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International Property
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Commercial property: Japan gains upper hand in attracting foreign investment as China’s uncertain outlook deters capital

  • End of negative interest rates in Japan unlikely to discourage foreign investors from commercial real estate investments: analysts
  • ‘Foreign investor appetite could not be stronger for Japan at the moment,’ JLL analyst says

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People walk in a crosswalk in Tokyo on March 7, 2024. Photo: EPA-EFE
Cheryl Arcibal
The end of Japan’s ultra-loose monetary policy is unlikely to deter foreign investors from snapping up commercial real estate in the world’s fourth-largest economy, as Tokyo and other large metropolises remain attractive destinations for capital looking to acquire assets such as hotels, multifamily buildings and logistics facilities, according to analysts.
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This view on Japan stands in contrast to the outlook for China, where various support measures and a loose monetary stance have failed to revitalise foreign investment demand for commercial property, they said.

Last month the Bank of Japan (BOJ) wound up its eight-year policy of negative interest rates, which had been put in place to encourage consumption and boost investment. The BOJ pegged rates to between 0 and 0.1 per cent and signalled a potential rate hike if consumer prices continue to firm up.

Meanwhile, China’s central bank has been on an easing trajectory, with its latest decision in February cutting 25 basis points from banks’ five-year loan prime rate (LPR), the largest shave since the LPR was designated as the main rate benchmark in 2019.

People take pictures in the Shinjuku area of Tokyo on March 30, 2024. Photo: AFP
People take pictures in the Shinjuku area of Tokyo on March 30, 2024. Photo: AFP

“From the commercial real estate perspective, the appetite is quite a tale of two countries: foreign investors continue to look for opportunities in Japan but remain very silent when it comes to China,” said Henry Chin, global head of investor, thought leadership and head of research for Asia-Pacific at CBRE.

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