Japan Investment MarketView Q4 2025

Investment volume for 2025 reaches record-high JPY 6.5 trillion;
Expected prime office yields fall to a new record low

• Japan commercial real estate investment volume increased 5% y-o-y to JPY 1.596 trillion in Q4 2025. While J-REIT acquisition volume rose y-o-y, purchases by non-J-REIT domestic investors and foreign investors declined from the same quarter of the previous year. In addition to several sales of major office headquarters by corporates, the period also saw sizable transactions in the logistics and retail sectors. As a result, the full-year 2025 investment volume totaled JPY 6.5 trillion, a rise of 31% y-o-y and some 20% above the previous annual record of JPY 5.4 trillion set in 2007.

• J-REIT acquisition volume (all transactions, including those below JPY 1 billion) reached JPY 390.4 billion, 2.7x the figure recorded in the same quarter of the previous year. This also marked the first positive y-o-y growth recorded in five quarters. On the other hand, J-REIT sales fell by 48% y-o-y to JPY 104.9 billion. More cases of public equity offerings on the back of rising stock prices, as well as active reshuffling of portfolios, led to J-REIT acquisitions for the quarter significantly outpacing sales.

• Expected NOI yields for Tokyo prime assets declined in the office sector for the first time in approximately three years, slipping by 2bps q-o-q to 3.13% and establishing a new all-time low. Expected NOI yields remained unchanged for all other asset types. Despite interest rates rising during the quarter, strong investment volume and record-low expected yields indicate that investor appetite remains robust.