Japan’s 2022 Real Estate Transaction Volume Was the Lowest Since 2019, Dragged Down By JREITs’ Weak Acquisitions

March 3, 2023 – Real estate transaction volume growth in Japan turned negative in 2022 for the first time in four years as total acquisitions by REITs fell below 1 trillion yen (US$7.4 billion), according to data compiled by the Nikkei Real Estate Market Report. The last time REIT transactions totalled less than 1 trillion yen was in 2011.

The number of real estate transactions compiled by the Nikkei Real Estate Market Report in 2022 increased by 3% year-on-year to 1,467. However, the total amount of sales transactions for which prices had been revealed fell 12% year-on-year to 3,465.2 billion yen (Fig 1). From 2019 to 2021, the market recorded positive year-on-year growth for three consecutive years.

Property acquisitions by JREITs declined 34% year-on-year in 2022 to 935.5 billion yen. On the other hand, purchases by non-REIT buyers totalled 2,529.7 billion yen, a 1% increase year-on-year. This includes the Otemachi Place transaction valued at approximately 436.42 billion yen, the largest since the Nikkei Real Estate Market Report began this survey in 2001.

The fundraising environment for REITs deteriorated against a backdrop of turmoil in the stock market due to rising interest rates in the U.S. However, acquisitions by foreign funds and some developers held steady, indicating a resilient investment appetite.

The downturn in REIT activities put the brakes on the growth momentum in the real estate market. This was further aggravated by the Tokyo Stock Exchange REIT Index slump in 2022.