2018日本房地产市场展望（英文版）_34页-4mb

2018 Asia-Pacific Real Estate Market Outlook: Japan

Executive Summary

The Japanese economy is expected to maintain stable, albeit low, growth in 2018, supporting continued demand for commercial real estate. However, the shift from landlords' markets to occupiers' markets is anticipated in areas with significant new supply. The Bank of Japan's monetary policy is likely to remain loose, keeping interest rates at ultra-low levels, while the U.S. Federal Reserve's normalization policy may lead to a slowdown in the U.S. economy from 2019 and potentially negative growth in Japan by 2020.

Economic Outlook

• Japan has experienced seven consecutive quarters of GDP growth between Q1 2016 and Q3 2017, marking the longest period of economic expansion in over sixteen years.
• The economy is driven by exports and corporate capital expenditure, supported by a stable currency.
• Consumer spending remains stagnant due to low real wage growth, but the strong stock market and stable exchange rates have helped department stores recover in luxury and duty-free sales.
• The tight labour market is expected to boost wage inflation in 2018, supporting private consumption.
• CBRE Global Research forecasts real GDP growth of 1.7% in 2017 and a similar level in 2018, with inflation remaining low.
• The U.S. Federal Reserve's rate hikes may support the weaker Yen initially but could slow the U.S. economy, leading to a potential negative growth in Japan in 2020, especially if the consumption tax is raised.

Office Sector

• Tokyo is expected to transition from a landlords' market to an occupiers' market due to a significant increase in new supply (233,000 tsubo in 2018 and 2019, up 30% from the 10-year average).
• Office demand remains strong due to a stable economy and record corporate profits, with companies prioritizing prime locations and high-grade premises to attract talent.
• The All-Grade vacancy rate in Tokyo is forecast to rise from 1.5% at the end of 2017 to 2.8% by end-2019.
• Grade A rents are expected to decline by around 8% by the end of 2019 and 20% by 2020, unless the consumption tax is postponed.
• Regional cities like Osaka, Nagoya, and others are expected to maintain tight supply-demand balances, leading to continued rent growth.

Logistics Sector

• Demand for logistics facilities is driven by e-commerce growth, though labor shortages remain a challenge.
• Greater Tokyo is set to see record high new supply in 2018 and 2019, with 470,000 tsubo in 2018 and 550,000 tsubo in 2019.
• Vacancy rates are expected to vary across different areas, with the Tokyo Bay Area remaining tight (around 1%) and the Ken-O-do area seeing higher vacancy rates (close to 30%).
• The increase in supply may lead to a decline in rents, particularly in the Greater Tokyo area.

Retail Sector

• The growth of e-commerce is starting to impact the retail property market, with prime high street locations seeing show-room strategies.
• Luxury and duty-free sales have recovered due to the strong stock market and stable currency, which could lead to a recovery in luxury retail demand and rents.
• Ginza retail rents have adjusted following a slowdown in demand from luxury brands but are expected to stabilize or rise in 2018.
• Retail demand is shifting from merchandise to "experience," influencing property investment trends.

Investment Outlook

• Investors show a strong appetite for Japanese real estate, but supply, particularly of prime assets, remains limited.
• There is growing uncertainty around rental outlooks for certain asset classes and areas, leading to a widening price gap between buyers and sellers.
• Transaction volume is expected to decline year-on-year in 2018 due to this uncertainty.
• Cap rates are likely to remain low, with further compression expected in mid-sized offices in Tokyo, prime offices in regional cities, and logistics facilities in the Greater Tokyo area.

Regional Cities Overview

Major Development Pipeline