Japanese economic recovery has not been obvious from the negative q-o-q GDP growth in the second quarter. Housing starts have been recovering as the construction cost increase has finally lost steam. Land prices in the three major metropolitan areas continued appreciating.
The Tokyo grade-A office market has strengthened further, however, weakness in office demand has become noticeable over the whole market. Tokyo residential rents have been on the increase, but the luxury category has corrected.
Retail stores and hotels are benefiting from the increase in foreign visitors. In particular, hotels are enjoying very high occupancy rates and have raised their room rates. The logistics facility market is about to face significant supply.
The TSE REIT Index declined by 7.0% in the third quarter. Though J-REITs have accelerated asset acquisitions this year, the entire transaction volume in the property investment market has fallen short of that in 2014.
