Where is the most attractive city to invest in Asia ? : CBRE institutional investors reports 2018


(Kamogawa city in Chiba)                       (Kominka-tradtional Japanese folk house-)
Are you curious about where the most attractive city in Asia to invest is ?
CBRE, renowned global real estate company, recently published a report on Japanese investment market called “CBRE Investors Survey 2018” 
According to the report while domestic investors’ willingness to invest remains high but the marker can see a somewhat prudent attitude and a move to seek an alternative investment.
Foreign investors targeting the Asia-Pacific region ranks Tokyo as the most attractive city and  local cities (7 cities in the region such as Osaka, Fukuoka as one category) in Japan as the seventh place.
In 2018, the interest from overseas investors to Japan is expected to further 
grow.
Here are key points from the report
While Japanese investors have increased willingness to sell, the intention to acquire is somewhat lower.
According to the report, 63% of investors in Japan said they would acquire the same volume as in 2017, an increase of 5 points from 58% in the previous year.
Meanwhile, 29% of investors responded that they will increase from the 2017 acquisition, a 9 point decrease from 38% in the previous year.
The overall result is that more than 90% of investors are still assuming investment trajectory                shall be equal to or higher than the previous year. Nonetheless, the trajectory also decreased by 5 points from 96% in the previous year. The willingness to acquire assets seems to be somewhat declining.
On the other hand, the willingness to sell is somewhat increasing.Investors who said they would sell the similar volume as the previous year, is 62%, decreased by 7 points from the previous year,34% of total said they would increase sales from the previous year, an increase of 14 points from 20% in the previous year.Overall, 96% of the total is  projecting plan to sell equal to or greater than last year.


(Kamogawa city in Chiba)
Approximately half of investors are concerned about domestic and overseas economic trends and declines in real estate prices

As for the risk in the real estate market, most investors were concerned about sudden economic fluctuations in domestic and overseas.They also worry the decline in real estate prices.Meanwhile, in the survey of the previous year, concerns about the over-supply expected in the office market in Tokyo, which about 20% of investors had pointed out, decreased to less than 10% in this survey.The office vacancy rate in the 23 wards of Tokyo is less than 2%, and the demand tight situation continues, which seems to give investors peace of mind.On the contrary, there are an increasing number of investors say risks of political instability in Japan and abroad in response to the rapidly changing international situation.
Seeking new investment options for higher yield

As for the most attractive asset type of the entire investment target, the office (41% of total) was selected as the most attractive type.Then followed by hotel, 26% to total which was increased by 10 points from the previous survey.Meanwhile, as yields on key asset types decline, investors seek investment in alternative assets  chasing higher yields.
In particular, investors are increasingly interested in asset classes whose demand is expected to expand due to economic structural changes 
symbolized by keywords such as “Millennial generation”,
“aging society” and “technology”.
As for the sector to consider investment in the future, “Student dormitory・student apartment” is the highest at 20%, followed by “data center”, “home for seniors with a service ・nursing home for home”, “health care” accounting for 16%.
Regarding “leisure ・ entertainment”,  it is considered that the sectors will grow accompanying life-style reform initiatives by the government and also backed by the expanding inbound tourism demand.

Tokyo is “the most attractive city” in the Asia Pacific region

(CBRE chart)
In a survey on foreign investors, Tokyo is  the most attractive place in the Asia-Pacific region.
Nearly 60% of investors who responded Tokyo as No.1 are from Asia.
Asian investors will be a driving force in Japan’s inbound investment in 2018.
In addition, 48% of overseas investors who responded that Japan is the most attractive are projecting that the global investment volume would be the same and 52% of total say it will higher.
This projection would prompt Japan ‘s inbound investment even more.
As the high-yield real estate investment attracts attention due to the  global easy money policies.
Final thoughts
Japan market presents a large economic scale and it is very stable.
In this context, for institutional investors, Japan market will continue to maintain the good momentum in the portfolio of the global funds.
We, individuals investors, should also watch the overall market trend closely.

Toshihiko Yamamoto
Real estate investing consultant and author.
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia

Toshihiko’s book, “The Savvy Foreign Investor’s Guide to Japanese Properties: How to Expertly Buy, Manage and Sell Real Estate in Japan”is now out on Amazon, iBooks (iTunes, Apple) and Google Play.
About the book 
Amazon.com Link

 

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