CBRE Releases Q1 2017 Japan Investment MarketView

Q1 2017 Transaction Volume Rises 51% y-o-y to JPY 1.3 trillion

​Acquisitions Increase in Greater Tokyo and Osaka; Diversification by Asset Type and Region Continues

Tokyo, May 16, 2017 - CBRE today released its 55th Quarterly Survey on Japanese Real Estate Investment along with the Q1 2017 edition of its Japan Investment MarketView. The methodology for the survey is detailed on page 7 of this release.


  • Transaction volume rose 51% y-o-y to JPY 1.3 trillion in Q1 2017. This was the second highest Q1 total since 2014, shortly after Abenomics began to affect the real estate investment market in 2013.
  • The period saw several large transactions including major deals in Yokohama and Osaka. Investor appetite remained strong and continued to diversify by asset type and region.
  • In CBRE's investor survey, expected yields in Tokyo fell to new lows for retail and residential, but were unchanged for offices. Retail and offices were both at their lowest since the survey began in 2009.
  • CBRE Tankan survey: The Tokyo Grade A offices Diffusion Index (DI) was unchanged for NOI and expected yields, but improved for investment & loans intentions. However, the logistics DI (large multi-tenant-type) deteriorated slightly for investment & loans intentions.

Investment market

Transaction volume (includes deals worth JPY 1 billion or more) rose by 51% y-o-y to JPY 1.3 trillion in Q1 2017. This was the second highest Q1 total since 2014, shortly after Abenomics began to affect the real estate investment market in 2013. That said, the y-o-y rate of increase was largely due to the fact that transaction volume in Q1 2016, at JPY 900 billion, was the lowest since 2013. During the period, the value of transactions increased y-o-y for all investor categories. The largest increase was in acquisitions by overseas investors, which increased by 3.7 times y-o-y to JPY 466 billion. Among Japanese investors, acquisitions by J-REITs increased 10% y-o-y to JPY 581 billion, and those by other Japanese investors were up 27% to JPY 307 billion.

All asset types saw a y-o-y increase in transaction volume, except for hotels. The largest increase was in residential, which rose 2.7 times to JPY 330 billion. This was mainly due to the acquisition of a large portfolio of residential properties. The second largest increase was in retail, which rose 78% y-o-y to JPY 272 billion. The period saw several large transactions worth over JPY 30 billion involving office properties in Yokohama and retail in Osaka.

By region, transaction volume increased 3 times to JPY 491 billion in the Greater Tokyo Area (excluding the central 23 wards), and 1.9 times to JPY 136 billion in Osaka. Investors continued to diversify by asset type and region.

Expected yields

CBRE's latest quarterly survey (as of April 2017) found that average*  expected yields in Tokyo based on NOI*  declined q-o-q for two out of six sectors, while the other four remained unchanged. They declined by 5 bps q-o-q to 3.60% for retail (Ginza Chuo Dori) and by 10 bps to 4.55% for residential (multi-room) properties. Yields for retail (Ginza Chuo Dori) are now at their lowest level since the survey began in 2009*, as are those for offices (Otemachi), which were unchanged this quarter.

Expected yields for offices also continued to decline in regional cities, falling by at least 5 bps q-o-q in Osaka (to 5.20%), Nagoya (5.38%), and Fukuoka (5.15%). They also edged lower in Sapporo (5.70%) and Sendai (5.75%), but were unchanged in Hiroshima (6.10%). Expected yields in Sapporo and Osaka reached their lowest levels since the survey began in 2003, joining Fukuoka, which was already at a record low.

* The survey started covering different asset types in different years - 2003: offices and residential; 2009: retail, hotels, and industrial.

CBRE Tankan survey

CBRE's April 2017 Tankan survey asked respondents to compare current conditions to three months ago (with results collected as Diffusion Indices* ). Topics were: 1) trading volume, 2) sales prices, 3) NOI (or rents and vacancy rates for logistics facilities), 4) expected yields, 5) lending attitude of financial institutions, and 6) strategies for investment and loans. For Grade A office buildings, the DI for current conditions improved for two questions and were unchanged for two. Improvements were recorded in the DI for investment and loans intentions (up 7 points q-o-q) and the lending attitude of financial institutions (up 4 points), while NOI and expected yields were unchanged. Although there was no change in views regarding income, the funding environment remained favorable and investors' appetite for acquisitions increased. For large logistics properties (multi-tenant-type), the DI for current conditions improved by 7 points q-o-q for trading volume and by 5 points for the lending attitude of financial institutions, but deteriorated for the other five questions. The greatest deterioration was in the DI for sales prices, which was 11 points lower than in the previous quarter, followed by vacancy rates and expected yields, which were both 10 points lower. The deterioration was due to fewer respondents than three months ago who answered that prices were higher and vacancy rates were lower. The DI for investment & loans intentions also deteriorated by 6 points. Investors seem to have become more cautious as prices are seen to be already high and as vacancy rates have started to rise in some areas.

The forward-looking DI declined by at least 10 points for sales prices and the lending attitude of financial institutions in both asset types. These next largest deteriorations were in NOI for offices and expected yields for industrial properties. It appears that investors expect further rent rises for offices and declines in yields (and price rises) for industrial properties may be limited.

To download the Q1 2017 edition of the CBRE Japan Investment MarketView, please click on the link below.

*1  Average: Average figure of the median of lowest/highest yield each
*2  NOI:Net income before depreciation and income taxes; total revenues from real estate less total expenses (excluding depreciation).
*3  DI: Diffusion index subtracts the ratio (%) of respondents that expected a “contraction (fall)” from the ratio (%) of respondents that expected an “expansion (rise).”




NOI Yield



As the survey goes beyond the scope of this publication, full results are only provided to respondents. Please refer to the following list for all surveyed items.


*1 NOI / NCF Cap Rate, Project / Equity IRR

  • Minimum and Maximum of the range of Median, Average, Highest, Lowest and Standard deviation
  • Some of the questions include result by respondent type.

*2 Questions Polled

  • A survey was administered on real estate investors' attitude to investment and loans for Japanese real estate. It asked about investors' appetite for real estate investment and loans, sectors they see as attractive, markets in which they are interested, and the reasons for each of these.

Note to Editors:

Quarterly Survey

1. Objective

  • The objective of the survey is to collect and analyze data looking at the level of expected yields for real estate investments.

2. Survey method and period

  • Sent and received by e-mail primarily between March 21 to April 7, 2017.

3. Recipients surveyed and response rate

  • Recipients:  196 individuals (174corporations)
  • Responses:  134 individuals (129 corporations)
  • Response rate:  68.4% from individuals (74.1% from corporations)

4. Type of respondents

  • Arrangers, Lenders (senior), Lenders (mezzanine), Developers, Real property lessors, Asset managers (mainly for J-REITs), Asset managers (mainly for non J-REITs), and Equity investors, among other respondents.

5. Policy regarding the release of survey results

  • This report is an excerpt of the results from our quarterly survey.

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Press Release
CBRE Quarterly Survey Vol 55
Japan Investment MarketView Q1 2017

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.  Please visit our website at

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