Yet Japanese lenders remain risk averse in 2021
According to new survey data by CBRE, new loan volume is set to increase in FY 2021, despite concerns over economic stagnation.
CBRE further reports total volume of new loans to the real estate industry was JPY 10.9 trillion in 2020, down 5.2% y-o-y. Lenders appear to have adopted a cautious approach out of concern regarding the further worsening of the rental market as a result of measures to contain the COVID-19 pandemic.
Total real estate investment volume in 2020 reached JPY 3.98 trillion, up 9% y-o-y. 44% of equity investors who replied to CBRE's 2021 Japan Investor Intentions Survey indicated that they planned to increase their real estate investment volume this year, up one point from 2020.
CBRE's survey recorded a significant y-o-y decrease among those lenders who answered, "real estate prices will fall", "LTV ratios will increase" and "spreads will widen" over the upcoming year.
In terms of real estate prices, a slightly higher percentage of lenders responded that they expected prices to increase (17%) than those who anticipated a decrease (13%). Furthermore, lenders are anticipating NOI yields to be either equivalent to or lower than those seen before the advent of the pandemic for some prime Tokyo assets.
CBRE reports the greatest threat to the real estate financial market remains "a domestic or international economic shock", with this answer given by 50% of lenders, up two points from the previous year. Lenders may maintain some level of caution.
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