The Japanese economy in 2014 continued to grow, albeit at a modest pace. Both the monetary and fiscal policies of ‘Abenomics’ have shown steady progress so far, in contrast to the growth strategy based on structural reform, which requires a longer time frame to be realized. Although the dampening effect from the increase in consumption tax starting in April 2014 is expected to be temporary, the Bank of Japan may introduce a further stimulus package in order to revitalise the nation’s economy.
The Tokyo CBD grade A office leasing market improved further in Q1 2014. Vacancy for Tokyo CBD grade A office fell by 0.69 percentage points quarter-on-quarter (q-o-q) to 6.30% in Q1. Grade A rent increased 1.3% q-o-q to JPY 25,003 per tsubo per month. It was the first time in seven quarters that average rent moved above JPY 25,000. DTZ forecasts that the Tokyo office market will improve further and will witness declining vacancy and rent increase. The rent increase will accelerate in H2 2014, underpinned by limited new supply.
Real estate transaction volume increased 38% q-o-q to JPY 1,333.3 billion in Q1. This was the highest transaction volume recorded in the first quarter of the year. The volume in Q1 traditionally increases as most local companies try to sell their holding assets or acquire new assets in order to improve their balance sheets before the fiscal year-end in March. This quarter, a couple of significant deals over JPY 100 billion pushed up the total investment volume.
Source : DTZ (Groupe UGL)