The world has felt pretty hard-done-to in the last few years as the global credit crunch wreaked havoc on the financial lives of people around the world. Imagine how the Japanese must feel; Japan has been "bumping along the bottom" since its economy crashed during the Asia crisis in the early years of this century.
There comes a point in every recession when investors decide the bottom has arrived and start capitalising on rock bottom property prices. According to the latest data from Jones Lang La Salle that time is upon Japan.
According to the report sales of offices, logistics and retail space were up 70 percent to 1.48 trillion YEN (USD 15 billion) in the first five months of 2013 from a year earlier. Takeshi Akagi, the firm's regional director was quoted by Bloomberg predicting a rise to as much as 3.5 trillion YEN this year, the most since 2008.
Prime Minister Shinzo Abe has been trying to spark the economy with policies that have been dubbed "Abenomics," including measures to increase inflation.
According to some analysts it is unlikely that the policies will make a difference in the long-term, but they have definitely affected investor sentiment in the real estate market.
"I don't think anyone would argue that there hasn't been a favourable sentiment shift since Abe came to power," Christian Mancini, chief executive officer of North East Asia at Savills Asia Pacific Ltd., told Bloomberg. "Inflation translates into balance-sheet recovery and has a knock-on effect on the real estate market."
Mancini also told the Wire Service: "Some of the J-REITs and some of the property companies are willing to purchase very aggressively right now to lock into what they believe would be an improvement in the market. You can expect prices going forward will continue to improve."
Several key metrics have turned positive recently, with office vacancy rates falling while rents and land prices start to grow.
Financial ratings agency Moodys have put their weight behind the turnaround as it revised its outlook on the Japanese real estate market from stable to positive.
"The change in the sector outlook reflects the appreciation in the values of commercial properties, as well as the increasing rents for new office buildings and the stable rents for properties such as logistics, retail and residences," Moody's wrote.
The Mori Trust, an asset management company with a portfolio of 89 buildings in Japan has also recently said it is considering buying more property as the market begins turning around.
Retail may be one of the main beneficiaries as consumer confidence picks up, JLL predicts.
"Tokyo stands out as a bright spot on a global stage when investors consider where to put their money," Mr Akagi of JLL told Bloomberg. "It's no doubt Abenomics is immensely positive for the real estate market and has a huge impact and property prices."
- Monday 15 July 2013