Research Report

Japan Real Estate Fourth Quarter 2012

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Economy: The outlook for Japan’s economic growth is expected to slow down from 2.4% in 2012 to 0.8% in 2013 due to weaker economic conditions in the Eurozone and, to a lesser degree, in the United States and China. Leading economic indicators point to slower activity in the months ahead. Consumer prices have recently been flat.

Capital market: Unlike Europe, credit conditions in Japan are still favourable for borrowers. Lending volumes for new real estate projects posted positive growth for the past three consecutive quarters through June 2012. Favourable credit conditions, a recovery in the J-REIT index, and cap rate compression all underscored a solid capital market and an attractive investment environment.

Property markets: Japan’s property leasing markets provided mixed signals in the third quarter of 2012. Office rents remain soft, with Tokyo absorbing a recent supply increase and Osaka preparing for one on the horizon. The retail sector has shown recent resilience, but some forward-looking indicators are less sanguine. Meanwhile, fundamentals in residential and industrial markets have been relatively healthy.

Research topic: A highly valued currency has tempted many Japanese companies and investors to look abroad. This same pattern is not true within the real estate sector, as our analysis explains. We show how the structure of the property sector in Japan contributes to this pattern. Proposed regulatory changes are in the works that could help pave the way for more outbound property investments in the years ahead.

Source : RREEF Real Estate

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Mots-clés : RREEF Real Estate