Desired Acceleration of Grade-A-Office Investment by J-REIT

mamoru masumiya

Recently, more transactions of Grade-A-offices by J-REITs have been observed in the Tokyo prime office market. Currently, however, Grade-A-offices account for only a small portion of J-REIT portfolios. While property developers own a lot of Grade-A-offices, J-REITs play a very small role in the Tokyo prime office market.
When more Grade-A-offices are invested by J-REITs, various benefits can be expected in the market. J-REITs can overcome obscurity among investors, especially retail and overseas investors, and can secure the competitiveness of their portfolios even in a more polarized and selective office market. J-REIT market liquidity can improve with the increasing market size, which leads to good accesses to large institutional investors. Regarding the overall property market, the transaction liquidity and the transparency of the Grade-A-office market will possibly improve. Moreover, property developers selling Grade-A-offices can pursue growth opportunities by reinvesting the proceeds from the sales into development projects in Asia.