Foreign funds are finding real estate in Tokyo and the rest of Japan increasingly viable thanks to low-interest rates and one of the highest yield gaps in international cities.

According to JLL, the yield gap in office buildings in Tokyo was 2.9% this year, overtaking London’s average of 2.5% and New York of about 1%. This yield gap has constantly outranked the above cities as well as Hong Kong by staying around the 3% range over the past decade.

Daiwa Real Estate Appraisal believes the average purchasing price of prime real estate in central Tokyo in this year’s second quarter to be 3,000,000 Yen per square meter, which is the second-highest level since 2008.

A bumper year for foreign investment was in 2017 with overseas investors spending 1.1 trillion Yen on acquisitions.

In general, acquisitions slowed in 2018, before gearing up for the next year. 

Take away points 

January - Takeda pharmaceuticals sells 21 assets such as their Osaka headquarters for around 50 billion Yen 

April - Gaw Capital Partners acquires Aoyama building in Tokyo for 80 billion Yen 

June - Aberdeen Standard Investments partners with a banking firm to invest in rental housing targeted to geriatrics 

July - Japan Tobacco plans to sell its HQ after their vacation in 2021 with many foreign firms showing interest

Source: Japan Property Central, Daiwa Real Estate Appraisal, JLL

Similar to this:

Bubble? A tale of two Tokyos

Tokyo apartment sales in August 2019

Tokyo new apartments supply levels nears 43 year low