Report | Intelligent Investment
Japan Market Outlook 2025
December 12, 2024 10 Minute Read
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01 Economy
With both domestic and foreign demand as drivers, the Japanese economy is expected to continue its gradual recovery in 2025.
02 Investment
Sentiment among domestic investors and lenders was largely unchanged in 2024. Total commercial real estate investment volume for the year is set to exceed last year’s figure, topping JPY 4 trillion by a large margin. While CBRE expects investment volume to remain generally stable in 2025, this is predicated on only moderate increases in interest rates. Should the BoJ hike rates at a faster-than-expected pace, purchasing activity could stagnate as investors recalibrate their cap rate targets.
03 Office
The trend for occupiers to upgrade their office working environments to attract and retain employees continued in 2024, pushing up office rents in almost all cities. With demand expected to stay robust, the polarization of office rents based on factors such as building location and age should become even more pronounced. Vacancy rates are likely to be heavily influenced by new supply, with rents increasing in cities set to witness the addition of new stock at or below previous average levels.
04 Logistics
While the Greater Tokyo vacancy rate may remain high in 2025, the vacancy rates for Greater Osaka, Greater Nagoya, and Greater Fukuoka should either remain low or decline slightly. The regional diversification of logistics facilities in response to the “2024 problem” has led to a situation in which the outlook differs significantly by area. However, with nationwide net absorption forecasted to reach around 1 million tsubo per annum in the coming years, Japan’s LMT logistics market is certain to continue to expand.
05 Retail
In 2024, vacancy rates declined in high streets nationwide as retailers in a wide range of industries became more eager to open new stores. In 2025, rents should continue to rise as retailers compete for a limited number of available plots as demand for new store openings is likely to remain robust.