Japan Investment MarketView Q3 2015
- The total value of real estate investment transactions (transactions worth JPY1 billion or more) in Japan in Q3 2015 decreased 2.7% y-o-y to JPY 1.2 trillion. Transactions by J-REITs fell by 10% y-o-y, those by other Japanese investors declined by 20%, but those by overseas investors increased by 60%.
- Investment in regional cities continued to grow this quarter. Transactions in Osaka increased 9.3% y-o-y to JPY 96.9 billion, while other regional cities excluding Osaka and Nagoya saw a 58.8% increase to JPY 183 billion. Japanese investors, including J-REITs, continued to dominate the market in regional cities, accounting for around 90% of total investment volume.
- CBRE's Quarterly Investment Survey in October 2015 found that expected NOI yields had reached record lows for office, retail and industrial properties. Yields on offices (Otemachi) declined 3 bps to 3.75%.
- Although J-REITs slightly held back on acquisitions due to the stock market correction, investors generally remained keen to invest. The funding environment remained favourable and cap rates continued their downward trend. Yields are likely to decline further, mostly on assets in regional cities.