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1、REPORTJapan rental housing:Solid investment fundamentals despite an ageing populationInvestment IntelligenceCBRE RESEARCHJULY 20232CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationNote:Bubble size represents GDP of each
2、country weighted by%planning to rentn=6,420(Japan n=316)Source:CBRE,January 2023Figure 0:Respondents planning to buy/rent property and potential size of rental housing market(image)ManyJapaneseprefertorentratherthanbuylivingaccommodation.When asked whether they plan to rent or buyproperty in the fut
3、ure,some 46%of Japanese respondents toCBREs 2022 Global Consumer Survey*indicated an intention torent,significantly above the global average of 35%.Estimates basedon the percentage of respondents indicating an intention to rentand each countrys GDP indicate that Japans latent rental housingmarket is
4、 of a size comparable to that of the U.S.,Germany andChina(Figure 0).The countrys residential sector is one of the few mature residentialinvestment markets in Asia Pacific,with properties being tradedactively by both domestic and foreign investors.The sector alsoboasts more stable rents than other a
5、sset types,such as offices.Scale,liquidity,and cash flow stability are some of the reasons thatmake the sector an attractive proposition to commercial real estateinvestors.To support the contention that Japanese rental housing will remaina promising sector,this report assesses the market from theper
6、spectives of demographics,household income,housing marketand consumer trends,and discusses the current state andattractiveness of the Japanese residential real estate investmentsector.*For more details,please refer to“Voices from Japan:How will people live,work and shop in the future?”,January 2023I
7、ntroductionKoreaBrazilIndiaNorwayUnited StatesSpainSingaporeUnited KingdomMainland ChinaSwedenItalyMexicoFranceHong Kong SARAustraliaCanadaNetherlandFinlandDenmarkGermanyJapan0%10%20%30%40%50%60%70%0%10%20%30%40%50%60%70%80%90%100%Prefer to BUYPrefer to RENTAmericasEuropeAPAC%planning to rent%planni
8、ng to buy3CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationExecutive summaryPopulation and demographicsHousehold economyHousing marketConsumer characteristicsInvestment marketAppendix000ContentsExecutive summa
9、ry005CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationExecutive summary Location:concentration of the population in urban areasLocation:concentration of the population in urban areasSince peaking in 2010,the Japanese pop
10、ulation has been declining,with the latest estimates suggesting a fall of 20 million by 2050.At the same time,however,the labour force is expanding,and the population continues to migrate to urban areas with plentiful job opportunities.While 30%of the population is currently concentrated in the 21 l
11、argest cities,this share is expected to rise further.The 23 wards of central Tokyo are expected to witness a population increase of 5%between 2015 and 2030.As a result,long-term demand for rental housing can be anticipated for central Tokyo and the other major centers of population concentration.How
12、ever,housing stock remains insufficient to accommodate demand in these urban areas.Target demographic(1):dualTarget demographic(1):dual-income householdsincome householdsThe rise in the number of Japanese women in the workforce has meant an increase in dual-income households.With relatively high hou
13、sehold income,dual-income households can afford high rents.Such households also tend to prioritise factors such as access to workplaces and convenience for child-raising,making them more likely to prefer urban locations.However,some 60 to 70%of rental apartment stock in major cities consists of smal
14、ler studio or one-bedroom apartments.While demand is strong for these smaller apartments due to the prevalence of young singles in metropolitan areas,this leaves an insufficient number of family-type units for dual-income households seeking to rent their home.Target demographic(2):single senior citi
15、zensTarget demographic(2):single senior citizensRecent statistical projections indicate that by 2040,one in five Japanese households will consist of single senior citizens.At the same time,the ongoing overhaul of legal frameworks allowing for the employment of senior citizens since mid-2010 has resu
16、lted in higher workforce participation rates among the over-60s,with significant room to increase these rates among the over-65s.Demand can be anticipated over the long term for properties targeting this demographic.Locations in close proximity to train stations with good access to workplaces and ro
17、bust lifestyle infrastructure are likely to be preferred.Elsewhere,so-called“share houses”,until now predominantly occupied by younger singles,may also become an option for single senior citizens.Specifications:demand for high quality and environmentally friendly propertySpecifications:demand for hi
18、gh quality and environmentally friendly propertyThe results of CBREs Global Consumer Survey indicate that,following the pandemic,the trend for consumers to prioritise high-quality housing has strengthened.In concrete terms,an increasing number of people are looking for better quality property,bigger
19、 homes,and better residential environments in their future domiciles.The same survey also indicates a rising commitment to issues of sustainability when selecting a residence,particularly among high-income earners and senior citizens.Should senior citizens and dual-income households with significant
20、 economic security continue to increase in number,demand for high-spec housing is also likely to increase.Interest rate environment:Interest rate environment:demand for rental housing set to increase in a rising interest rate environmentdemand for rental housing set to increase in a rising interest
21、rate environmentAn analysis of recent trends in the Japanese residential market shows that prices are on the rise,with condominium prices in particular spiking sharply.Furthermore,although interest rates remain low for the time being,any hikes in the future will lead to higher loan burdens for homeo
22、wners.While Japanese household economies remain largely healthy with ample ability to repay loan debts,any drop in housing affordability and greater home loan burdens would certainly lead to an increase in the number of households selecting rental options.Factors that drive rental housing demand des
23、pite Japans ageing and declining populationWhile the Japanese population is ageing and declining,strong demand for rental housing in the major metropolitan areas can still be anticipated:Population and demographics017CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid invest
24、ment fundamentals despite an ageing populationNote:Based on Population Census of Japan in 2020,and medium fertility and mortality scenario.Source:National Institute of Population and Social Security Research(IPSS),April 2023Populace set to continue to ageJapans population continues to age and declin
25、e,with this trendset to accelerate in the coming years(Figure 1.1).According to data compiled by the Ministry of Internal Affairs andCommunications,Japans population peaked in 2010 at 128.06million,before falling to 125.50 million by October 2021.Projections published in April 2023 by the National I
26、nstitute ofPopulation and Social Security Research suggest that thepopulation will continue to decline,reaching 120.12 million in 2030,112.84 million in 2040,104.69 million in 2050,and falling below the100 million threshold six years after that.The working-age population(ages 15 to 64)has also been
27、steadilysliding since peaking at 87.26 million in 1995,falling to 75.09million in 2020,and projected to reach 55.40 million by 2050.Withthe fertility rate continuing to languish(falling to 1.26 in 2022,matching the all-time low recorded in 2005),the percentage ofthe total population of over-65s is e
28、xpected to increase from 29%in 2020 to 37%by 2050.Population projectionsFigure 1.1:Japans population and projections to 2050020,000,00040,000,00060,000,00080,000,000100,000,000120,000,000406282000200220042006200820002220242
29、026202820302032203420362038204020422044204620482050ages 0-14(actual)ages 15-64(actual)age 65 and above(actual)ages 0-14(projection)ages 15-64(projection)age 65 and above(projection)8CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing
30、 populationNote:Data for 2011 are estimates based on supplemented dataSource:MIC Labour Force Survey,May 202363646566676869708220002002200420062008200022Total population(age 15+)Working population(rhs)(million)(million)More women and elderly in the workfor
31、ceReflectingthedecliningworking-agepopulationdata,theJapanese labour force was also in decline until 2012.Since then,however,it has risen sharply,and even managed to maintain itshigher levels during the pandemic(Figure 1.2).One key factor contributing to this phenomenon is the expandingparticipation
32、 of senior citizens in the workforce.With theratification of an amendment to the Act on Stabilisation ofEmployment of Elderly Persons in 2013,companies are required toprovide continuous employment measures for employees up tothe age of 65(to be fully enacted in April 2025).As a result,thelabour forc
33、e participation rate for 60 to 64-year-olds has spikedsharply since the mid-2010s(Figure 1.3).While the participationrate for over-65s has also risen moderately,there remains furtherpotential for growth as business operators are now required tomake their best efforts to implement measures to secure
34、jobopportunities for employees up to the age of 70 from April 2021.Another major reason behind the expanding labour force is thegrowth in the number of women in the workforce.Improvementsin child-rearing support offered by both the private and publicsectors,combined with legislative reforms,have led
35、 to fewerwomen leaving the workforce due to life events such as childbirth.In April 2022,the Act on the Promotion of Womens ActiveEngagement in Professional Life was fully implemented,requiringcompanies with 101 or more regular employees to form an actionplan and disclose data on womens participatio
36、n and advancement.Enhanced support for women employment should lead to a furtherincrease in female labour force participation.Working populationFigure 1.2:Population(age 15 and over)and working population Note:Data for 2011 are estimates based on supplemented dataSource:MIC Labour Force Survey,May 2
37、02300708020002002200420062008200022Allages 60-64age 65+Female(%)Figure 1.3:Labour force participation rate9CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:National Institute of Po
38、pulation and Social Security Research(IPSS),20180%5%10%15%20%25%30%35%40%45%0020002242025203020352040OthersNuclear householdSingle-person householdSingle-person household-age 65+(rhs,%of total)Single-person household(rhs,%of total)(million)Single-person an
39、d dual-income households on the riseAccording to the latest official estimates(2018),the number ofhouseholds in Japan is projected to peak at 54.19 million in 2023,falling to 50.76 million by 2040(Figure 1.4).As a result of thetrend toward later marriages and the ageing population,theproportion of n
40、uclear families is also set to decline,with single-person households projected to increase from their current levelof just over 35%to around 40%in the same time frame.Within thisgroup,households comprised of single senior citizens(over-65s)are expected to increase dramatically,making up 18%of allhou
41、seholds by 2040.In terms of labour participation,the number of dual-incomehouseholds has risen sharply in recent years,on the back of thegreater number of women in the workforce.Specifically,thenumber of dual-income households has increased by over 30%inthe past 20 years(Figure 1.5).The implementati
42、on of child-raisingsupport measures and more stringent requirements for companiesto promote the employment of women have led to a continued risein the number of female workers.Furthermore,with the gradualerosion of Japans traditional“lifetime employment”culture,morecouples are realising that they ca
43、nnot afford to rely solely on theirpartners income and are seeking financial stability with twoincome streams.With gender equality in terms of new hirings alsotaking root,the number of dual-income households is likely tocontinue to rise moving forward.Household statusFigure 1.4:Household by type and
44、 projectionsNote:Households employed in non-agricultural industries.Data for 2011 are estimates based on supplemented data.Source:Japan Institute for Labour Policy and Training,MLIT Labour Force Survey May 20230204060800220032004200520062007200820092000019
45、202020212022Single-income householdDual-income householdFigure 1.5:Single-and dual-income households(2002=100)10CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationNote:Japanese net migration within Japan,does not include m
46、igration to/from overseasSource:MIC Report on Internal Migration in Japan Derived from the Basic Resident Registration,April 2023Migration of the population into urban areasSome 30%of Japans population is currently concentrated in its 21largest cities(including the 23 wards of Tokyo),with dataindica
47、ting that this urban flow is continuing unabated.Between 2000 and 2022,the average net in-migration to majorcities(number of Japanese people migrating away subtractedfrom the number of people migrating to major cities)was roughly100,000 per year(Figure 1.6).In times of economic recession,such as the
48、 period following the Global Financial Crisis(GFC),thenumber of people moving to urban areas has tended to fall.Thisphenomenon was most recently observed with the onset of theCOVID-19 pandemic in 2020.In 2021,the number of peoplemigrating away from the 23 wards of Tokyo exceeded the numberof those m
49、oving in for the first time since 1996.Several factorscontributed to this anomaly:many hospitality businesses wereforced to close or restrict their opening hours,remote workingbecame more widely adopted,and online classes at universitiesled to fewer students transferring to major cities for highered
50、ucation.When restrictions were lifted in 2022,however,thesituation returned to the former status quo,with more peoplemigrating to Tokyo than leaving it.By individual city,by far the largest net in-migration was recordedby the 23 wards of Tokyo,with a figure of+20,000 in 2022.However,it should be not
51、ed that there was an inflow of 46,000 forthe working-age population,while a net outflow was recorded forboth over-65s and under-15s(Figure 1.7).Large net in-migrationforworking-age populations were also observed in Osaka,Yokohama,Saitama,Sapporo and Fukuoka.Internal migrationFigure 1.6:Internal net
52、migration-major 21 cities Note:Japanese net migration within Japan,does not include migration to/from overseasSource:MIC Report on Internal Migration in Japan Derived from the Basic Resident Registration,April 2023Figure 1.7:Internal net migration by age group-major 21 cities(2022)-10,000010,00020,0
53、0030,00040,00050,00060,00070,00080,00090,000100,000110,000120,000130,000140,0002000200042005200620072008200920000022 Total of 21 Major CitiesTokyo 23 wards(people)-20,000-10,000010,00020,00030,00040,00050,000SapporoSendaiSaitamaChibaTokyo 23 war
54、dsYokohamaKawasakiSagamiharaNiigataShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyushuFukuokaKumamotoages 0-14ages 15-64age 65+(people)11CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:National I
55、nstitute of Population and Social Security Research(IPSS),20180%10%20%30%40%50%60%70%859095100105110NationwideSapporoSendaiSaitamaChibaTokyo 23 wardsYokohamaKawasakiSagamiharaNiigataShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyushuFukuokaKumamotoTotal population in 2030(2015=100)W
56、orking age population in 2030(2015=100)%of working age population in 2030(rhs)Further increases expected in central TokyoWhile the population continues to flow towards urban areas,seenas a whole,Japans population is both ageing and shrinking.As aresult,the latest projections(2018)suggest that almost
57、 all of the21 largest cities in the country will see their populations declinebetween now and 2030.That said,declines in both totalpopulation and working-age population(ages 15 to 64)areanticipated to be less significant in most major cities than for thecountry as a whole(Figure 1.8).Only three citi
58、es are projected to see both their total populationand working-age population grow over this period:Tokyo 23wards,Kawasaki and Fukuoka.While the working-age populationof Saitama is forecasted to decline slightly,its overall populationshould increase,driven largely by the 0-14 age group.All of thesec
59、ities should see their working-age population continue tocomprise above 60%of their total population,fed by theirrelatively young demographics.Robust rental housing demandcan continue to be expected in these areas.Working-age populationFigure 1.8:Working age population growth prospects in 2030-major
60、 21 cities(2015=100)12CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:MIC Social Indicators by Cities,20220%10%20%30%40%50%60%70%80%90%100%NationwideSapporoSendaiSaitamaChibaTokyo 23 wardsYokohamaKawasakiSagamiha
61、raNiigataShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyushuFukuokaKumamotoNuclear householdSingle-person householdOthersSingle-person households prevalent in cities56%of Japanese households are nuclear families,with single-person households accounting for a further one-third of the
62、 total(Figure 1.9).Single-person households are,however,more common in urbanareas;inOsaka,Fukuokaandthe23wardsofTokyo,approximately half of all households consist of just a single-person.This is due to the prevalence of students and youngworkers migrating to these areas.In central Tokyo and Fukuoka,
63、in particular,where increases in the working-age population areprojected,continued robust demand for single-person rentalhousing can be anticipated.Household structureFigure 1.9:Breakdown of households by type-major 21 cities(2015)Household economy0214CBRE RESEARCH 2023 CBRE,INC.Intelligent Investme
64、ntJapan rental housing:Solid investment fundamentals despite an ageing populationSource:BIS Q4 2022Japanese households remain financially healthyThe Japanese households debt-service ratio(principal andinterest payment as a percentage of disposable income)stood at7.5%as of Q4 2022(Figure 2.1).While t
65、his represents an increasefrom the 7.0%mark of 10 years ago,it remains significantly lowerthan that of most other nations.While house prices have risen inthe past few years,mortgage rates have remained at very lowlevels,which has kept household debt at manageable levels.Household debt(primarily home
66、 loans)as a percentage of GDPwas 68.2%in Q4 2022 and has been climbing since house pricesbegan to surge in 2020(Figure 2.2).Nevertheless,whencompared with other advanced nations,Japanese householdeconomies are largely healthy and have ample capacity to makeloan or rent payments.Given the long-standi
67、ng low-interest rate environment,floating-rate loans currently represent almost 80%of total new housingloan volume.Although the market consensus is for monetaryeasing policies to continue for the time being,interest ratescannot go lower.This means that a future rise in the short-terminterest rate wi
68、ll trigger an automatic increase in the debt burdensof households with floating-rate loans.As discussed previously,Japanese consumers are generally conservative with theirhousehold finances and have ample capacity.Nonetheless,ahigher loan repayment burden and lower affordability willincentivise more
69、 consumers to select rental housing options overpurchasing a home.Household debtFigure 2.1:Debt-service ratio of the household sector(%)Source:BIS Q4 2022Figure 2.2:Household debt as%of GDP5792 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022AustraliaCanadaFranceGermanyJapanKoreaUnited K
70、ingdomUnited States%40506070809002012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022AustraliaCanadaFranceGermanyJapanKoreaUnited KingdomUnited StatesAdvanced economies%15CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an agei
71、ng populationSource:MIC National Survey of Family Income and Expenditure 2014 National Survey of Family Income,Consumption and Wealth 2019 Increasing number of high earnersAccording to the latest National Survey of Family Income,Consumption and Wealth,the average yearly income for two-or-more-person
72、 households in Japan in 2019 stood at JPY 6.77million,upfromJPY 6.35million in2014.Single-personhouseholds,too,saw a rise from JPY 3.08 million to 3.42 millionover the same period.Comparisons of household income distribution based on thesurveys conducted in 2014 and 2019,show that for bothhousehold
73、types,the proportion of higher earners is on theincrease(Figures 2.3 and 2.4).The most significant rise can benoted in the percentage of two-or-more-person householdsearning over JPY 10 million a year,which spiked from 6%in 2014to 17%in 2019.A major factor behind this is the increase in thenumber of
74、 dual-income households.Household incomeFigure 2.3:Distribution of household income-two-or-more-person householdsSource:MIC National Survey of Single-person Household Income and Expenditure 2014 National Survey of Family Income,Consumption and Wealth 2019 Figure 2.4:Distribution of household income-
75、single-person households0%5%10%15%20%25%30%----10-15142019Annual household income(unit:JPY10,000)0%5%10%15%20%25%30%---20142019Annual household income(unit:JPY10,000)16CBRE RESE
76、ARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:MIC National Survey of Family Income,Consumption and Wealth 2019 0%5%10%15%20%25%-----12-20
77、002000-Annual household income(unit:JPY 10,000)Two-or-more-person householdHousehold of husband and wife(husband age under 60 years)Single-person householdPolarisation by household type and areaDifferences in household income can be observed by householdtype and area.A comparison of the distribution
78、 of annual household income byhousehold type(Figure 2.5)shows that single-person householdsare far more likely to have lower incomes.This is,of course,areflection of the fact that such households feature a significantnumber of under-25s(9%of single-person households)and over-65s(45%of the same group
79、),in addition to the fact that they haveonly one income stream.At the other end of the scale,the sub-group of households consisting only of married couples in whichthe husband is under 60 years old featured a much higherproportion of high earners,with 20%earning over JPY 10 million,compared to the o
80、verall group of two-or-more-person households.Divided by size of city of residence,larger cities(defined as over 1million in population)recorded higher average annual income thansmaller cities(Figure 2.6).Furthermore,increases in householdincome over the period from 2014 to 2019 were also notable in
81、 thelarger cities.This suggests that the household income gaps basedon location could expand further moving forward.Differences in household incomeFigure 2.5:Distribution of household income by household type(2019)Source:MIC National Survey of Family Income and Expenditure 2014“National Survey of Si
82、ngle-person Household Income and Expenditure 2014“National Survey of Family Income,Consumption and Wealth 2019 0%2%4%6%8%10%12%14%16%18%00500600700800NationwideLarge city(1 mln+)Mid-sized city(150,000+)Small city(50,000+)Average annual income-single-person householdAverage annual income-t
83、wo-or-more-person householdGrowth in annual income-single-person household(rhs)Growth in annual income-two-or-more-person household(rhs)Annual household income(unit:JPY 10,000)Figure 2.6:Household income and growth between 2014 and 2019Housing market0318CBRE RESEARCH 2023 CBRE,INC.Intelligent Invest
84、mentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:MLIT Housing and Land Survey 2018Major cities exhibit low homeownership ratiosAccording to the latest Housing and Land Survey of Japan,conducted in 2018,there are 53.62 million registered dwellings inthe nation
85、,with a homeownership rate of 61.2%(Figure 3.1).Asmost advanced nations feature homeownership ratios of anywherebetween the high 60s and mid-80s,Japans rate is relatively low.Privately-owned rental accommodation(excluding public housing,UR and public corporation-owned rental units and companyhousing
86、)makes up 28.5%of total residential stock in the country.Homeownership rates in most of the major 21 cities fall below thenationwide average:the figure for the 23 wards of Tokyo is 41.7%,Osakas is 40.5%,while the lowest homeownership rate in thecountry is found in Fukuoka,at 36.8%(Figure 3.2).In add
87、ition tothe prevalence of students and other single-person households inthese locations,renting is a preferred choice in the majormetropolitancitiesduetohighhousingpricesandlowaffordability.HomeownershipFigure 3.1:Housing stock in Japan by ownership typeSource:MLIT Housing and Land Survey 2018Figure
88、 3.2:Homeownership ratio-major 21 citiesOwned61.2%Rented-public housing3.6%Rented-UR,public corporation1.4%Rented-privately owned28.5%Rented-company housing2.1%Unknown3.3%0%10%20%30%40%50%60%70%05001,0001,5002,0002,5003,0003,500SapporoSendaiSaitamaChibaTokyo 23 wardsYokohamaKawasakiSagamiharaNiigata
89、ShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyushuFukuokaKumamotoHouseholds owning a homeHouseholds renting a homeHomeownership ratio(rhs)Nationwide:61.2%(unit:1,000)19CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ag
90、eing populationSource:MLIT Housing and Land Survey 2018Stock is relatively scarce in urban areasFurther data from the 2018 Housing and Land Survey of Japanindicates that there are currently 1.16 dwellings per household inJapan(Figure 3.3).As a result of government housing schemesimplemented during t
91、he period of high economic growth,Japanese housing stock is now more than adequate for its needsin terms of number.In the major cities,however,housing stock iscomparatively low.Breaking down Japans rental housing stock by age,roughly 60%of housing in the three largest metropolitan areas was built pr
92、iorto the year 2000(Figure 3.4),with around 20%remaining frombeforethelatestearthquakeresistancestandardswereimplemented in 1981.Both the Basic Plans for Housing,whichreceived cabinet approval in March 2021,and the FundamentalPlan for National Resilience of June 2022 specify that residencesthat fail
93、 to meet the current earthquake resistance standards(estimated at 13%of nationwide stock as of 2018)are to largely beeliminated by 2030,suggesting that older properties are likely tobe rebuilt in the coming years.Housing stockFigure 3.3:Number of units per household major 21 citiesSource:MLIT Housin
94、g and Land Survey 2018Figure 3.4:Rental housing stock by vintage year-3 major metropolitan areas1.041.061.081.101.121.141.161.181.201.2200400050006000SapporoSendaiSaitamaChibaTokyo 23 wardsYokohamaKawasakiSagamiharaNiigataShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyush
95、uFukuokaKumamotoNo.of householdsNo.of dwellingsNo.of dwellings per household(rhs)(unit:1,000)Nationwide:1.1616.3%22.8%17.3%43.9%43.6%40.5%22.4%19.4%26.2%17.4%14.2%16.0%0%10%20%30%40%50%60%70%80%90%100%KantoKinkiChububefore 19-20102011-2018/920CBRE RESEARCH 2023 CBRE,INC.Intelligent In
96、vestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:MLIT Housing and Land Survey 2018Studio apartments dominate in urban areasBy floor space and number of rooms,29%of all rental housingstock nationwide is made up of units of 29 sq.m.or smaller,and27%of all s
97、tock consists of studio apartments(one room).In otherwords,almost 30%of rental stock can be assumed to be small,studio units(Figures 3.5 and 3.6).These smaller units are particularly prevalent in central Tokyo,Kyoto and Osaka,where units of 29 sq.m.or less account for over40%of stock,and units of 49
98、 sq.m.or less account for over 70%of stock.Units consisting of one or two rooms make upapproximately 60%of stock in these cities.These cities attractstudents and other members of younger demographics,sodemand should remain robust for these smaller units.On the otherhand,however,there appears to be a
99、 proportionately smallvolume of units that are of larger size for couples and families whoprefer to live in convenient and central locations.Rental housing stockFigure 3.5:Rental housing stock by floor area major 21 citiesSource:MLIT Housing and Land Survey 2018Figure 3.6:Rental housing stock by num
100、ber of rooms major 21 cities0%10%20%30%40%50%60%70%80%90%100%NationwideSapporoSendaiSaitamaChibaTokyo 23 wardsYokohamaKawasakiSagamiharaNiigataShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyushuFukuokaKumamoto-29 sqm30-49 sqm50-69 sqm70-99 sqm100-149 sqm150 sqm+0%10%20%30%40%50%60%7
101、0%80%90%100%NationwideSapporoSendaiSaitamaChibaTokyo 23 wardsYokohamaKawasakiSagamiharaNiigataShizuokaHamamatsuNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKitakyushuFukuokaKumamoto1 room2 rooms3 rooms4 rooms5 rooms6 rooms7 rooms8 rooms21CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental hou
102、sing:Solid investment fundamentals despite an ageing populationNote:Average floor space per unit=total floor space/no.of unitsSource:MLT“Statistical Survey of Housing Starts”,January 2023Recent rise in units and floor spaceThe 10-year average for rental housing starts is 360,000 units peryear nation
103、wide,and 67,000 in central Tokyo.Major factorsaffecting the volume of new rental housing construction arechanges to the interest rate(investment)environment andregulatory frameworks.For example,rental housingstartsincreased in 2015 as a result of changes made to the inheritancetax regulations,while
104、tightening of the oversight on apartmentloans led to a fall in 2019(Figures 3.7 and 3.8).More recently,thecontinued low-interest rate environment has spurred demand forinvestment in residential real estate,which is reflected in theincrease in rental housing starts over the past two years.Incidentall
105、y,while the average floor space of newly completedrental housing units had been on a downward trend until 2018,ithas been increasing over the past two years.This phenomenon isparticularly pronounced in central Tokyo.It is possible that this isa result of the growing adoption of hybrid working during
106、 thepandemic,leading to the need for more space at home.Rental housing startsFigure 3.7:Rental housing starts and average floor space-nationwideNote:Average floor space per unit=total floor space/no.of unitsSource:MLT“Statistical Survey of Housing Starts”,January 2023Figure 3.8:Rental housing starts
107、 and average floor space-central Tokyo34363840424446485052050,000100,000150,000200,000250,000300,000350,000400,000450,000200002020212022#of unitsAverage floor space per unit(rhs)34363840424446485052010,00020,00030,00040,00050,00060,00070,00080,00090,000200
108、002020212022#of unitsAverage floor space per unit(rhs)22CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:MLIT“Residential Property Price Index”,May 2023Prices spike following the pandemicAcco
109、rding to data from the Ministry of Land,Infrastructure,Transport and Tourisms Residential Property Price Index,housingprices stagnated following the GFC in 2008,but have increasedover the past decade(Figure 3.9).The rise in condominium pricesis particularly steep,with figures at the end of 2022 repr
110、esentingan 88%increase from 2010.Price increases have acceleratedsince 2020,with detached house prices,which had remainedrelatively stagnant until then,also beginning to increase.Thedirect causes of these increases are changes in consumerpreferences following the pandemic to favour higher qualityhou
111、sing,as well as the rise in construction costs.In terms ofcondominium prices,increased supply of high-rise condominiumsin metropolitan areas and more high-quality properties indesirable suburban areas near train stations can also be identifiedas contributing factors.Nationwide,housing prices have in
112、creased by an average of 35%between 2010 and 2022.Divided by region,Hokkaido has seen thesharpest increase,at 53%,followed by the Kanto(Greater Tokyo),Kyushu,Kinki(Greater Osaka),and Tohoku regions at around 40%(Figure 3.10).The dramatic increase in Hokkaido house prices canlargelyattributedtothefac
113、tthatpriceswereinitiallycomparatively low,as well as due to the surge in new housingdevelopment projects in Greater Sapporo.Housing pricesFigure 3.9:Japan Residential Property Price Index(average of 2010=100)Source:MLIT“Residential Property Price Index”,May 2023Figure 3.10:Japan Residential Property
114、 Price Index by region(%change between 2010 2022)8001802002008/042009/022009/122010/102011/082012/062013/042014/022014/122015/102016/082017/062018/042019/022019/122020/102021/082022/06All residential propertyResidential landDetached housesCondominiums35%53%35%40%15%9%36%12%8%38%0%10%20%30
115、%40%50%60%NationwideHokkaidoTohokuKantoHokurikuChubuKinkiChugokuShikokuKyushu23CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationNote:Residential rents are for family-type condominiums(units with floor area of less than 3
116、0 sqm and mixed-use units are excluded).Source:Tokyo Kantei,CBRERent levels continue to trend upward in major citiesAccording to data provided by Tokyo Kantei,housing rents havebeen rising over the past decade(Figure 3.11).While newproperties are driving the increase,rents are also on the rise forol
117、der buildings.It is generally understood that Japanese leasecontracts make it difficult for lenders to raise rents at renewal.Inrecent years,however,affordability of housing has diminishedsignificantly on the back of higher prices,leading to situations inwhich tenants have no choice but to renew the
118、ir lease contractand accept higher rents for their current accommodation.It should also be noted that residential rents exhibit more stabilitythan office rents.Having demonstrated their superior resilience toeconomic instability during the GFC(Figure 3.12),they did so oncemore during the COVID-19 pa
119、ndemic,when housing rentscontinued to go up while office rents fell on the back of increasedvacancies.ARESs data show that occupancy rates for residential propertiesin Tokyo held by core funds have been in the high-90s for thepast ten years(Figure 3.13).Occupancy fell during the pandemic,particularl
120、y in the central areas of Tokyo,but has since recoveredto near pre-pandemic levels.This trend mirrors the migration ofthe population observed during the same period;the 23 wards ofTokyo saw net out-migration in 2021 but returned to net in-migration in 2022(Figure 1.6,page 12).Housing rents and occup
121、ancyFigure 3.11:Residential rent index(2012100)Figure 3.13:Occupancy rates for residential properties 9001401502012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Tokyo 23 WardsOsakaNagoyaFukuoka50607080900720092001720192021Office(GradeA,Tokyo 23 wards)Residential(
122、Condominium,Tokyo 23 wards)*Figure 3.12:Rent comparison residential and office(2007=100)Note:Tokyo 3 central wards are Chiyoda,Minato and Chuo wards.Tokyo Metropolitan Area includes Tokyo,Kanagawa,Saitama and Chiba prefectures.Source:The Association for Real Estate Securitization90%91%92%93%94%95%96
123、%97%98%99%2000000020003202110202205Tokyo 3 central wardsTokyo 23 wardsTokyo Metropolitan Area24CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populatio
124、nNote:Survey format changed in 2016.Data unavailable for 2017 and 2018.Source:Japan Share House Organisation,November 2022A viable option for younger generationsAccording to the Japan Shared House Organisation,there were atotal of 5,607 share houses(63,000 beds)in Japan as of 2022,with 60%located in
125、 the 23 wards of central Tokyo(Figure 3.14).The market stagnated due to issues related to building codeviolations and illegal financing,combined with the advent of thepandemic.However,signs of recovery has been observed morerecently in 2022.According to the survey conducted by the Ministry of Land,I
126、nfrastructure,Transport and Tourism in 2015,roughly 50%ofshare house operators indicated that women made up theoverwhelming majority of their tenants,while 65%of users wereunder the age of 30(Figure 3.15).Meanwhile,results from CBREsGlobal Consumer Survey revealed that 10.3%of Gen Z(18 to 25year-old
127、s)and 7.1%of late millennials(26 to 33 year-olds)seeshare houses(including room-sharing)as viable options for theirfuture housing(Figure 3.16).Share houses appear to beconsidered a viable housing option for younger generations.On a related note,the revision in 2017 of the Act on Promotion ofOffering
128、of RentalHousingto Persons RequiringSpecialAssistance in Securing Housing(Housing Safety Net Act)saw theexpansion of the registration and aid system to help people suchas the elderly or foreigners who have difficulty in securinghousing.Share houses are one of the formats assumed for useunder this fr
129、amework.Share housesFigure 3.14:Number of share houses in JapanFigure 3.15:Share house residents by age group19 and under1%20-2416%25-2948%30-3427%35-394%40-591%Unknown3%n=316Source:CBRE Global Consumer Survey,January 202310.3%7.1%4.2%0.0%0.0%0%2%4%6%8%10%12%Gen Z(18-25)Late Millenials(26-33)Early M
130、illennials(34-41)Gen X(42-57)Baby Boomers(58+)004000500060002000212022Tokyo 23 wardsTokyo otherSaitama,Chiba,KanagawaAichiOsaka,KyotoOtherSource:MLIT Share house market trends survey(Japanese),2015Figure 3.16:%of respondents considering shared housing Consumer charac
131、teristics04From CBREs 2022 Global Consumer Survey(Live-Work-Shop)26CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationn=6,420(Japan n=316)Source:CBRE,January 2023Japanese have stronger preference to rent livingaccommodatio
132、nCBREs 2022 Global Consumer Survey*polled consumers in 21countries across the world.According to the results of this survey,some 49%of respondents in Japan said that they planned to renttheir residence in the future,a level significantly above the 30%to40%seen in other regions(Figure 4.1).This sugge
133、sts that demandfor rental housing is comparatively high in the Japanese market.Also worth highlighting is that 19%of respondents in Japan are“not sure”regarding their future dwellings,notably higher thanthat in other markets.Until recently,the economy in Japan wasdeflationary and wages had risen onl
134、y marginally over a 30-yearperiod.In addition,traditional employment structures underpinnedby the concepts of“lifetime employment”and“promotion byseniority”have gradually changed.As such,uncertainty aboutfuture earnings can be considered the key underlying factor forthe relatively large number of re
135、spondents who selected“rent”or“not sure”regarding their plans for future housing.Economicallyconscious Japanese consumers are likely to make decisions onwhether to buy or to rent based on a practical comparison ofmonthly rent and loan repayment levels.With housing priceshaving risen,more consumers a
136、re likely to choose the rentaloption,and even more so in a rising interest rate environment inthe future.*For more details,please refer to“Voices from Japan:How willpeople live,work and shop in the future?”,January 2023Preference to rent Figure 4.1:Respondents planning to buy/rent property when movi
137、ng in future49%35%31%40%36%33%55%60%51%54%19%9%9%9%10%0%10%20%30%40%50%60%70%80%90%100%JapanGlobalAPACEuropeAmericasRentBuyNot sure27CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationn=6,420(Japan n=316)Source:CBRE,Januar
138、y 2023Japanesehomeowners spendless on housingThe relative weight of housing costs on the average Japanesehousehold budget is relatively light when seen from a globalperspective.Survey responses reveal that for some 22%of Japaneserespondents,housing costs equate to less than 10%of totalhousehold inco
139、me,while they are less than 30%of householdincome for as many as 70%.These are much higher percentagesthan are found in any other region(Figure 4.2).Conversely,just2%of Japanese respondents indicated that their housing costscome to over 50%of their annual income,a lower figure than anyother region.T
140、hese results agree with the conclusions from thesection of this report on household debt,that Japanese householdfinances are relatively healthy.The standard debt-to-income ratios set for Japanese home loanstypically fall in the range of 30 to 35%.Other reasons commonlygiven for the relatively low ho
141、using costs in Japan are the low-interest rates which have persisted now for some time,and atendency towards fiscal conservatism in the Japanese populacewhich encourages the early repayment of housing loans.Itappears fair to conclude that,on the whole,Japanese householdshave sufficient financial res
142、ilience to handle future rent increasesor increased loan repayments as a result of rising interest rates.Housing costsFigure 4.2:Housing cost(rent or loan repayment amount)as percentage of household income22%15%20%11%14%26%21%23%19%20%22%24%22%27%22%7%13%11%15%14%2%6%5%7%8%2%5%4%5%7%19%16%15%17%16%0
143、%10%20%30%40%50%60%70%80%90%100%JapanALLAPACEuropeAmericas10%or less11 20%21 30%31 40%41 50%More than 50%Unknown/NA28CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationAPACAmericasEuropen=7,082(Japan n=316)Source:CBRE,Janu
144、ary 2023Japanese move homes less frequently compared toglobal counterpartsIn the survey,just 20%of Japanese respondents indicated thatthey planned to relocate within the next two years,a lowerpercentage than all other surveyed nations(Figure 4.3).This lack of mobility among the Japanese people can l
145、argely beattributed to the cultural factor of lifetime employment.Althoughjob fluidity has been on the rise in recent years,the Japaneseemployment situation remains considerably more rigid than inmost other countries.This is borne out by the fact that“new jobopportunity”was selected as the reason fo
146、r future housingrelocations by far fewer respondents in Japan than in any othercountry,with the post-pandemic spike also smaller(Figure 4.4).Furthermore,the structure of residential leases in Japan is suchthat it is difficult for owners to evict tenants,even if they do notagree to rent increases.Thi
147、s factor also serves to suppress theinclination for Japanese consumers to move homes as comparedto consumers in other markets.There is,however,a global trend for renters to relocate morefrequently than those who own their homes.Japan is no exceptionin this regard,with 38%of renters planning to move
148、to a newdomicile within the next two years.This suggests that rentalproperties can expect tenant turnover at a pace of around onceevery four to five years.Tendency to relocateFigure 4.3:Respondents planning to move in next two years46%48%35%32%32%22%20%45%38%35%31%45%43%38%37%31%33%33%30%28%28%60%65
149、%50%52%40%52%38%66%51%51%45%62%50%54%48%53%57%47%42%35%38%KoreaIndiaHong Kong SARAustraliaSingaporeMainland ChinaJapanBrazilUnited StatesMexicoCanadaFinlandSwedenNorwayDenmarkItalySpainFranceUnited KingdomGermanyNetherlandYESRespondents rentingn=21,096(Japan n=1,621)Source:CBRE,January 2023Figure 4.
150、4:Respondents moving for new job opportunities9%22%22%27%18%13%28%27%35%24%JapanGlobalAPACAmericasEuropeBefore COVIDAfter COVID29CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationn=7,082(Japan n=316)Source:CBRE,January 20
151、23The younger generations have a strong preference tolive in citiesYounger generations in Japan have a stronger desire to relocate,with many wishing to move to a different city in a more centralisedlocation(Figures 4.5 and 4.6).This is likely a reflection of thenumber of young people who move from t
152、he regions to the majorcities upon graduation or finding a job.While the same generaltrend can be observed worldwide,the desire to move to centrallocations is particularly strong among Japanese youth.Moreover,the desire to move to urban areas is stronger than theglobal average in Japan across all ge
153、nerations.This is indicativeof the fact that most employment opportunities can be found inurban areas,and in Greater Tokyo in particular.The fact thatroughly 90%of survey respondents either wish to remain in theoffice or spend several days a week in the office,a figure abovethe global average,can al
154、so be considered to relate to thispredilection for urban areas*.The survey results match the demographic outlook for continuedin-migration in the major cities and the expectation for the urbanareas to maintain a relatively young population.The strongpreference to live in urban locations means that r
155、obust housingdemand can continue to be expected in the major cities.*For more details,please refer to the WORK section in“Voices from Japan:How will people live,work and shop in the future?”,January 2023Preference to live in citiesFigure 4.5:Respondents planning to move in next two years(by age grou
156、p)n=5,205(Japan n=316)Source:CBRE,January 2023Figure 4.6:Respondents planning to move to“different city more centralised”location(by age group)42%35%25%15%10%49%46%36%28%18%0%10%20%30%40%50%60%GenZ(18-25)LateMillennials(26-33)EarlyMillennials(34-41)GenX(42-57)Baby-boomers(58+)JapanGlobal51%36%32%25%
157、23%26%20%19%16%16%0%10%20%30%40%50%60%GenZ(18-25)LateMillennials(26-33)EarlyMillennials(34-41)GenX(42-57)Baby-boomers(58+)JapanGlobal30CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationQuality of living environmentQuality
158、 of surrounding environmentEconomic reasonsFamily reasonsWork reasonsOthern=1,621Source:CBRE,January 2023Qualityof living increasesin importancePrior to the COVID-19 pandemic,the top three reasons given byJapanese consumers for relocating were“for better-qualityproperty”,“change in household”,and to
159、 be“closer to work”.Inother words,relocations were triggered by life events or workconsiderations.This trend has evolved since the onset of the pandemic.Thenumber of respondents giving reasons relating to quality of livingandlivingenvironmenthasclearlyrisen,withincreasedpercentages for answers inclu
160、ding“for a bigger home”,“foroutdoor space”,“for better surroundings/community”and to be“close to retail and leisure amenities”.The increase in time spentat home seems to have served as a catalyst to change the criteriaprioritised when selecting a residence.While the number of respondents that chose“
161、to be closer towork”and“change in family”as a reason to relocate decreased,they remain important factors.“Closer to transport hubs”,on theother hand,rose in importance,implying that consumers continueto prefer to live in convenient locations for commute and otheractivities,despite the prevalence of
162、hybrid workstyles.Reasons to relocateFigure 4.7:Reasons for moving pre-and post-pandemic(Japan,multiple answers allowed)0%5%10%15%20%25%30%35%40%For better quality propertyFor a bigger homeFor a space to accommodate remote workingFor outdoor space(e.g.,balcony,yard,or rooftop)Move close to transport
163、 hubsFor better surroundings/communityMove close to the school my kids go toMove close to retail and leisure amenitiesMove to a place with more relaxed distancing/travelling restrictionsTo save moneyAffordability of housingChange in household family/partner/babyCloser to my family/friendsTo be close
164、r to where I workFor better/new job opportunitiesIll have fewer days spent in a formal workplaceLost jobMove to dedicated accommodations(e.g.,senior housing,student living)Please specifyPre-pandemicPost-pandemic31CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment
165、 fundamentals despite an ageing populationNote:Income levels are classified based on monthly household income.High;JPY 1,083,333 or more Mid;JPY 416,667 or more to less than 1,083,333 Low;less than JPY 416,667n=1,621Source:CBRE,January 2023Sustainability issues a greater concern for seniorgeneration
166、and highearnersHomeowners in Japan generally place a stronger emphasis onsustainability issues than renters when selecting a residence(Figure 4.8).This reflects the importance placed on such issuesby more senior generations and high-income earners,whotypically own their homes and are under comparati
167、vely lessfinancial pressure.For younger generations,on the other hand,a much lower homeownership rate makes sustainability issues less of a factor.Thatsaid,when asked in a separate question whether they have begunto place increased importance on sustainability issues within thelast two years,44%of G
168、en Z respondents replied that they have,the highest figure among all age groups.It appears that youngergenerations also have a keen awareness of sustainability issues.The survey results suggest that sustainability-related factors suchas environmental friendliness can help provide a competitive edgef
169、or owners leasing properties targeting high income earners.These factors are also likely to begin to assume increasingimportance for properties targeting younger generations as well.Importance of sustainabilityFigure 4.8:Sustainability as important factor when choosing a property(Rank 1-3),responden
170、ts that feel sustainability has become more important in last two years,respondents renting current property(Japan)34%32%31%37%39%44%33%39%31%31%43%24%20%49%54%36%30%18%0%10%20%30%40%50%60%0%5%10%15%20%25%30%OwnRentLowMidHighGenZ(18-25)LateMillennials(26-33)EarlyMillennials(34-41)GenX(42-57)Babyboom
171、ers(58+)Rank 1Rank 2Rank 3Increased importance of sustainability feature(rhs)%Renting(rhs)HomeownershipHousehold incomeAge groupInvestment market0533CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationNote:Transactions of a
172、t least JPY 1bn,excluding acquisitions by J-REITs at IPOSource:MSCI Real Capital Analytics,CBRE,Q1 2023The residential sector represents 13%of the investment market,transactions increasing in sizeResidential real estate is one of the major asset types in Japans commercial real estate investment mark
173、et,with total transaction volume now commensurate with logistics facilities and trailing only offices in terms of transaction volume.The popularity of this asset type lies in its stability and the opportunity to gain exposure to any major city in Japan.The size of each property is considerably small
174、er in the case ofresidential real estate than for properties in other sectors,withmost in the range from hundreds of millions to low billions of yen.As such,the percentage of residential deals as a proportion oftotal investment volume in Japan has averaged 13%,since large-scale easy monetary policy
175、was introduced in 2013(JPY 484billion;Figure 5.1).This is well below the 46%(JPY 1.7 trillion)represented by the office sector.In recent years,however,transaction sizes for the residentialsector have been on the increase.The major reason for this trendis the increase in portfolio transactions;the pe
176、rcentage of totalresidential investment volume made up by transactions of JPY 10billion or greater has risen markedly since 2014,reaching 61%in2022(Figure 5.2).Residential investment sectorFigure 5.1:Real estate investment in Japan by asset typeNote:Transactions of at least JPY 1bn,excluding acquisi
177、tions by J-REITs at IPOSource:MSCI Real Capital Analytics,CBRE,Q1 2023Figure 5.2:Residential real estate investment in Japan01,0002,0003,0004,0005,0006,0002005 2007 2009 2011 2013 2015 2017 2019 2021(billion JPY)OfficeRetailIndustrialResidentialHotelOthers0%10%20%30%40%50%60%70%80%2005 2007 2009 201
178、1 2013 2015 2017 2019 2021Residential real estate investment as%of total%of large deals(more than JPY10bn)in residential real estateinvestment34CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationNote:Transactions of at lea
179、st JPY 1bn,excluding acquisitions by J-REITs at IPOSource:MSCI Real Capital Analytics,CBRE,Q1 2023Foreign investors increase their profile in the Japanese residential investment market Until 2013,the residential investment market was driven primarily by J-REITs.However,ever since GE relinquished its
180、 residential portfolio in 2014,the sector has seen a shift to overseas investors,who tend to pursue large-scale portfolios more aggressively than their domestic counterparts.Typically,these are institutional investors such as overseas-based life insurance companies.Foreign investment as a percentage
181、 of total residential transaction volume peaked at 73%in 2017,with the latest 2022 data recording a figure of 57%(Figure 5.3).According to the results of CBREs investor survey,conducted in March 2023,some 90%of overseas investors have identified the residential sector as an investment target,well ab
182、ove the 67%of domestic investors who indicated the same.CBREs analysis has identified three major reasons for the enthusiasm shown by many foreign investors for Japanese residential real estate.(1)Stable profitability(2)The large number of investors in the market,which allows for wide range of exit
183、strategies(3)The limited number of mature residential investmentmarkets in Asia PacificInvestor baseFigure 5.3:Residential real estate investment in Japan by investor typeSource:Cap rate survey,CBRE,March 2023.Figure 5.4:Target sector for investors in Japan0%10%20%30%40%50%60%70%80%005006
184、007008002005200620072008200920000022Domestic(J-REITs)Domestic(Others)Overseas%of overseas investor(billion JPY)67%89%0%50%100%OfficeRetailLogisticsResidentialHotelDomesticOverseas35CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Soli
185、d investment fundamentals despite an ageing populationSource:Datastream,CBRE,Q1 2023Residential J-REITs exhibit stable growth even amidthepandemicAn analysis of J-REIT investment unit prices during the COVID-19pandemic(2020 to 2022)shows that residential J-REITs exhibitedthe least volatility(Figure
186、5.5).This is believed to be a result ofthe stable cashflow achieved by properties in the sector,whichallowed residential REITs to conduct public offerings and acquirenew properties even during the pandemic.Capital raised throughpublic offerings for residential J-REITs over the three-year periodfrom
187、2020 to 2022 actually exceeded that raised in the previousthree-year period of 2017 to 2019 by 23%,ranking behind onlylogistics J-REITs(67%over the same period)in terms of growth.Residential J-REIT performanceFigure 5.5:J-REIT investment unit price index by sector40608002020202120222023TS
188、E REITOfficeRetailResidentialIndustrialJan 2020=10036CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:CBRE Lender Survey,CBRE,June 2023.Lenders continue to ease conditions for rental housingJapans residential sect
189、or is also highly valued by lenders.According to the results of CBREs latest lender survey,conducted in April 2023,the residential sector was selected by lenders as the second-most attractive for the third straight year(Figure 5.6).Indeed,the financing environment for residential real estate continu
190、es to ease.The aforementioned survey regarding non-recourse loan lending conditions revealed that in 2023,the residential sector was the only sector for which on average,LTV rose and spreads fell from the previous year(Figure 5.7).As lenders value stable income streams even more highly than investor
191、s do,competition among lenders to provide financing is far more intense for residential properties than for all other asset types.It is this competition that has led to an easing of financing conditions.Lender attitudeFigure 5.6:Sector that lenders find most attractiveSource:CBRE Lender Survey,CBRE,
192、June 2023.Figure 5.7:Non-recourse loan lending conditions(senior loan average)20021202220230%20%40%60%80%100%OfficeRetailLogisticsHotelResidentialOthers4050607080902020202020202120222023Office(Marunouchi/Otemachi
193、)Retail(Hight-street)Logistics(multi-tenant)Residential(single)LTV(%)Spread(bps)37CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing populationSource:CBRE,Q1 2023Japanese residential investment offers higher yieldsthanothercountries
194、Easing lending conditions are leading to the increased appeal ofJapanese residential sector in terms of yields.While the cap ratefor central Tokyo rental housing sits at around 3%,a figuresomewhat below that seen in other countries,investors are able tofinance at high LTV and low-interest rates.As a
195、 result,post-leverage cash-on-cash yields remain higher for investments inJapans residential sector,compared to those in other countries(Figure 5.8).Global yield comparisonFigure 5.8:Residential sector cap rates and cash-on-cash yields0%1%2%3%4%5%6%7%TokyoWashington DCBostonAmsterdamSydneySeattleLon
196、donBerlinCap RateCash-on-Cash YieldAppendix0639CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentJapan rental housing:Solid investment fundamentals despite an ageing population3.5%4.1%6.1%6.7%39.3%34.8%17.4%16.7%16.7%17.7%5.3%5.7%2.6%2.9%9.1%11.3%0%20%40%60%80%100%GRP as percentageof national GDP(no
197、minal)Percentage ofnational populationHokkaidoTohokuKantoChubuKinkiChugokuShikokuKyushuAppendixBreakdown of GDP and population by regionNote:Regional divisions are based on those established by the Japan Agency for Local Authority Information Systems.Source:METI“Prefectural Economic Analysis FY2019”
198、,MIC“Population Estimates”April 2023ShizuokaHamamatsuSendaiNiigataSaitamaTokyo 23 WardsYokohamaChibaKawasakiNagoyaKyotoOsakaSakaiKobeOkayamaHiroshimaKumamotoKitakyushuFukuokaSapporoJapans regions and major 21 citiesSagamihara Copyright 2023.All rights reserved.The views and opinions in these article
199、s belong to the author and do not necessarily represent the views and opinions of CBRE.Our employees are obliged not to make any defamatory clauses,infringe or authorize infringementof any legal rights.Therefore,the company will not be responsible for or be liable for any damages or other liabilities arising from such statements included in the articles.ContactsHiroshi OkuboHead of RResearchChinatsu HaniSenior DAsukaHondaD