, Japan

Here’s a rundown of Japan’s real estate investment market

Investors are still attracted to the resilient logistics sector.

The logistics sector is thriving despite concerns over the sharp pricing recently seen in the market and the large supply pipeline. Nonetheless, Savills says many investors still appear attracted to the sector, such as GLP which announced a JPY1 trillion investment. 

Meanwhile, investor appetites for multifamily and offices have continued to grow, despite some rental corrections, particularly in the office market. 

Here’s more from Savills:

Urban retail continues to lag, although high street retail remains sought-after. The hospitality sector has continued to garner interest, and large deals such as the acquisition of the Seibu hotel portfolio for JPY150 billion by GIC have been announced. Elsewhere, in March, KKR announced its acquisition of Mitsubishi Corp. – UBS Realty for JPY230 billion demonstrating the increasing interest in various areas of the Japanese real market. 

In Q1/2022, the Grade A office market saw another mild correction of 1.2% QoQ to JPY33,266 per tsubo, translating to a decline of 7.0% YoY. Although rents have been contracting steadily since the pandemic began, the rate of decline has softened notably, suggesting that the market might be approaching an inflection point. 

Vacancy rates have seen their first quarterly improvement since the pandemic - contracting 0.1ppts QoQ to 2.7%, but increased 1.5ppts YoY. Poorly accessible and older offices continue to underperform and are the primary cause of the deterioration in the office market, while on the other hand, easily accessible and newer offices remain in favour with tenants.

 

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