Is a Pre-Completion Condo Still Worth Buying? Reading Yield as Tokyo Tops ¥145 Million
According to the "CAPS Price Trend Report" published on 10 September 2026 by MFS, which runs an AI property valuation service, the AI-estimated price of a pre-completion condominium (converted to a 3LDK, 70㎡ unit) reached an average of ¥67.95 million nationwide (up 8.9% year on year) and ¥145.72 million in Tokyo's 23 wards (up 13.3%). The upward trend has continued into this year.
Seeing prices keep climbing can easily turn into a feeling that you need to buy now before it's too late. But when you are looking at a property as an investment, what matters is not the price level itself but the yield you can actually get at that price. This article walks through how to read yield on a pre-completion condo and what to confirm before signing.
Is an AI-estimated price the same as today's fair price?
AI valuation services like CAPS process past transaction data and market trends statistically to update an estimated price for a given property every month. Being derived mechanically from a large dataset, it offers a more objective benchmark than relying on personal intuition alone.
That said, an AI-estimated price remains a statistical estimate, not an actual transaction price. Even units on the same rail line and of the same building age can sell for different amounts depending on view, sunlight, and how well the building is managed. In practice, it is more useful to treat the estimate as a starting point for gauging the market than as "the price you should pay."
Pre-completion condo prices as of September 2026 (MFS "CAPS Price Trend Report")
- Nationwide average AI-estimated price
- 67.95million yen
- Tokyo 23 wards AI-estimated price
- 145.72million yen
- Floor area assumed for the estimate
- 70㎡
Up 8.9% year on year (converted to 3LDK, 70㎡)
Up 13.3% year on year (converted to 3LDK, 70㎡)
Converted to a 3LDK-type unit
What's the difference between surface yield and real yield?
When comparing income properties, the first figure most people see is the "surface yield": annual rental income divided by the purchase price. It is simple to calculate, but it excludes every cost you carry while holding the property.
To see what actually lands in your pocket, you need to work out a "real yield" that deducts management fees, reserve fund contributions, fixed asset tax, and fire insurance premiums. It is not unusual for a property with an attractive surface yield to look far less attractive once those costs are factored in.
Surface yield vs real yield (general outline)
| Measure | How it's calculated | Costs included | Typical use |
|---|---|---|---|
| Surface yield | Annual rental income ÷ purchase price | None | Quick first comparison across properties |
| Real yield | (Annual rental income − annual costs) ÷ (purchase price + acquisition costs) | Management fees, reserve fund, fixed asset tax, fire insurance, etc. | Simulating cash flow after purchase |
For example, at a purchase price of ¥145.72 million with assumed monthly rent of ¥280,000, the surface yield works out to roughly 2.3% (¥3.36 million ÷ ¥145.72 million). Once you deduct management fees, reserve fund contributions, and fixed asset tax and add acquisition costs to the denominator, the real yield typically comes in lower still. The higher the price, the more this gap between surface and real yield matters to your decision.
What should you check specifically for a pre-completion unit?
Unlike a completed property, you cannot inspect a pre-completion condo in person — you are judging it from floor plans and rendered images — which makes reviewing the contract terms all the more important.
Under Japan's Building Lots and Buildings Transaction Business Act, a seller is required to arrange protective measures for deposits above a certain amount when selling an incomplete property. Confirming before signing whether the protective measure applies, and which guarantee institution handles it, helps limit your exposure if the seller's finances later deteriorate.
Key relevant provisions
- Building Lots and Buildings Transaction Business Act, Article 35
- Requires a licensed real estate transaction agent to explain key matters before a contract is signed. For pre-completion units, this generally covers construction progress management and the expected handover date.
- Building Lots and Buildings Transaction Business Act, Article 41
- For sales of incomplete properties, the business operator is generally required to arrange protective measures once deposits exceed a set amount.
- Building Lots and Buildings Transaction Business Act, Article 37-2
- Under certain conditions, a buyer may cancel the contract in writing (a cooling-off right).
What gets overlooked when prices keep rising?
The stronger the uptrend, the easier it is to feel you'll miss out if you don't buy now. But as an income property, what matters is not just the purchase price but the whole chain: rental income, costs, and eventual exit (resale) during the holding period.
It's worth noting in particular that a rising AI-estimated price does not automatically translate into rising future rents. Prices and rents don't always move in lockstep, and in a phase where price alone is running ahead, yield tends to compress rather than expand.
Common mistakes and fixes
✕Treating the AI-estimated price as today's fair price and using the broader market upswing as the basis for a lowball offer.
→Compare several properties on the same line and of the same building age, and treat the AI estimate as just one reference point.
✕Judging on surface yield alone, missing management fees, reserve fund contributions, and fixed asset tax, and ending up with less cash flow than expected.
→Work out the real yield before signing, and build in a scenario that accounts for vacancy periods.
✕Not confirming, for a pre-completion unit, what happens if handover is delayed or specifications change.
→Confirm construction progress management and the delayed-handover arrangement during the key-matters explanation.
✕Signing without checking whether deposit protective measures applied, and carrying the risk if the seller's finances changed later.
→Confirm before signing whether the deposit falls under the protective-measure requirement and who the guarantee institution is.
Checklist before considering a pre-completion condo
- Compared yields across several properties on the same line and of the same building age
- Checked the planned schedule for future management fee and reserve fund increases
- Worked out real yield including fixed asset tax and fire insurance
- Confirmed the planned handover date and the delayed-handover arrangement in the key-matters explanation
- Confirmed whether deposit protective measures apply and who the guarantee institution is
- Built more than one cash-flow scenario that accounts for vacancy risk
Frequently asked questions
- Q. Should I treat the AI-estimated price as the actual transaction price?
- A. Generally, an AI-estimated price is a statistical estimate and can differ from an actual transaction price. It's advisable to also check a real estate agency's own appraisal and nearby transaction records before signing.
- Q. Which matters more, surface yield or real yield?
- A. Surface yield is often used for a first comparison across properties, but real yield — which factors in running costs — is generally considered closer to the actual outcome once you hold the property.
- Q. Is a pre-completion unit riskier than a completed one?
- A. Not being able to inspect the actual unit or surroundings, and the possibility that the handover date shifts, are risk factors to weigh. It's advisable to judge based on the contract terms and whether protective measures apply.
- Q. With prices still rising, is now a good time to buy?
- A. It's generally advisable to weigh not just the price level but also interest rate trends, your own financing plan, and your exit strategy over the holding period.
The SUMIMOTO Hub app lets you compare yields across multiple properties using AI valuation, while a 24-hour AI advisor explains, in multiple languages, how to read the key-matters explanation and what to check in deposit protective measures. For a final check on contract terms, please also consult a licensed professional such as a real estate transaction agent.
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