Total commercial real estate investment transactions (excluding residential and hotel properties) decreased further by 22% to JPY547 billion in Q3 2014, from JPY699 billion in Q2 2014. This was the second consecutive quarter of reduced transaction volume, although the pace of decline slowed in Q3 from Q2. Despite a quarterly fall in Q3, we perceive the investment market remaining active and resilient overall.
The calmer market during the summer holiday season, as well as slower investment activities by J-REITs, were the main cause of the drop in this quarter. Given the fierce competition in the market, yields are continuously compressed and this has pushed up prices, especially in prime locations. As REITs are normally risk averse and avoid making speculative investment, the current market trend towards appreciation in sales prices has reduced the number of investment opportunities for J-REITs. This, in turn, has resulted in a decline in J-REIT activities.
Source : DTZ