A combination of five factors means the Tokyo offices sector presents an outstanding buying opportunity, according to a new report by Cordea Savills, the international property investment manager.

The report, entitled Five Reasons to Buy Tokyo Offices in 2015, says the government’s pro-business and growth stance; a larger, more liquid market; favourable cyclical factors; strong investor sentiment; and attractive valuations all support the case for investing in Tokyo offices. It says the fundamentals supporting investment in the Tokyo office market have particularly strengthened so far in 2015.


“Tokyo remains our top pick in Asia,” said Kiran Patel, Chief Investment Officer at Cordea Savills. “The demand fundamentals are well supported by the political and economic background while the Tokyo office investment cycle has turned the corner and will continue to gain momentum. The positive sentiment and relaxed credit conditions will provide tailwinds to an already improving market in 2015.”


The five reasons listed in the paper are:


  • Government’s pro-business and growth stance: Japan’s latest fiscal stimulus package, which is worth 3.5 trillion yen (USD 30 billion) is expected to boost GDP by 0.7%. The government’s pro-business stance and the spending on the 2020 Olympics is a positive for Japan’s real estate market as a whole
  • Larger, more liquid market: Investors and developers have driven a larger, more liquid market: The volume of real estate transactions in Japan continues to rise and remained at a buoyant level in Q3 2014, indicating an 8% year-on-year increase on a 12-month rolling period. The core / core-plus sector is particularly attractive
  • Favourable point in the cycle: The Greater Tokyo offices cycle continues to gain momentum: The Office sector is a cyclical play. The cycle has turned positive and is gaining momentum. Furthermore, total returns from Japan’s office market is enhanced by steady income returns
  • Strong investor sentiment: Over the last 12 months, the J-REIT index remains on a recovery track, indicating improving sentiment across the direct real estate market, supporting further momentum in the Tokyo office market. The Bank of Japan’s survey of lending attitudes of banks to the real estate industry increased sharply in Q3 2014 to an index value of 23 from 17 in Q2
  • Attractive valuations: The Bank of Japan’s asset purchase program has pushed Japanese Government Bond (JGB) yields close to historic lows. This has increased the spread of Tokyo office yields over 10-year JGB yields. The property risk premium on Tokyo offices is now among the highest offered by any major global city

The report can be viewed on our Research and Strategy page.




Citigate Dewe Rogerson

Patrick Evans / Stephen Sheppard / James Madsen / Alice Stewart


Tel: +44 (0)20 7282 2966

E: savillsim@citigatedr.co.uk


  • 24 February 2015