Japan’s economy advanced at a healthy rate of 1.5% in 2013. Domestic consumption and external demand continued to recover in the first quarter of 2014. An April 2014 hike in Japan’s consumption tax is expected to deter consumer sentiment in the near term with the economy reverting to moderate growth in the second half of the year. For now, aggressive monetary easing has created a tailwind for asset prices and the overall real estate market.
Favourable credit conditions and lending attitudes led to a doubling in the volume of commercial property transactions over the past year. This has impacted real estate cap rates which are still gradually compressing. Backed by buoyant equity raising activities, J-REITs dominate the investment market in the office, logistics, and residential sectors. Foreign investors continue to be attracted to the Japanese market due to its recovering fundamentals and wide spreads relative to other major markets. Foreign investors’ activities are especially strong in the retail and hospitality sectors.
Source : Deutsche Asset & Wealth Management