Japan Investment MarketView Q4 2014
- The total value of real estate investment transactions in Japan during 2014 rose 3.5% y-o-y to JPY4.7 trillion.
- Despite the shortage of properties for sale in central Tokyo, a series of large deals towards the end of the year drove the volume above the previous year's level.
- Acquisitions by overseas investors doubled y-o-y in 2014, and exceeded JPY1 trillion, the second highest after 2007's JPY1.88 trillion.
- According to CBRE's latest real estate investor survey in January 2015, the expected NOI yield for Tokyo (Otemachi) offices was 3.90%, at par with the lowest (since the survey began in 2003), recorded in July 2007.
- Against the background of low inflation and low interest rates worldwide, investment capital is likely to continue to flow into the real estate market in search of yield in 2015. It is very likely that cap rates will maintain a gradual downward trend, as expectations of rental increases are priced-in, particularly for regional offices where the rents have bottomed in 2014.