Japan Investment MarketView Q1 2026

Investment volume edges up to record high for a first quarter;

large-scale acquisitions by overseas investors continue

• Commercial real estate investment volume increased by 2% y-o-y to JPY 2.043 trillion in Q1 2026. This figure marked a record high for a first quarter, with the onset of the Middle East conflict during the period not impacting investment activity. Overseas investors remained active, completing a large-scale acquisition exceeding JPY 100 billion, while acquisition volume by J-REITs and other domestic investors remained robust. While investment volume in the office and retail sectors fell y-o-y, the residential, logistics, and hotel sectors each saw double-digit y-o-y growth.

• J-REIT acquisition volume (all transactions, including those below JPY 1 billion) grew by 5% y-o-y to JPY 466.2 billion, with many acquisitions funded by equity offerings. Acquisitions of central Tokyo office buildings from sponsors were prominent, while hotel investment volume reached a record quarterly high, buoyed by the largest-ever acquisition by a J-REIT.

• Expected NOI yields for Tokyo prime assets rose by 2 bps q-o-q to 3.15% for the office sector (Otemachi). After falling for the first time in three years in Q4 2025, yields returned to their previous levels this quarter. Expected yields for logistics facilities rose by 1 bps, but those for the hotel sector fell by 5 bps to a new record low. While expectations for rent increases remain strong amid robust tenant demand, investors remain cautious of further rises in interest rates. That said, no significant change in overall investment appetite has been observed thus far.