Japan Investment MarketView Q2 2025

Investment volume rises 46% y-o-y ​
amid continued robust spending by foreign investors​

• Japan commercial real estate investment volume increased by 46% y-o-y to JPY 974.0 billion in Q2 2025. Several major transactions, including some residential portfolios, pushed up acquisition volume by overseas investors. The office, residential, and logistics sectors registered y-o-y increases in investment volume, while the hotel and retail sectors reported y-o-y declines. Although hotel investment this quarter was only around half of that in the same quarter last year, this was largely due to the concentration of multiple large transactions in Q2 2024. The hotel sector’s positive fundamentals continue to ensure that investor interest remains high.​
  
  
• J-REIT acquisition volume for the quarter (all transactions, including those below JPY 1 billion) fell by 41% y-o-y to JPY 103.8 billion, while J-REIT sales rose by 78% y-o-y to JPY 120.2 billion. Office acquisition volume registered the highest volume among all asset types. Hotel acquisitions stagnated due to the high base of comparison from the previous year.
  
  
• Expected NOI yields for Tokyo prime assets fell by 5bps q-o-q for hotels, remaining unchanged for all other sectors. In a separate survey asking investors their outlook for the next 12 months, the majority anticipated interest rates to increase, while most expected yields to remain unchanged. The number of respondents projecting office yields to remain unchanged increased from the previous September 2024 survey, with the robust office leasing market leading many investors to anticipate rising rent levels to absorb the impact of any future interest rate hikes.