What does the future look like for Japan’s retail property sector? | Real Estate Asia
, Japan

What does the future look like for Japan’s retail property sector?

Overall, the industry is set for a robust improvement and stronger prospects.

According to a Savills report, most submarkets in Japan have seen an increase in retail footfall and lower levels of vacancy, and both luxury and non-luxury brands are more optimistic about retail conditions. 

Consequently, major retail areas have seen several new openings, with more to come in the pipeline. Indeed, Forever 21 and American Eagle have plans for several physical locations in Japan, reversing their decision to exit Japan in 2019. 

Here’s more from Savills:

Going forward, a number of developments across Japan are expected to change respective retail landscapes and gravitate footfall toward these areas. Most notably, Yaesu and Toranomon Azabudai will be transformed in the near future with their major developments. 

Further down the road, Shibuya and Shinjuku will see such developments around the main station areas, which could spark change to these submarkets and enhance their image and branding. ESG features will also be another important aspect for these projects to better integrate themselves into the community. As such, investors will need to be aware of the impact that these developments will have on respective submarkets. 

Despite the gradual recovery in footfall in central areas experienced in 2022, overall lifestyle changes might change the course of recovery. The Tokyo 23 wards (23W) has experienced a net outflow of people since the onset of the pandemic, meaning that some retail spending has shifted to suburban areas. E-commerce has also changed shopping trends, and may change the function that retail units serve. 

Some players, even in the struggling F&B sector, have adapted to the new lifestyle changes of consumers and have thus improved their profitability. Hence, tenant and site selections appear increasingly important as the gap between strong and weak retailers widens. 

With inflation, albeit modest in Japan, average households with modest wage growth would be expected to tighten their budgets, especially with the prevailing uncertainty of the world economy. On the other hand, inbound tourists will boost some retail spending by leveraging the weak yen, even without Chinese shoppers. 

Overall, the retail sector is likely to further improve and have stronger prospects. This is likely to attract the attention of more investors as the yield spreads in the popular logistics and residential sectors appear tight, and retail properties have greater room for value-add opportunities. 

 

Follow the link for more news on

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!