Why Osaka is winning investment in Japan
Osaka is fast emerging as an attractive real estate investment destination, supported by spillover demand from Tokyo and tourism.
Last year, commercial real estate investment in Greater Osaka climbed 35 percent from 2016 to 651 billion yen (US$6 billion) the highest since 2007. Recent deals included PGIM real estate’s purchase of the Toyobo HQ Building for reportedly 20 billion yen and Japan Retail Fund’s acquisition of the Shinsaibashi GROVE for 15 billion yen. Capital values increased 20 percent year-on-year in the last quarter, according to data from JLL.
The region’s share of total investment into Japan also climbed – from 13 percent in 2016 to 16 percent in 2017 – for its fourth straight year of gains, according to JLL data. Tokyo’s share, in comparison, steadied between 2016 and 2017 but fell between 2014 and 2015.
“Demand for assets in Tokyo has continually been strong, however a lack of sellers and high prices have led investors to shift their focus to regional markets including Osaka,” says Takeshi Akagi, Head of Research at JLL Japan.
The annual government land survey results confirmed the market’s strength when they were released in March. According to the report, over 2017, commercial land prices climbed 4.7 percent in Osaka, compared with Tokyo’s 3.7 percent.