When considering apartment building management by utilizing land, the first hurdle is often visibility into construction costs. "How much does it cost per tsubo?" and "How can costs be reduced?" This article explains market rates by structure, practical cost-reduction methods, and key points for financial planning.
How Much Does It Cost to Build an Apartment Building? Market Rates for Cost per Tsubo by Structure
Construction costs can be estimated roughly as "cost per tsubo × floor area (number of tsubo)". The approximate market rates by structure are as follows.
| Structure | Market Cost per Tsubo | Features |
| Wood | JPY 400,000–600,000 | Low cost and short construction period. Suitable for up to about 3 to 4 stories |
| Steel frame | JPY 500,000–800,000 | Better earthquake resistance and durability than wood |
| RC (reinforced concrete) | JPY 700,000–1,000,000 | Excellent sound insulation and earthquake resistance, allowing higher rent settings |
| Heavy steel frame | JPY 800,000–1,100,000 | Suitable for high-rise apartment buildings |
| Wall-type precast concrete (PC) | JPY 900,000–1,000,000 | Factory production ensures consistent quality and shorter construction periods |
Regional differences are also significant, and even for the same RC structure, Tokyo can be JPY 200,000 to 300,000 higher per tsubo than Osaka in some cases. For a five-story RC apartment building, a rough guide for construction cost is 200 million yen or more.
Main Factors Affecting Construction Costs
- Building shape: Complex shapes increase wall area and drive up costs
- Number of stories and scale: More stories require greater structural reinforcement
- Layout and equipment grade: Higher-grade equipment can support higher rents but increases initial costs
- Location and building coverage ratio: Floor-area ratio and building coverage ratio limit the actual buildable area
Five Practical Tips to Reduce Apartment Building Construction Costs
1. Keep the building shape simple
By adopting a simple rectangular form known as "yokan-giri," wall area and finishing materials can be reduced. Complex shapes increase construction costs and can make leasing more difficult.
2. Optimize column spacing
If the distance between columns is too long, stronger beams are required, which increases costs. appropriate span settings at the design stage are important.
3. Match the number of elevators to the number of units
one elevator for every 50 units is a useful benchmark. Elevator installation and maintenance affect both construction costs and running costs.
4. Use exterior corridors for shared hallways
By using exterior corridors, additional wall area and air-conditioning equipment become unnecessary, which helps reduce costs.
5. Do not include a basement level
Creating a basement significantly increases construction costs. Installing mechanical parking on an intermediate floor can help keep costs down.
Understand the Costs Incurred Beyond Construction Costs
In addition to construction costs (main building work), the following expenses arise.
- Ancillary construction costs: 10% to 20% of the main construction cost (water, gas, ground surveys, land grading, etc.)
- Miscellaneous expenses: Surveying, design, various insurance policies, registration fees, real estate acquisition tax, etc.
- Running costs during operation: Management fees, repair reserves, and taxes
Exit Strategy in an Era of Inflation and Rising Construction Costs should also be kept in view, and it is essential to establish a long-term financial plan.
Frequently Asked Questions (FAQ)
Which has lower construction costs, RC or PC construction?
The cost per tsubo is broadly similar (roughly in the JPY 700,000 to 1,000,000 range), but PC construction is factory-produced, so indirect cost savings from shorter construction periods can be expected. This varies by scale and design.
Where can financing for apartment building construction costs be obtained?
Major banks, regional banks, credit unions, and non-bank lenders are the main options. Cash flow simulations in the business plan and the equity ratio (roughly 20% to 30% as a guide) are key factors in loan screening.
With construction costs continuing to rise, is now a good time to build?
Material and labor costs continue to increase, but coordination with rising rents is also progressing, so the investment decision varies depending on location, structure, and the income-and-expenditure calculation. Consulting a specialist is recommended.
