While foreign investment declined in Japan, it was offset by domestic investments
Based on fresh data from CBRE, Japan’s investment volume in commercial real estate for the first quarter of 2024 surged by 7% year-over-year, totaling JPY 1.439 trillion. Although there was a decrease in foreign investment, domestic acquisitions compensated with an upward trend. Despite a prevailing cautious stance among overseas investors, notable large-scale transactions were noted.
Breaking down by asset category, the logistics sector witnessed the most significant upswing, with a 113% year-over-year increase in investment volume, reaching JPY 371 billion, propelled by several major transactions. Office investment volume saw a 15% year-over-year rise to JPY 742 billion, primarily fueled by numerous J-REIT transactions. Conversely, a decrease in portfolio transactions within the residential sector led to a 31% decline in investment volume for this asset class compared to the same quarter of the previous year, amounting to JPY 131 billion.
J-REIT investment volume, encompassing all transactions, experienced a notable 36% year-over-year increase, totaling JPY 502 billion, while the total sales volume reached a new all-time quarterly high of JPY 356 billion. With equity financing facing challenges, many J-REITs are adjusting their asset portfolios, particularly within the office sector.
In the latest CBRE Cap Rate Survey, investors highlighted “cap rate increases due to rising interest rates” and “higher construction costs” as significant risk factors across all asset types when sharing their perspectives on the investment market.
