outlook

"Despite global headwinds, Japan maintains its resilience and continues to show strong appeal to investors, supported by unwavering demand. While some short-term disruptions may arise from recent political developments, firm underlying fundamentals are expected to pave the way for a stable outlook in 2026."

"Japan’s stability in 2024 continued to attract significant international investment despite gradual interest rate hikes. With renewed optimism for rental growth and strategic importance in the APAC region, further rate hikes should cause only temporary disruptions, paving the way for increased market dynamism and new players into 2025."

"As recently as three decades ago, Japan was extremely successful, but its recent performance has become rather subdued. The declining population, and the abruptly weakened currency in recent years have raised some concerns regarding the prospects of the economy and real estate market. Nevertheless, looking ahead at the next ten years, Japan looks poised to normalise itself, and the economy and real estate market are likely to fare well in turn."

"In the midst of a challenging global economy, Japan has proven to be a stable and resilient market. The delayed reopening has led to a significant release of pent-up demand, driving growth in various real estate sectors and the overall economy. This has attracted both existing and new investors eager to expand their presence in Japan. Despite potential challenges like expected interest rate hikes and limited opportunities, the country’s nominal growth prospects and overall stability are anticipated to maintain stronger transaction volumes in 2024."

"Japan’s prospects look to remain relatively bright until 2040, regardless of some prevalent risks. Although demographic conditions are challenging, changes should be gradual and manageable, and Japan is actively exploring new avenues for innovation and growth. In particular, game-changing developments such as Integrated Resort and the Chuo Linear Shinkansen are expected to generate huge economic benefits nationwide, while multiple large-scale mixed-use commercial developments and public transport projects look to improve the urban landscape in Tokyo and beyond. As such, Japan will likely remain a popular destination for overseas capital for the coming decades, particularly given its robust and mature real estate market, and sound and stable fundamentals."

"Although the pandemic has faded into the background, 2022 was still a tumultuous year highlighted by events such as the war in Ukraine, the subsequent energy crisis, and persistent inflation leading to interest rate hikes. A global recession is likely, but the Japanese economy looks to fare better due to its belated reopening. The majority of investors in Japan are still pursuing new investment opportunities, and 2023 will see more participants. The matured Japan market will welcome a more diversified pool of investors, which will give the market more liquidity and greater potential for growth."

"There are plenty of lingering risks globally: new variants, likely interest hikes from the tapering of asset purchases, and a possible economic slowdown originating from China. However, amidst these circumstances, Japan’s market has remained attractive as a stable destination for real estate investment. Furthermore, the large amounts of unallocated capital worldwide and higher allocation targets for real estate should serve as a tailwind for the market going into 2022, further boosting investments into Japanese real estate."

"Japan remains a popular destination for international real estate capital due to its stable government, the resilience of its large economy and its attractive funding conditions. The country typically accounts for the largest share of real estate transaction volumes in the region, supported by a strong domestic investor base. While the country’s population is ageing and shrinking, this is occurring at manageable levels, at least over the next decade. Looking ahead, the depth and liquidity of the Tokyo market is increasingly being mirrored in other cities including Osaka, Nagoya, and Fukuoka, offering a more diverse choice to investors."