Recent trends in Japan’s logistics property investment market revealed | Real Estate Asia
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Recent trends in Japan’s logistics property investment market revealed

Total investment increased by 11% YoY in 2024.

According to preliminary data aggregated by MSCI, investment activity in Japan continues its rising trend, with total investment volume in 2024 up 11% from 2023. Investment volumes in the industrial sector saw significant growth in the second half of 2024, bringing total annual volumes in 2024 66% higher than in 2023.

In a recent report, Savills said overseas players were notably active in the market, accounting for nearly 60% of industrial transactions in 2024, with many players moving to capitalise on low funding costs as well as its strong long-term fundamentals.

Here’s more from Savills:

Investors’ interest in logistics has not waned moving forward in 2025. Indeed, in January 2025, Brookfield Asset Management acquired a nearly 100,000 sq m plot of land in Nagoya as part of a US$1.6 billion deal that also included the Meguro Gajoen complex. The buyer will reportedly invest JPY45 billion to develop a 220,000 sq m logistics facility on the transacted plot of land.

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Additionally, Brookfield Asset Management expressed further interest in expanding its investments in Japanese real estate, highlighting the logistics sector as one of its key areas of focus, citing potential opportunities from public J-REITs still trading below net asset value and some private REITs seeking liquidity from new shareholders.

Domestic transactions, including J-REITs, remain strong as well. The largest transaction in 2024 was SoftBank’s acquisition of a portion of Sharp’s Sakai Plant in Osaka for approximately JPY100 billion. The buyer acquired the property on the condition that the area has the potential to supply over 250 MW within four years, with plans to convert it into an AI data centre starting in 2026. Similarly, Sekisui Chemical acquired part of Sharp’s Sakai Solar Cell Plant for JPY25 billion.

Another notable transaction saw Nippon Life Insurance acquire three logistics facilities in October 2024 - GLP Hidaka III in Saitama, along with GLP Yao I and GLP Yao II in Osaka - for approximately JPY50 billion. Additionally, in December 2025, Nippon Prologis REIT purchased Prologis Park Yachiyo 1 in Chiba for JPY39 billion, further underscoring the strong appetite among domestic investors for logistics assets.

According to the bi-annual market sentiment survey in February 2025 by Ichigo Real Estate Service, a majority of respondents (61%) still hold a neutral outlook on capital values, expecting stability in terms of pricing. At the same time, there is some divergence in views, with the proportions of respondents anticipating capital values to rise and fall both increasing over the coming half year.

Those anticipating rising prices cite elevated construction costs and rental levels, in addition to greater profitability due to the development of facilities with strong amenities, such as cold storage and hazardous material storage. Although, interest rate hikes as well as the softening supply-demand balance were quoted as reasons for capital values of logistics facilities to potentially fall looking ahead.

Similarly, while over half of respondents predict stable rents, the proportion anticipating further rental growth over the next half year fell slightly, with market players holding some caution as the market adjusts to the recent large influx of new supply.

Japan has seen a consistent increase in transaction volumes driven by strong investment appetite. Particularly, the logistics sector reached a record 27% share compared to all other sectors. Looking ahead, given the various short-term challenges facing the logistics sector, some players may be eager to sell logistics assets, especially as potential further interest rate increments may depress net yields.

As such, many opportunities may present themselves moving forward for players with a longer-term view looking to increase their exposure to the market, and some players currently appear to be targeting value-add opportunities among less prime properties located beyond the central metropolitan areas.

Overall, the logistics sector has strong fundamentals, with e-commerce growth continuing its momentum. Rising land and construction costs, along with rising interest rates, have put pressure on developers, evidenced by the modest overall supply forecast in coming years.

Therefore, existing stock, especially modern facilities with premium amenities, strategically located in accessible areas, particularly near expressways and residential hubs that attract workers amidst the labour shortages, should benefit from greater tenant demand and increased valuations, and will become increasingly attractive for investors moving forward.

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