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The Grade A and B office markets both saw impressive rental growth over the year. Nevertheless, a COVID-19-induced market slowdown is likely to materialise during late-2020.
• Vacancy rates remain extremely low in the central five wards (C5W), and rents have picked up once more. That said, momentum is expected to peter out as the market grapples with the impact of the COVID-19 pandemic.
• Average rents in the C5W Grade A office market grew 1.0% quarter-on-quarter (QoQ) and 7.1% year-on-year (YoY) to JPY37,759 per tsubo1 per month.
• The average Grade A office vacancy rate in the C5W was steady over the quarter and year, holding at around 0.3% as of Q1/2020.
• Average rents for large-scale Grade B office space rose to JPY28,558 per tsubo per month, growing by 1.3% QoQ and 6.5% YoY.
• Like its Grade A counterpart, the average large-scale Grade B office vacancy rate saw minimal change this period, standing at 0.3%.
China is the world’s second-largest economy and its second-largest consumer market (13.1% in 2018) having overtaken Japan in 2005, as well as being one of the fastest-growing large markets. International retailers have been placing increased importance on the market with some making China its regional headquarters. Meanwhile...
Download the Report Read MoreAs COVID-19 continues to spread across the world without an end in sight, global capital markets have unsurprisingly been hit hard and the J-REIT market has suffered more than most. Yet, under the current circumstances, it is easy to forget that J-REITs had performed solidly up until 20 February – when the TSE REIT Index peaked at over 2,250 (Dividend: 3.5%, NAV: 1.28). Things swiftly changed thereafter, however, as the index lost around half of its value over the course of the following month, plummeting to 1,145 (Dividend: 6.8%, NAV: 0.69) by 19 March. A modest recovery to 1,640 (Dividend: 4.8%, NAV: 0.97) by 25 March notwithstanding, the index has hovered around the 1,500 mark (Dividend: 5.2%, NAV: 0.90) since the start of April – around 30% below its preCOVID-19 high.
Download the Report Read MoreAs reported in the semi-annual survey by the Japan Real Estate Institute (JREI) and BAC Urban Projects, rental growth in Tokyo’s prime retail submarkets on the whole was impressive during 2H/2019. Average 1F rents increased by 4.9% half-year-on-half-year (HoH) and 14.9% year-on-year (YoY). As for Non-1F rents, growth in this sector has yet again exceeded its typically more volatile 1F peer, rising 8.8% HoH and 15.9% YoY. As such, for the first time, non-1F rents in all submarkets sit above JPY30,000 per tsubo per month. At the submarket level, 1F rents in Ginza remain streets ahead of rivalling districts, whilst the spread between average non-1F rents remains tight.
Download the Report Read MoreThe COVID-19 pandemic continues to depress office rents during the month, with rents in Central and Admiralty dropping 18.6% and 22.2% YoY, respectively, extending the decline to 11 consecutive months. With current rents adjusted significantly downwards, cost-conscious occupiers started to seek bargain deals in the down market, triggering more leasing activity than in the previous month. In Island East, however, as office vacancies remained at a low level (Quarry Bay: 0.5%, North Point: 5.1%), rents in the area remained stable.
