Investment in the Tokyo commercial market is picking up pace based on the prospect of rent increase and rising returns. According to Jon Tanaka, the managing director of Angelo Gordon & Co., an alternative asset manager with $27 billion in assets, there is a sense of value there that Japanese and offshore buyers have not been able to find in other major office markets.
Investment in Japan, as a whole, increased by 70 per cent to $44 billionin the 12 month-period ended in March, according to a report released in July by Deutsche Asset & Wealth Management.
Over the next three years, rents are predicted to increase by another 30 per cent, giving potential investors the opportunity to capitalise on incomes by getting into the market at this time.
Returns on office assets are higher than in other major international markets. According to Deutsche Asset, the difference between the return on equity and long-term interest rates is more than 400 basis points higher than 10-year bond yields. In Singapore and Hong Kong, it is less than 100 basis points, and in New York and London it is 200 basis points.
