2018日本房地产市场展望（英文版）_32页_3mb

2018 Asia-Pacific Real Estate Market Outlook: Japan Summary

Core Content

The 2018 Japan real estate market outlook highlights a stable but slow-growing economy, with a continued focus on real estate dynamics. The market is expected to experience a shift from landlords' to occupiers' markets, driven by increased supply and changing demand patterns. The report also outlines specific trends across various sectors and cities, including office, logistics, retail, and investment.

Main Points

Economic Outlook

• Japan's economy has recorded seven consecutive quarters of GDP growth between Q1 2016 and Q3 2017, the longest such period in over sixteen years.
• Economic growth is expected to remain low but steady in 2018, with real GDP growth forecasted at around 1.7%.
• The Bank of Japan is likely to maintain its loose monetary policy, keeping interest rates at ultra-low levels.
• The U.S. Federal Reserve's normalization policy may lead to a weaker Yen and could result in slower U.S. growth from 2019, potentially leading to a recession in Japan by 2020 if the consumption tax hike is implemented.

Office Market

• Tokyo:
  • New supply is expected to increase significantly, with an average of 233,000 tsubo in 2018 and 2019, up 30% from the 10-year annual average.
  • Vacancy rates are forecast to rise from 1.5% at the end of 2017 to 2.8% by the end of 2019.
  • Grade A rents are projected to decline by 8.2% by the end of 2019, while Grade A-Minus rents are expected to fall by 6.9%, and Grade B rents by 4.0%.
• Osaka:
  • The office market has seen strong demand, with net absorption in 2017 close to 2014 levels.
  • New supply in 2018–2019 is expected to be minimal, only 5,000 tsubo, leading to a stable vacancy rate of 2.4% by the end of 2019.
  • Grade A rents are expected to rise by 4.1%, and Grade B rents by 8.8%.
• Nagoya:
  • Vacancy rates are forecast to decline slightly, with Grade A rates expected to fall by 0.8 points to 1.8% by the end of 2019.
  • Grade B rents are expected to rise by 7.5%, and Grade A rents by 2.2%.
• Other Cities:
  • Kanazawa, Kyoto, Kobe, Hiroshima, Fukuoka, and Takamatsu are expected to see varying trends, with some experiencing a rise in vacancy rates and others a decline.
  • Rents in most cities are projected to increase, with Fukuoka showing the highest rental growth.

Key Information

Supply and Demand Trends

• Tokyo will see a significant increase in new supply, which is expected to outpace demand, leading to a rise in vacancy rates and a decline in rents.
• Regional cities (e.g., Osaka, Nagoya, Sapporo, Sendai) are expected to maintain tight supply-demand balances, with rents continuing to rise.
• Logistics sector will see strong demand due to e-commerce growth, but the labor shortage poses a challenge. New supply in Greater Tokyo, Osaka, and Nagoya is expected to remain high, with Tokyo leading in both supply and vacancy rate changes.

Retail Market

• The growth of e-commerce is starting to affect the retail property market, especially in prime locations.
• Show-room strategies are becoming more common, influencing rental trends.
• Ginza has seen a recovery in luxury sales, which may lead to a rebound in retail rents.

Investment Outlook

• Investors show strong interest in Japanese real estate, but supply, especially of prime assets, is limited.
• There is growing uncertainty in certain asset classes and areas, leading to a widening price gap between buyers and sellers.
• Transaction volumes are expected to decline 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.

Figures and Data Highlights

• Figure 1: Economic growth and rates are expected to remain low and steady.
• Figure 2: GDP growth comparison between Japan and the U.S.
• Figure 3: Tokyo Grade A rents are forecasted to decline by 8.2% by the end of 2019.
• Figure 4: New supply in Tokyo and regional cities is expected to increase significantly.
• Figure 5: Office rental growth and vacancy rate forecasts for 2017–2019.
• Figure 6: Investment outlook, including transaction volumes and cap rates.
• Figure 7: Vacancy rate and rental forecast for various cities.
• Figure 8: Major development pipeline in Tokyo and Sapporo.

Conclusion

The Japanese real estate market in 2018 is expected to experience a shift from landlords' to occupiers' markets, with increased supply in Tokyo and other major cities. While economic growth remains low, the market is anticipated to show resilience in some sectors, particularly retail and logistics, with a significant impact on rental rates and vacancy levels. The investment sector faces challenges due to limited supply and growing uncertainty, which may lead to a decline in transaction volumes. Overall, the market is expected to remain dynamic, with varying outcomes across different regions and asset classes.