Japan Investment MarketView Q4 2022

2022 transaction volume down on weak buying by J-REITs, although inbound investment increases by 12%

• Commercial real estate investment in Japan rose by 14% y-o-y to JPY 1.4 trillion in Q4 2022 driven by purchasing by domestic investors.
• Among major asset types in Tokyo, expected yields fell for offices, rental apartments, and retail facilities. CBRE’s latest Tankan Survey showed that the Diffusion Index (DI) worsened for “sales prices” and “expected yields” for both Tokyo Grade A offices and Large Multi-Tenant (LMT) logistics facilities in the Greater Tokyo area. However, there are no signs that investment appetite is on the wane.
• Total transaction volume for 2022 fell 2% y-o-y to JPY 3.8 trillion, largely due to a drop in purchasing by J-REITs. Meanwhile, investment by overseas investors rose by 12% y-o-y.
• In December 2022, the Bank of Japan (BoJ) announced a partial revision to its monetary policy, leading to a rise in market interest rates. However, CBRE’s latest surveys show that while most investors foresee interest rate increases, they remain keen to continue investment.