Tokyo’s commercial property market topped an ongoing survey of the world’s major cities in the first quarter of 2014, according to Jones Lang LaSalle (JLL).
A surge in international interest led to total commercial property transactions in the city increasing by 71 per cent in comparison with the same period last year.
The Japanese capital jumped ahead of both New York and London in the real estate service provider’s figures.
After 20 years of nearly constant price falls since the collapse of the country’s asset bubble back in the early 1990s, land prices in Tokyo increased last year. They were bolstered by a successful bid for the Olympic Games in 2020.
Prime Minister Shinzo Abe’s pro-growth economic programme and the Bank of Japan’s aggressive monetary stimulus policy have also helped to encourage confidence in the economy.
David Green-Morgan global capital markets research director at JLL, stated recently that investor sentiment toward Tokyo from within Japan and other countries around the world is more positive at this point than it has been for many years.
The increased interest in the Tokyo market and higher real estate prices are encouraging greater supply as well.
As a result, there is a higher volume of transactions in the market, according to Shigeo Hirayama, head of research at Urban Research Institute Corp. He also said the prospect of higher rents is prompting some tenants to buy the properties they are currently renting.
The latest report from Cushman & Wakefield states that office rents are expected to stop their decline and start rising gradually. Analysts say investors will broaden their search for good property deals beyond central Tokyo as interest in Japanese real estate increases.
One-quarter of all purchases in Tokyo involved money coming from overseas. European and other Asian investors formed the majority of foreign interest. Big transactions boosted Tokyo’s standing during the last quarter, including Mizuho Bank’s purchase of Otemachi Tower, an office building in central Tokyo, and AXA Real Estate’s acquisition of Nakano Central Park East.
Tokyo was the only property in Asia to be listed on the top ten. Economic cooling measures in China have had a negative effect on investor sentiment in that country.
