Japan’s Q3 Real Estate Transaction Volume Down 3%, Falling For The Third Consecutive Quarter
Gaw Capital, Qatar Investment Authority and Blackstone acquired residential assets. Activities by REIT were subdued in the quarter.
Nov 20, 2022 – The number of real estate sales transactions in Japan fell 8% year-on-year in the third quarter to 356, according to a Nikkei Real Estate Market Report survey. The total transaction amount between July and September 2022 decreased by 3% to 890.8 billion yen (US$5.9 billion), recording a year-on-year fall for three consecutive quarters.
Non-REIT transactions reached 769.9 billion yen (US$5.1 billion), the highest level ever in a third quarter, but stagnant REIT activities dampened the overall trend. The volume of property acquisitions by REITs was at 120.9 billion yen (US$800 million), a record low level for a third quarter. Although, the previous quarter volume was lower at 92.3 billion yen (US$610 million).
Among the major transactions in the period was the acquisition of 32 rental apartments, mainly in Tokyo and Osaka, by Gaw Capital Partners of Hong Kong as assets under management for a new fund invested by the Qatar Investment Authority. The total value was US$450 million. Separately, Blackstone acquired 19 properties in Tokyo, Nagoya, Osaka and Fukuoka for slightly above 20 billion yen ($US132 million). Kasumigaseki Capital and Mitsui & Co. group formed a fund targeting rental apartments in central Tokyo and acquired 13 properties for 17 billion yen ($110 million).
During the period, four REITs, including Star Asia REIT, conducted public offerings (POs) and
raised a total of 23.5 billion yen (US$160 million). The total amount raised since the beginning of the year decreased by 54% year-on-year to 161.8 billion yen (US$1.1 billion), reflecting the turmoil in the stock market caused by interest rate hikes in the U.S.
Central Tokyo Office Rental Could Bottom in 2023
In the leasing market, central Tokyo’s rental office market could bottom in 2023, the Nikkei Real Estate Market said, citing a report by Commercial Property Research Institute, a think tank funded by Sanko Estate and others.
The report, which surveyed buildings with floor areas of 50 tsubos (165 sqm) or more,
expects the currently rising vacancy rate to peak at 5.1% in the second quarter of 2023 and fall to 3.2% by the second quarter of 2025. It also expected rent to bottom at 21,995 yen per tsubo (US$44 per sqm) in the third quarter of 2023. By the second quarter of 2025, rent should recover to 23,473 yen per tsubo (US$46.86 per sqm), approaching its peak of 23,709 yen per tsubo (S$47.33 per sqm) in the second quarter of 2020.
The institute expected demand to grow amid new supply and rent to rise, indicative of a post-pandemic economic recovery as companies review their office needs.