Japan Investment MarketView Q2 2017
Notwithstanding Big Ticket Deals by Overseas Investors, Volume Falls 25% y-o-y
- Transaction volume in Q2 2017 fell 25% y-o-y to JPY 447 billion, led by drop in investment by J-REITs which fell 41% y-o-y to JPY 132 billion, the lowest second quarter total since 2012.
- Geographical diversification continued. The ratio of investment in regional cities stood at 34% in Q2 2017, higher than the same quarter last year (28%) as well as full-year 2016 (31%).
- CBRE's latest quarterly survey in July 2017 showed that expected NOI yields in Tokyo had fallen to record lows for all asset types except hotels. NOI yields were down 10 bps q-o-q to 3.50% for retail (Ginza Chuo Dori) and fell below 3.55% for offices (Otemachi).
- Transaction volume for H1 2017 totaled JPY 1.8 trillion, up 28% y-o-y. Funding conditions remain favorable and investor appetite remains high. However, rental upside for the major asset types in Tokyo, offices in particular, is limited. With buyers taking a more cautious stance, transaction volume for full-year 2017 is unlikely to significantly exceed the previous year's level.