Japan‘s Liberal Democratic Party (LDP) assumed power in December 2012 following a general election. The new Prime Minister, Shinzo Abe, announced aggressive policies for monetary easing and the fiscal stimulus aimed at ending deflation and weakening the Japanese yen’s value. Capital markets reacted positively, and most economists revised their forecasts upward. The outlook now is for economic growth to resume by the second half of 2013.
Unlike Europe, credit conditions in Japan remain favourable for borrowers. Lending volumes for new real estate projects posted positive growth for the past four consecutive quarters, and the amount of fund raising by J-REITs approached its highest level in five years. Further cap rate compression reflected an overall attractive investment environment.
Japan’s property leasing markets provided mixed signals in the fourth quarter of 2012. Office rents remain soft, with Tokyo absorbing a recent supply increase and Osaka preparing for one in 2013. The outlook for the retail sector was cautious, as recent regional territorial disputes have deterred foreign tourism. Meanwhile, fundamentals in residential and industrial markets have been relatively healthy.
Source : RREEF Real Estate