• 2020 VOLUME DRIVEN BY 30% RISE IN INVESTMENT FOREIGNERS

Commercial real estate transaction volume was up 7.6% y-o-y at JPY 1.2 trillion in Q4 2020. Purchasing was led by J-REITs, for which investment volume recorded an 87% y-o-y rise during the period at JPY 493.0 billion. Investment by overseas investors fell to JPY 314.0 billion, a 41% drop from the same period of 2019, when several large-scale deals were completed. Total transaction volume for 2020 reached JPY 3.8 trillion, up 5.2% from 2019. Investment by overseas investors was up 30% y-o-y.  J-REIT investment volume increased by 2% y-o-y over the same period, while volume by other domestic investors fell by 15% y-o-y.

  • INVESTOR APPETITE REMAINS ROBUST

Investment appetite among Japanese investors is anticipated to remain strong in 2021. Foreign investors, whose acquisition volume in 2020 rose by 30% y-o-y, are also expected to be active purchasers in 2021. CBRE’s survey of Asia Pacific investors revealed that Tokyo was chosen as the most attractive investment property location in APAC for the second consecutive year.

  • INVESTORS EYE REGIONAL OFFICE MARKETS

The ongoing impact of measures to contain the pandemic is likely to result in a weakening of office leasing demand and a consequent lowering of rents. Interest from investors has therefore been waning. In contrast, the rise in vacancy rates in regional cities has been moderate in comparison to Tokyo, with rental declines forecasted to be less significant. With few properties available in Tokyo, an increasing number of investors may identify relatively stable regional city markets as an investment opportunity.