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  • Japanese Outbound Real Estate Investment on a Rising Trend Since 2011

Japanese Outbound Real Estate Investment on a Rising Trend Since 2011

October 8, 2015
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Investors Have Predominantly Been Real Estate Companies and Trading Companies; North America and Europe Receive Largest Share of Investments for Existing Assets, Asia for Development Sites

Tokyo, October 8th, 2015 - CBRE today released, "Japan Major Report – Rising Outbound Flows: Japanese Capital in the Global Real Estate Market," a special report that examines the overview of, and outlook for, overseas real estate investment by Japanese companies.

Japanese outbound real estate investment

Outbound real estate investment by Japanese investors has been expanding since 2011. Although 2014 saw the total investment amount (in existing properties only, excluding purchases for development) drop 6.9% y-o-y to USD1.8billion, the market is likely to expand going forward.

Major investors driving the market to date include real estate companies and general trading companies. Offices are the most favoured asset class, but in recent years, more investors are diversifying into hotels, residential and other sectors. The preferred regions for investment are North America and Europe. However, with regards investment for development purposes, such as land transactions which are not included in the figures quoted above, the largest number of investments has been in Asia.

The growth in outbound real estate investment by Japanese companies is on the back of: 1) the expectation that demand for real estate in Japan will decrease in the long term because of the declining population; 2) greater geographical diversification of assets to lower investment risks; and 3) increasing competition in the Japanese real estate investment market on the back of recovery in fundamentals and favourable funding environment.

Prospects for outbound real estate investment

Outbound real estate investment by Japanese investors is likely to continue increasing further in the coming years, particularly through indirect investment through funds.  In this regard, anticipated investment by the Government Pension Investment Fund (GPIF) is of particular note. As part of its plan to increase allocations to riskier assets, the GPIF, which had JPY 141 trillion of assets under management as of June 2015, will invest a larger proportion of its assets in Japanese and international equities, and will start to invest in alternative sectors, including real estate. Assuming that it will invest a similar proportion of its assets in real estate as other Japanese public pension funds, and in overseas real estate as one of the major US pension funds, the total amount of investment in overseas real estate by GPIF could be at par with the total Japanese outbound real estate investment recorded in 2014 (all else being equal, and assuming an exchange rate of JPY 120/USD).

Japanese outbound real estate investment

 
Source: Real Capital Analytics, CBRE
 
 
Source: Real Capital Analytics, CBRE

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Press Release
Japan Major Report - Japan Outbound Investment
Infographic
 
 

 

About CBRE Gro​up, 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 (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.​

Official Twitter account for Japan: @cbrejapan

Disclaimer

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

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