Q1 Property Transaction Value In Japan Lowest Since 2013
REITs were active in divesting and acquiring new properties as the number of transactions rose by 17%.
May 17, 2022 – Real estate transaction volume in Japan declined by 8% year-on-year in the first quarter of 2022 to 802.3 billion yen (US$6 billion), its lowest first-quarter reading since 2013, the Nikkei Real Estate Market Report said in its latest report.
However, the number of sales transactions climbed 17% year-on-year to 379.
The report said that the most notable decrease in transaction value was office buildings, which saw overall sales volume falling 32% to 186.8 billion yen (US$1.4 billion).
Other declining sectors were logistics facilities at 118.2 billion yen (US$890 million), down 23%, and residential at 85.1 billion yen (US$640 million), down 27%. Hotel and land transactions, meanwhile, increased.
Land transactions were particularly active, increasing 153% in sales volume to 161.1 billion yen (US$1.2 billion).
The largest transaction was the sale of 31 facilities under Seibu Holdings to the Singaporean sovereign wealth fund GIC for approximately 150 billion yen (US$1.1 billion). The facilities include 15 hotels such as The Prince Park Tower Tokyo (603 guestrooms), Sunshine City Prince Hotel (1,091 guestrooms) and Naeba Prince Hotel (1,216 guestrooms) with a total of 6,896 guestrooms, plus 10 golf courses and six ski resorts. Seibu expects a gain on sale of about 80 billion yen (US$600 million).
REIT transactions supported Q1 performance
Nikkei also noted that real estate investment trusts (REITs) sold older office buildings and replaced them with newer buildings, which supported the market.
During the first quarter of 2022, 10 REITs, including Nippon Building Fund (NBF), Mitsubishi Estate Logistics REIT and Mitsui Fudosan Logistics Park, conducted public offerings (POs), raising 124 billion yen (US$930 million).
Overall, Nikkei confirmed 76 cases of property acquisitions totalling 344.5 billion yen (US$2.6 billion) and 25 cases of property sales totalling 72.7 billion yen (US$550 million) conducted by listed REITs.
“With the market structure changing during and after the pandemic, REITs have been increasing property sales since last year,” Nikkei noted in its report.