Japan Real Estate Market Quarterly Review-First Quarter 2023

Financial Research Department Economic Research Department Researcher Hiroto Iwasa

Macro Economy

Japan’s real GDP is expected to increase by +0.1% q-o-q (annualized 0.3% increase) in Q1 2023, with steady private consumption offsetting the downward pressure from sluggish exports.
Japan’s real GDP is expected to expand by 1.2% in FY2022, 1.0% in FY2023, and 1.6% in FY2024.

Real Estate Market

Tokyo grade-A office rents continue to decline. The vacancy is expected to increase due to new supply.
Multifamily rents in Tokyo increase modestly or level off depending on the size.
The hotel market recovered to the pre-COVID level.
Retail sales are recovering, driven by solid consumption of inbound tourists.
Population inflow to Tokyo recovered to the pre-COVID level.
Logistics markets eased due to the large supply in both Greater Tokyo and Greater Osaka.

Capital Market

J-REIT Index declined by 5.7% q-o-q in Q1 2023, trading at a price to NAV ratio of 0.90x, dividend yield at 4.2%, and dividend and JGB spread at 3.9% in March 2023.
J-REITs acquired property assets totaling JPY367 billion in Q1 2023 (2% increase y-o-y).

This report includes data from various sources and NLI Research Institute does not guarantee the accuracy and reliability. In addition, this report is intended only for providing information, and the opinions and forecasts are not intended to make or break any contracts.