Japan Investment MarketView Q3 2023

Q3 volume down 9% y-o-y, but investment by domestic investors doubles​

• Commercial real estate investment volume fell by 9% y-o-y to JPY 945.0 billion in Q3 3023, largely because of an 80% decline in investment by foreign investors. Purchasing was underpinned by J-REITs and non-J-REIT domestic investors, both of which were 2.4x of the same quarter of the previous year.

• The most significant increase in investment volume was seen for hotels, where transaction volume was 3.5x that of Q3 2022, reaching JPY 195.0 billion. J-REITs were responsible for 75% of this figure, with this quarter recording the highest ever acquisition volume of hotels by J-REITs.​

• Expected yields in Tokyo for the major asset types fell to new record lows in all sectors other than offices and retail, both of which were unchanged from the previous quarter. Expected yields for offices in regional cities also declined to historical lows.​

• Cumulative transaction volume for the first three quarters of 2023 is up 27% y-o-y, driven by a 60% increase in investment by J-REITs. By asset types, purchasing was driven by hotel and logistics deals.