Investors likely to keep Japan portfolios: Savills


Savills Japan indicated their view that investors will maintain their Japanese real estate portfolios even after the earthquake in a report compiled on April 2011 in the wake of the Great East Japan Earthquake. Several real estate transactions were forced to be cancelled or postponed due to the impact of the earthquake. However, the company says that the long-term outlook for the Japanese real estate market is stable and that major investors will continue their involvement in the market.


Since the future of the Fukushima nuclear power plant incidents remains uncertain, some core and core-plus investors are abstaining from engaging in transactions. On the other hand, some opportunistic investors and hedge funds are showing signs indicating that they think this a prime opportunity for making investments. Savills believes that domestic investors who have led the market prior to the earthquake will continue to be active even after the earthquake.


In terms of the rental office market, tenants have become increasingly wary of locations and earthquake resistance standards of office buildings following the quake. As a result, it projects that demand for class A and quality class B offices in the central five wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku and Shibuya wards) will increase and, albeit gradually, office rents of these classes will show signs of bottoming out.


The report goes on to say that once the nuclear power plant issue cools down, office relocations to areas in western Japan such as Osaka taking place as a means to avert the issue, may end up being a short-lived trend.


Savills says that the market for rental housing in the greater Tokyo area will continue to maintain high occupancy rates supported by stable demand. Major changes are yet to be seen in the market for luxury rental houses. However, Savills points out that this market may perhaps soften, since demand from executives and staff of foreign companies may weaken depending on the progress made on the nuclear issue.


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