Japan Real Estate Market Quarterly Review-Fourth Quarter 2020

Financial Research Department Makoto Sakuma

Macro Economy

Japan’s real GDP is expected to expand by 2.1% q-o-q (annualized 8.5%) in Q4 2020, but likely to slip into negative growth in Q1 2021, due to its second COVID state of emergency.
Economic recovery is expected to be moderate. Japan’s real GDP is expected to recover its cyclical peak (Q3 2019) in FY2023.

Real Estate Market

Tokyo grade-A office rents declined by 8.9% q-o-q in Q4 2020, falling to the same level in Q4 2017.
Tokyo multifamily rents remained resilient, but pockets of weakness have been seen in urban residential areas.
Amidst the COVID third wave, headwinds for hotels and retails are becoming stronger.
Logistics rents have continued to increase in Q4 2020 driven by robust occupier demand from e-commerce.

Capital Market

J-REIT Index increased by 3.3% q-o-q in Q4 2020 and declined 16.9% y-o-y in 2020.
J-REITs acquired property assets totaling JPY1,393 billion in 2020, which remained at the same level as the previous years, underpinned by acquisitions of logistics properties.

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.