Tokyo Ranks No.1 for Global Real Estate Investment Foreign Capital inflow due to Covid-19

Jones Lang Lasalle (JLL), a leading real estate service company, has announced that Tokyo commercial real estate investment was ranked on the top for the period of January- September 2020 with USD19.3 billion (approx. 2 trillion yen). This raises Tokyo from its previous rank of 4th place year-on-year. Foreign institutional investors have been preferring Tokyo real estate market, which has had less economy impact compared to Europe and the United States due to the Coronavirus pandemic. Inflow of oversea investment money is particularly seen towards logistic facilities and apartment rental properties that are stably operating.

According to JLL, Soul (USD14.2 billion) ranked 2nd place, and London (USD13.4 billion) ranked 3rd. A first, since the financial crises 2008 from the collapse of Lehman Brothers, that Tokyo ranked first place throughout the third quarter.

The ratio of foreign investors making direct investments in Japan’s real estate was 38% for the period of January-September 2020. A 17-point increase compared to the period of January-December 2019. The breakdown of usage of real estate nationwide in Japan compared to the period of January-September 2019 is; investments in logistic facilities 30%(11-ponit increase year-on-year), housing properties 22%(9-point increase year-on-year), offices 31%(9-point decrease year-on-year), commercial facilities 7%(7-point decrease year-on year).

The real estate investment market had concerns that foreign investors’ activities would slowdown due to the travel restriction impacts from the coronavirus pandemic. However, the rate of flow stabilized in logistic facilities and rental apartments due to increase online shopping and prolong work-from-home. Foreign investors based in Japan have started to prefer the stable real estate property trends in Tokyo to those of cities in Europe and the United State, where there is slowdown in economy.

JLL research division director has commented “Low yield transactions are made to maximize investment in order to overcome the crisis of coronavirus pandemic in a long term of 10 or 20 years.”