Japan Major Report - Japan Market Outlook 2022
15 Dec 2021
Domestic consumption and production are expected to rebound in earnest from Q4 2021, and the economy is expected to recover to its pre-COVID peak level in Q3 2022. Risk factors include rising resource prices and the weakening of the yen, which may continue to put pressure on corporate earnings, as well as the new Omicron variant of COVID-19, which could lead to the reintroduction of restrictive measures that may weigh on the global economy.
Tenants are expected to become more active as the economy recovers. In many cities, the pace of the rise in vacancy is expected to lose momentum in 2022. However, in Tokyo and Osaka, rents are expected to continue to fall over the next three years due to large new supply. In some regional cities where new supply is limited, the growth of leasing activity due to the economic recovery is expected to lead to a tightening of supply and demand.
Luxury brands will continue to drive new store openings in Ginza in 2022. Ginza high street rents, which have been declining since 2020, appear to have bottomed out in Q3 2021. CBRE expects rents to start rising in H2 2022 as leasing activity picks up along Ginza high streets, including in areas slightly further from the center.
New supply has remained high in all three major metropolitan areas over the last two years. In the Greater Tokyo area, new supply has reached a record high for two consecutive years. Even though the supply-demand balance will not be significantly disrupted in the Greater Tokyo area as a whole, leasing progress is likely to vary according to the quality of individual properties.
Investor appetite is likely to rise along with the normalization of the economy and continued loose monetary policy. In addition to continued strong purchasing in the logistics, residential, and office sectors, retail and hotel investment are set to gradually resume in 2022. Total investment in 2021 is estimated to be on par with the volume in 2020, which was up 11% from the previous year. Investment volume in 2022 is forecast to increase by about 10%.