Hope springs eternal for Japan’s office real estate sector

Japanese offices remain a promising investment in five to 10, even 20, years on

AsianInvestor shared that according to CBRE’s 2022 Asia Pacific Investor Intentions Survey, 60 percent of investors are planning to buy more regional commercial real estate this year compared to last year.

The key drivers for the office demand include strong investment activity from close-ended real estate funds, institutional investors, and real estate investment trusts (REITs).

Pensions & Investments reported that Japan’s office real estate sector, two years into the pandemic, remains sluggish.

“Rents since the beginning of the pandemic have come down perhaps 8 percent to 10 percent but in the offices that we own there’s still healthy demand,” with occupancy rates of around 97 to 98 percent, said Isabella Lo, managing director of investments with Hong Kong-based real estate boutique Gaw Capital Partners.

Many are uncertain about Japan’s office market, like David Chen, Hong Kong-based managing director, chief investment officer, and head of real estate Asia-Pacific with J.P. Morgan Asset Management’s alternatives division, J.P. Morgan Global Alternatives. He remains open to all the possibilities because the pandemic continues to create a ripple effect on office demand. 

More: Asia Pacific commercial real estate market forecast for 2022

While the future of office spaces is a bit of a grey area, he mentioned that modern, flexible workspaces with the right sustainability features will continue to be in demand.

Japanese offices remain a promising investment in five to 10, even 20, years on, according to money managers.

It is also believed that domestic companies will once again show their interest in office spaces this year, a sentiment that was shared by Hiroshi Okubo, Tokyo-based research head of CBRE Japan. He also noted that for the first time in five years, CBRE’s annual poll of domestic institutional investor interest in Japanese real estate showed that the office sector lost to logistics as the most favoured market category.

The latest survey, which was conducted in December, however, showed that the office sector was back on top.

The Property Report editors wrote this article. For more information, email: [email protected].