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Introduction to Japanese real estate market - Exploring the reasons behind Japan’s real estate boom

Japan's real estate market is experiencing significant growth, driven by a variety of factors that are making it an attractive destination for both domestic and international investors,Espeacially Tokyo.

  • Japan’s real estate market is booming

Tokyo becomes the most desirable real estate investment market for foreign investors

Hotels, logistics and residentialreal estate may continue to gain Investors' favor

  • Comparative Advantages of Japan’ s Real Estate

  1. Friendly to foreign investment

  2. Diversified investment strategies

  3. Higher income

  4. Japan’ s macroeconomic growth is stable

  5. Normalization of monetary policy

  6. Inflation near peak in 10 years

Segment Analysis(1) - RESIDENCE

  • The price-to-rent ratio is close to the 2000 level, and high-end housing still

has a certain price/performance ratio

  1. Looking at housing prices, Japanese real estate prices are close to the 2000 level

  2. In the field of high-end residential buildings, the price-perfo rmance ratio of high- end residential buildings in Japan is acceptable

  3. Investment by real estate companies remains high

Segment Analysis(2)- HOTEL

  • The number of international tourists in Tokyo has grown significantly, and

overseas investors favor the hotel real estate sector

  1. Tokyo, Japan benefits from tourism recovery

  2. Japan’ s hotel occupancy rate and single room revenue in 2023 Significant improvement, gradually returning to pre-COVID-19 levels

  3. Overseas investors are the main investors in Japan’ s hotel real estate sector

Segment Analysis(3)- Office Building

  • Tokyo office buildings are highly attractive, and strong new supply has led to

an increase in vacancy rates

  1. The attendance rate of Tokyo office buildings ranks high in the world, and the relative demand is strong.

  2. Among various places in Japan, the main indicators of office buildings in Tokyo are better.

  3. Looking at the Tokyo office building market, the overall vacancy rate will rise to 5.2% in the third quarter of 2023,and will be between 4% and 6% in the future.

Segment Analysis(4)- Logistic

Rents continue to rise and investment prospects are promising

1.Expected demand for advanced logistics facilities in the coming years

2. Demand will grow and investment prospects are good

J-REITs Market

J-REITs started in 2001. The underlying assets mainly include office buildings, retail properties, residential properties, logistics properties, hotels, medical care, etc. Foreign investors can directly invest in J-REITs.

Source: Japan Investment Trust Association, ARES, JPX, Bloomberg data

*This content is for reference only and does not constitute investment advice to anyone.

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