Tokyo’s real estate properties continue to attract investors from across the globe.
Asian investors, in particular, are fixing their eyes on commercial properties in Japan’s capital city. Economists say that rent will increase, boosting returns in the next few years. Japan recently saw incredible growth in foreign real estate investment, with figures growing to 4.6 trillion yen ($44 billion), the highest level since March 2008.
Analysts predict that Tokyo will continue to be a property investment hotspot over the next three years. They say that commercial rent prices for prime buildings in the city will increase by about 30%. This gives potential investors an opportunity to capitalise on rental incomes.
Demand for Rental Properties
Real estate development experts from Sumitomo-RD.com.sg observe that the demand for office space in the central business district of Tokyo continues to increase as corporations relocate and companies from other cities transfer to the capital. In the previous months, vacancies in commercial buildings have dropped, even if there were several properties on the market.
A Lucrative Investment
The Topix Real Estate Index monitoring 45 real estate businesses increase 0.6% and is headed for the highest close since August 1, 2014 in Japan’s capital city.
Relative yields on commercial properties that are higher than in other key international cities are also attracting investors. A report from Deutsche Asset says, “The difference between the return on equity and long-term interest rates is more than 400 basis points above 10-year bond yields.”
Lure of Tokyo
Because of high rental demand in the city, real estate development companies are planning to expand their operations and plan new projects to answer to the pressing needs of commercial businesses. With development projects on the rise in underused areas, it is certain that property values will improve. This will lure more investors in and boost the country’s economy even further.
With strong rental demand, high relative yields, and property development projects on the rise, Tokyo definitely promises more opportunities than ever.