Japan Commercial Property Investment Activity to Increase in 2022

Japan Commercial Property Investment Activity to Increase in 2022

Commercial News » Tokyo Edition | By Michael Gerrity | February 28, 2022 8:51 AM ET

According to global property consultant CBRE, Japan commercial real estate investment volume fell by 6% year-over-year to JPY 3.8 trillion in 2021, primarily due to the high base in 2020, which saw the completion of several large transactions of in excess of JPY 50 billion.

However, 2021's volume exceeded the level recorded in the pre-COVD years of 2018 and 2019. Total transaction volume for deals of less than JPY 50 billion showed an 18% increase on the previous year.

By asset type, office rose by 11 % y-o-y to JPY 1.7 trillion, while investment in logistics facilities fell by 13% over the same period to JPY 899 billion. For smaller transactions of less than JPY 50 billion, office investment surged by 53% y-o-y, while the logistics sector saw a 24% y-o-y decline.

CBRE further reports 54% of Japanese investors indicated that they expected their acquisition volume in 2022 to exceed that of the previous year.

While this represents a 10 percentage point increase from the previous year's results, the number of investors who answered that their disposition volume would exceed 2021's also showed an increase. This suggests that investment volume is likely to increase in 2022.

Other key CBRE findings:

  • While Japanese investors continue to prefer core strategy, an increasing number are selecting value-add strategy in pursuit of higher yields.
  • Investors' view on office demand is improving, with Japanese investors selecting them once again as the most attractive asset type.
  • An increasing number of Japanese investors are pursuing alternative investment targets including data centers and cold storage facilities.
  • Tokyo was selected as the most attractive city for investment in Asia Pacific for the third successive year.
  • Awareness of Environmental, Social and Governance (ESG) criteria continues to rise among Japanese investors, with J-REITs and real estate funds increasingly keen to implement such considerations in investment decisions.
  • ESG investment is seen as key in raising corporate brand value, with a property's environmental certifications viewed as important when investing.

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