Japan Brief: Faster-than-expected interest rate hikes may lead to higher cap rates

At its July 30-31 2024 policy meeting, the Bank of Japan (BoJ) decided to implement its second interest rate hike for the year. Although the outlook is uncertain with the recent volatility in the stock market and the yen exchange rate, as well as the situation of the US economy, the likelihood of interest rates rising at a pace exceeding expectations has increased. Investors and lenders are therefore likely to adopt a more selective approach. CBRE believes that there is a possibility of an uptick in investors’ expected yields, potentially leading to lower real estate transaction volumes in the coming quarters.