lifts and the crane plan changes, increasing preliminaries.

How to judge whether the third storey is worth it

The test is not "is the site small?" but "can the floor area ratio and the setback controls actually deliver a third floor?" On land with a 200% floor area ratio built at 60% coverage, two storeys capture only 120% of the land area in floor space, leaving 80 percentage points of permitted volume unused. Go to three storeys and you use up to 180% of the land area, increasing the unit count by half.

Against that, Japan layers several setback controls on top of the ratios: dōro shasen (道路斜線, the road diagonal-plane limit), kitagawa shasen (北側斜線, the northern boundary diagonal-plane limit that protects a neighbour's daylight), height districts and shadow regulations. Where these bite, part of the third floor is shaved away and the plan distorts. On a 40-tsubo site with a 200% floor area ratio, it is common to explore three storeys only to find that the northern diagonal-plane limit leaves room for just two habitable rooms on the top floor — the per-tsubo rate rises and the unit count does not. Judge the extra storey by setting the additional annual rent from the extra units against the additional construction cost. As a rule of thumb, if the extra cost exceeds 12 to 15 years of that extra rent, two storeys is the better answer.

Cost by unit count: what do 4, 6 and 8-unit apartments cost, and what is the cost per unit?

A four-unit wood-frame apartment in Japan costs roughly ¥34–43 million (approx. USD 227,000–287,000); eight units, roughly ¥67–85 million (approx. USD 447,000–567,000). What surprises most people — and it surprises investors from larger-format markets most of all — is that the cost per unit barely falls as you add units. From four units to ten, each stays within a band of roughly ¥8.4–10.8 million (approx. USD 56,000–72,000). Where a US or European developer would expect meaningful economies of scale between a four-unit and a ten-unit building, Japanese low-rise construction delivers almost none.

Units	Total lettable area (25 m² per unit)	Gross floor area incl. common parts	Land needed, two-storey wood frame	Total construction cost (wood frame)	Cost per unit
4	100 m² (approx. 30 tsubo)	approx. 36 tsubo	approx. 35 tsubo	approx. ¥34–43 million (USD 227,000–287,000)	approx. ¥8.5–10.8 million (USD 56,700–72,000)
6	150 m² (approx. 45 tsubo)	approx. 53 tsubo	approx. 52 tsubo	approx. ¥50–64 million (USD 333,000–427,000)	approx. ¥8.4–10.6 million (USD 56,000–70,700)
8	200 m² (approx. 61 tsubo)	approx. 71 tsubo	approx. 70 tsubo	approx. ¥67–85 million (USD 447,000–567,000)	approx. ¥8.4–10.6 million (USD 56,000–70,700)
10	250 m² (approx. 76 tsubo)	approx. 89 tsubo	approx. 87 tsubo	approx. ¥85–107 million (USD 567,000–713,000)	approx. ¥8.5–10.7 million (USD 56,700–71,300)

The common areas most people forget when counting units

Total lettable area and gross floor area are not the same figure. Staircases, corridors, pipe spaces, meter boxes and the refuse store all add on top. For a low-rise Japanese apartment, allow for gross floor area of 1.15 to 1.2 times total lettable area. Miss this and you will undersize the land you need by about 10%.

The second pitfall is the lettable area you set per unit. A 20 m² studio and a 25 m² studio differ by 20% in the floor area they require. In an area where rents are the same, the 20 m² version shows a higher yield on paper, but it competes against far more stock when you come to let it — and compact single-occupancy units of this size, normal in urban Japan, would be considered unusually small in most Western rental markets. If you are targeting family units of 50 m² and above, the same gross floor area yields half as many units, so cost per unit rises to the ¥17–21 million range (approx. USD 113,000–140,000).

Cost by budget: what can you build in Japan for ¥50 million or ¥100 million?

If your budget is already fixed, you can work the calculation backwards. A construction budget of ¥50 million (approx. USD 333,000) buys about 47 tsubo of floor area and five units in a two-storey wood-frame building; ¥100 million (approx. USD 667,000) buys about 93 tsubo and ten units. Spend that same ¥100 million on three-storey reinforced concrete and floor area falls to about 62 tsubo and the unit count to six or seven.

Construction budget (all-in)	Two-storey wood frame	Three-storey light-gauge steel	Three-storey reinforced concrete
¥30 million (USD 200,000)	approx. 28 tsubo / 3 units	approx. 23 tsubo / 2 units	approx. 18 tsubo / 2 units
¥50 million (USD 333,000)	approx. 47 tsubo / 5 units	approx. 38 tsubo / 4 units	approx. 31 tsubo / 3 units
¥80 million (USD 533,000)	approx. 75 tsubo / 8 units	approx. 60 tsubo / 6 units	approx. 49 tsubo / 5 units
¥100 million (USD 667,000)	approx. 93 tsubo / 10 units	approx. 75 tsubo / 8 units	approx. 62 tsubo / 6–7 units

Floor areas are derived by dividing the budget by an all-in per-tsubo rate of ¥1,070,000 (USD 7,100) for two-storey wood frame, ¥1,330,000 (USD 8,900) for three-storey light-gauge steel and ¥1,620,000 (USD 10,800) for three-storey reinforced concrete. Unit counts assume 25 m² per unit, with gross floor area set at 1.175 times total lettable area to allow for common parts. If you already know the per-tsubo rate in your own quote, substitute it and run the same arithmetic. Land cost is not included in these budgets.

Wood frame or reinforced concrete for a ¥100 million budget?

Structure is where a ¥100 million budget divides opinion most sharply. Wood frame gives you more units and a higher headline yield, but a statutory useful life of only 22 years. Reinforced concrete gives you fewer units in exchange for 47 years, allowing depreciation to be spread over a much longer period and — importantly in Japan — tending to support a longer loan tenor from the lender.

Item	Two-storey wood frame, 10 units	Three-storey reinforced concrete, 7 units
Gross floor area	approx. 93 tsubo (approx. 307 m²)	approx. 62 tsubo (approx. 205 m²)
Lettable area per unit	approx. 25 m²	approx. 25 m²
Assumed monthly rent per unit	¥65,000 (USD 433)	¥75,000 (USD 500)
Annual rent at full occupancy	¥7.8 million (USD 52,000)	¥6.3 million (USD 42,000)
Gross yield on construction cost	7.8%	6.3%
Statutory useful life	22 years	47 years
Annual depreciation (straight line, simplified)	approx. ¥4.55 million (USD 30,300)	approx. ¥2.13 million (USD 14,200)
Decline in the building's assessed value for fixed asset tax	Rapid	Gradual

Depreciation here is a simple division of the building's acquisition cost by its statutory useful life. In practice the building shell and the building fixtures and fittings are booked separately, so the actual figures differ. Read the table this way: wood frame leaves more cash in hand in the early years, while reinforced concrete offers steadier performance across the holding period and a better valuation at exit. Which is right depends on how long you intend to hold and whether the asset is part of a succession plan — a live consideration in Japan, where rental buildings are widely used to manage inheritance tax exposure.

What goes into the cost: core works, ancillary works and soft costs

The total cost of building an apartment in Japan breaks into three parts: core works at 75–80%, ancillary works at 15–20%, and soft costs at 5–7%. The per-tsubo rate a housebuilder or contractor first puts in front of you is, almost without exception, the core works figure alone. Remember that the total is 1.25 to 1.33 times the core works cost, and you will avoid the gap opening up the moment you read the first proposal. This convention differs sharply from US or UK practice, where a headline build cost is far more likely to be quoted on something close to an all-in basis.

Category	Share of total	What it covers
Core works (本体工事費)	75–80%	Temporary works, foundations, frame, roof, external walls, waterproofing, internal finishes, joinery, in-unit fittings (kitchen, bathroom, washbasin, WC), internal electrical and plumbing runs
Ancillary works (付帯工事費)	15–20%	Ground survey and ground improvement, demolition of existing buildings, site formation and retaining walls, external water, drainage and gas connections, electrical supply connection, external works (parking, bicycle parking, fencing, planting), refuse store, external lighting, signage and letterboxes
Soft costs (諸費用)	5–7%	Design and construction supervision fees, building confirmation application fees, registration and licence tax plus judicial scrivener fees for the building description and ownership registrations, real estate acquisition tax, stamp duty, fire and earthquake insurance, loan arrangement and guarantee fees, the jichinsai (地鎮祭, Shinto ground-breaking ceremony) and topping-out ceremony, and confirmed boundary survey

Design fees change dramatically with the procurement route

Design fees are the single most variable line within soft costs. Where design and construction are procured together, as with Japan's large housebuilders, roughly 1–3% of the core works cost is effectively absorbed within the contract. Where design and supervision are procured separately from an architectural practice, expect a separate 5–8% of the core works cost.

Separate procurement costs more, but it lets you tender the construction competitively and puts an independent party in charge of checking build quality. Where the plot has an awkward shape that standard plans cannot accommodate, or where the scheme exceeds 100 tsubo of floor area, paying the design fee can still bring the total down.

How far have apartment construction costs risen? Reading 2026 through the construction cost deflator

According to the 建設工事費デフレーター (Construction Cost Deflator) published by 国土交通省 (MLIT), with FY2020 set at 100, the May 2026 readings were 126.7 for wooden housing, 126.8 for reinforced concrete housing and 128.8 for steel-frame housing. In other words, construction costs in Japan have risen by 27–29% in roughly six years, regardless of structure. The old assumption that wood is the cheap option no longer holds in the way it once did. Note that "FY" here means the Japanese fiscal year, running from April to March — FY2020 covers April 2020 to March 2021.

Period	Wooden housing	Reinforced concrete housing	Steel-frame housing
FY2019	100.1	100.2	100.2
FY2020 (base year)	100.0	100.0	100.0
FY2021	110.3	105.2	108.3
FY2022	116.7	111.7	116.4
FY2023 (provisional)	114.8	113.9	117.0
FY2024 (provisional)	118.8	118.9	121.4
FY2025 (provisional)	122.3	122.1	124.3
May 2026	126.7	126.8	128.8

Read the table from top to bottom and you will see that wood alone fell below its previous year in FY2023. The index does not rise in a straight line; some years show a pause or a reversal, and that matters for the adjustment calculation that follows.

The climb has continued over the most recent twelve months. Between May 2025 and May 2026, wood rose from 120.4 to 126.7, up 5.2%; reinforced concrete from 120.3 to 126.8, up 5.4%; and steel frame from 123.0 to 128.8, up 4.7%. One technical caution: from the April 2026 figures onward, this deflator has been rebased to FY2020 = 100. Readings on the previous FY2015 base cannot be placed side by side with the current series, so check the base year whenever you compare an index quoted in someone else's material. For the reasons behind the increase and the outlook from here, see our analysis of why apartment construction costs surged in Japan and how long the pressure is likely to last.

How to restate an old budget estimate in today's money

This is the part of the article we most want you to use. Many owners still have a rough estimate from a land-use consultation of several years ago sitting in a drawer, and building a budget on that number will break the plan. The deflator lets you calculate for yourself what that estimate is worth today — a check that matters even more for an overseas owner, whose Japanese project may have sat dormant through a period of unusually sharp domestic cost inflation.

Adjusted amount = original estimate × (index for May 2026 ÷ index at the time of the estimate)

Suppose you received a rough figure of ¥60 million (approx. USD 400,000) for a wood-frame apartment in FY2021. Dividing 126.7 by 110.3 gives an adjustment factor of about 1.15. The equivalent figure today is approximately ¥69 million (approx. USD 460,000). The difference is roughly ¥9 million (approx. USD 60,000) — enough to overturn your entire equity assumption. Adjustment factors by structure are as follows.

When the estimate was issued	Wood frame factor	Reinforced concrete factor	Steel frame factor
FY2020	approx. ×1.27	approx. ×1.27	approx. ×1.29
FY2021	approx. ×1.15	approx. ×1.21	approx. ×1.19
FY2022	approx. ×1.09	approx. ×1.14	approx. ×1.11
FY2023	approx. ×1.10	approx. ×1.11	approx. ×1.10
FY2024	approx. ×1.07	approx. ×1.07	approx. ×1.06
FY2025	approx. ×1.04	approx. ×1.04	approx. ×1.04

You may find it odd that the wood-frame factor for FY2023 is larger than the one for FY2022. As the trend table above shows, this is because the wood index dipped in FY2023; it is not an arithmetic error. If the date on your estimate straddles a fiscal year boundary, dividing by the monthly index rather than the annual one gives a more accurate result.

We recommend running this adjustment before you sit down with a construction company. Start the conversation anchored to an old number and the quote in front of you will feel expensive, and your judgement will be pulled along by that feeling. Restate the figure in today's money first and you can assess the quote calmly. If you want to go deeper into how construction cost indices work, see our guide to reading the RC apartment building cost index and where it stands in 2026.

Supply is thinning out, and that changes your negotiating position

According to the 建築着工統計調査報告 (Statistical Survey on Building Construction Starts) from 国土交通省 (MLIT), new housing starts in FY2025 totalled 711,171 units, down 12.9% year on year, of which rental housing accounted for 308,906 units, down 13.5%. Set against FY2024, when rental housing starts came to 357,074 units and were up 4.9%, that is an abrupt contraction within a single year.

For an owner, this figure carries two implications. The first is that competitive tendering may become harder. Fewer starts mean fewer orders for construction companies, but firms that have already cut back their teams start being selective about small projects. The second is that programme dates become harder to predict. Allow more contingency than you would have previously between contract signature and the start on site.

How to build cheaper in Japan — and what you must never cut

There are genuine ways to bring apartment construction costs down in Japan, but every saving comes paired with a side effect and the two must be read together. The best value for money is in simplifying the building form, which affects neither tenants nor the eventual sale. At the other extreme, acoustic separation, insulation, waterproofing and the renewability of pipework cost several times more to put right later than to specify at the outset, and are therefore off limits.

Cost reduction measure	Indicative saving	Side effect on lettings and exit value
Simplify the form to a rectangular, full two-storey plan	3–7% of core works	Almost none. Consider this first
Adopt the contractor's standard plan and standard specification	3–8% of core works	Where similar-looking buildings line the street, tenants compare on rent alone
Standardise in-unit fittings to the normal rental specification	2–4% of core works	Minimal impact for single-occupancy units. For family units it shows directly at viewings
Drop external wall and roof materials by one grade	1–3% of core works	Shortens the renewal cycle for the envelope, bringing repair costs forward to years 10–15
Reduce lettable area per unit from 25 m² to 20 m²	10–15% of total, at the same unit count	Rents fall too, so the yield does not automatically improve
Change from three storeys to two	10–20% on the per-tsubo rate	Fewer units and lower gross income. Unused floor area ratio also weighs on exit valuation
Keep external works and planting to a minimum	1–2% of total	Do not cut parking, bicycle parking or the refuse store. They feed straight into your letting terms

Cutting lettable area from 25 m² to 20 m² shrinks gross floor area by nearly 20%. That the total falls only 10–15% is because the number of kitchens, bathrooms, washbasins and WCs is set by the unit count, not the floor area, and does not fall when the rooms shrink. Assume the total drops in proportion to the area and your funding plan will be wrong.

Four areas you must not cut

Trying to address any of the following after completion means either asking tenants to vacate or opening up the building. Specifying them properly at construction is cheaper in the end.

Acoustic performance of party walls and floors: noise ranks among the leading reasons tenants leave wood-frame apartments in Japan, where lightweight timber construction transmits impact sound more readily than the concrete construction common in much of Europe. Raising the acoustic grade by one step costs a few tens of thousands of yen per unit; fixing it afterwards means stripping out the interiors entirely.
Thermal performance: the tenant pays the energy bills, but cold and heat are reasons not to renew a lease. Window specification matters most of all.
Roof and balcony waterproofing: water ingress shortens the life of the building itself. Check the waterproofing specification and its warranty period while you are still reading the quote.
Renewability of water and drainage pipework: header pipework and access panels add very little at construction stage. Pipework buried in walls with no access panel turns the renewal works twenty years from now into a major undertaking.

Treat "low cost" as meaning not a cheap building but a building where you chose what to cut. The only things safe to cut are the ones that will never cause a tenant to leave. When an owner asks us to bring construction costs down, drawing that line together is where we start.

Working back from construction cost: yield, debt service ratio and equity

Whether an apartment construction cost is reasonable is decided not by its size but by whether the numbers work. Take an owner who already holds the land and is planning a two-storey wood-frame building of eight units, 71 tsubo of floor area, at a construction cost of ¥75 million (approx. USD 500,000), and follow the figures through.

Item	Amount	Basis
Monthly rent at full occupancy	¥520,000 (USD 3,467)	¥65,000 × 8 units
Annual rent at full occupancy	¥6.24 million (USD 41,600)	¥520,000 × 12 months
Gross yield on construction cost	8.3%	¥6.24 million ÷ ¥75 million
Operating costs (management fee, common area utilities, insurance, minor repairs)	−¥940,000 (USD 6,300)	15% of annual rent
Fixed asset tax and city planning tax (building portion)	−¥400,000 (USD 2,700)	Indicative, with the reduction for newly built housing applied
Vacancy loss	−¥310,000 (USD 2,100)	Assuming 95% occupancy
Annual net operating income (NOI)	¥4.59 million (USD 30,600)	624 − 94 − 40 − 31 (in units of ¥10,000)
Net yield on construction cost	6.1%	¥4.59 million ÷ ¥75 million

The gap between gross and net yield is 2.2 percentage points. What appears in a construction company's proposal is almost always the gross figure, so convert it to a net basis yourself. Note also that Japan levies koteishisanzei (固定資産税, fixed asset tax) and toshi keikakuzei (都市計画税, city planning tax) annually on the building as well as the land, with a statutory reduction available in the first years for new residential construction. Our guide to calculating gross and net yield on a Japanese apartment investment sets out the method in detail.

How the equity ratio changes what you keep

At the same ¥75 million construction cost, how much equity you put in changes what you keep each year. The figures below assume an interest rate of 2.5%, a 30-year term and equal instalments of principal and interest. Actual terms are set case by case with the lender — Japanese banks price development loans against the borrower's balance sheet and the building's statutory useful life as much as against the asset — so treat these as comparison assumptions only.

Equity ratio	Equity	Debt	Annual debt service	Debt service ratio (vs. rent at full occupancy)	Annual cash left after debt service
10%	¥7.5 million (USD 50,000)	¥67.5 million (USD 450,000)	approx. ¥3.2 million (USD 21,300)	51.3%	approx. ¥1.39 million (USD 9,300)
20%	¥15 million (USD 100,000)	¥60 million (USD 400,000)	approx. ¥2.84 million (USD 18,900)	45.6%	approx. ¥1.75 million (USD 11,700)
30%	¥22.5 million (USD 150,000)	¥52.5 million (USD 350,000)	approx. ¥2.49 million (USD 16,600)	39.9%	approx. ¥2.1 million (USD 14,000)

The debt service ratio is annual debt service as a share of annual rent at full occupancy. Once it passes 50%, a five-point fall in occupancy takes a heavy bite out of what you keep. In the 10% equity case, occupancy dropping to 90% cuts the annual balance to about ¥1.08 million (approx. USD 7,200), which makes it difficult to build a reserve for major repairs. When you size your equity, count not only the contribution to construction cost but also the soft costs and the working capital needed between the start on site and the first tenancies.

These figures exclude land cost, envelope repairs from year 10 onward, and equipment renewal from year 20 onward. Do not judge on construction cost alone; judge on cash flow across the whole holding period.

What to check when comparing construction quotes in Japan

The most common failure in competitive tendering is lining up the totals and picking the cheaper one. What each company includes in its core works figure differs, so the numbers are not comparable as they stand. There is only one way to put them on the same footing: fix the gross floor area, unit count, lettable area per unit and specification grade before you request the quotes. This matters more in Japan than in markets with a standardised elemental cost breakdown, because there is no universal convention here for what belongs in the headline figure.

Item to check	How it appears in the quote	Typical addition if it has been left out
Ground survey and ground improvement	"By others" or "to be determined after ground survey"	¥1–4 million (USD 6,700–26,700)
External water, drainage, gas and electrical connections	Companies differ on whether this sits in core or ancillary works	¥1–3 million (USD 6,700–20,000)
External works (parking, bicycle parking, refuse store)	Frequently marked "by others"	¥1.5–5 million (USD 10,000–33,300)
Demolition, site formation, retaining walls	Unavoidable on any site that is not already cleared	¥2–10 million (USD 13,300–66,700)
Design and construction supervision fees	Absorbed in core works, or charged separately	1–8% of core works
Building description and ownership preservation registration	Booked under soft costs	¥200,000–400,000 (USD 1,300–2,700)
Real estate acquisition tax and registration and licence tax	Billed after completion, easily overlooked	Varies with the building's assessed value
Fire and earthquake insurance	Often a condition of the loan	¥200,000–600,000 (USD 1,300–4,000) for a long-term single premium

Which type of contractor suits which project

Type of contractor	Scale and structure they excel at	How pricing behaves	Best suited to
National housebuilders (ハウスメーカー)	Two to three storeys in wood or light-gauge steel	Standardisation makes the figure predictable. Anything outside the standard specification is expensive	Owners who want to limit variability in programme and quality, and who may also consider a master lease
Regional construction companies and builders	Two to three storeys in wood	More room to negotiate, but also far more variation between firms	Awkwardly shaped plots, or where you want to specify in detail
Mid-tier general contractors	Heavy-gauge steel and reinforced concrete, three storeys and above	Built up from an execution budget. On small projects, overhead makes the rate expensive	Schemes over 100 tsubo, or reinforced concrete held for the long term

Compare the reasoning, not the number. A proposal that is ¥100,000 per tsubo cheaper will lose that advantage the moment ground improvement and external works turn out to be excluded. Our comparison of Japanese housebuilders versus independent construction companies from an investor's perspective covers how to choose in more depth.

Apartment construction cost in Japan is not one number called a per-tsubo rate. It is the accumulation of land conditions, storeys, unit count, specification and procurement route. Make each assumption explicit and you can judge for yourself whether the quote in front of you is fair. Construction cost is the figure that determines the next twenty or thirty years of ownership. If you are at the point of weighing that decision, INA will start with your own quote and your own land conditions in a free consultation.

Frequently asked questions

Q1. How much does it cost to build an apartment on a 70-tsubo site in Japan?

On 70 tsubo (approx. 231 m²) with a 60% building coverage ratio and a 200% floor area ratio, a two-storey wood-frame building gives about 71 tsubo of gross floor area at a total construction cost of ¥67–85 million (approx. USD 447,000–567,000). At 25 m² per unit that comes to about eight units. If you choose three-storey reinforced concrete, the same floor area costs ¥99–131 million (approx. USD 660,000–873,000). Because land tsubo and floor area tsubo are different numbers, start by confirming the registered land area and the zoning use district, then derive the footprint from the coverage ratio.

Q2. How many units can I build for ¥100 million?

About 10 units across roughly 93 tsubo in a two-storey wood-frame building, or 6–7 units across roughly 62 tsubo in three-storey reinforced concrete. These are approximations based on 25 m² per unit, and exclude land cost. Wood frame gives more units and a higher headline yield but a statutory useful life of 22 years; reinforced concrete gives fewer units and 47 years. Which suits you depends on how long you plan to hold and whether succession is part of the plan.

Q3. How much more expensive per tsubo is a three-storey apartment than a two-storey one?

At the same gross floor area, three storeys costs 10–20% more per tsubo. In wood frame at 60 tsubo, two storeys runs ¥57–72 million (approx. USD 380,000–480,000) against ¥66–84 million (approx. USD 440,000–560,000) for three. The additions are structural conformity assessment, fire-resistant or quasi-fire-resistant specification, two means of escape, heavier foundations and pressurised water supply. Decide on the third storey by whether the floor area ratio and the diagonal-plane setback limits genuinely allow a full third floor.

Q4. What is the cost of a four-unit apartment building?

A four-unit, two-storey wood-frame building at 25 m² per unit occupies about 36 tsubo of floor area and costs ¥34–43 million (approx. USD 227,000–287,000) in total, which works out at ¥8.5–10.8 million (approx. USD 56,700–72,000) per unit. That per-unit figure barely changes at six or ten units. Because scale does not bring the unit rate down, size the scheme by the land available and by how easy it will be to manage, not by hoping for construction efficiencies.

Sources and references

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