Commercial Real Estate - Japan | Statista Market Forecast

The projected value of the Commercial Real Estate market market in Japan is expected to reach ¥US$11.00tn in 2024.
This market is anticipated to demonstrate an annual growth rate (CAGR 2024-2029) of -1.14%, leading to a market volume of ¥US$10.39tn by 2029.
When compared globally, the United States is expected to generate the highest value in the Real Estate sector, with a projected worth of US$25.3tn in 2024.
The commercial real estate market in Japan is experiencing a surge in demand due to foreign investment and the expansion of multinational corporations.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Japan has been experiencing significant growth and development in recent years. Customer preferences in the market have been shifting towards mixed-use developments, which combine residential, commercial, and retail spaces in one building or complex. This trend is driven by the desire for convenience and efficiency, as well as the increasing popularity of live-work-play lifestyles. Additionally, there is a growing demand for sustainable and environmentally-friendly buildings, as customers become more conscious of their impact on the environment. Trends in the market show a strong focus on urbanization, with major cities such as Tokyo and Osaka experiencing a surge in commercial real estate development. This is due to the concentration of businesses and population in these areas, as well as the availability of infrastructure and amenities. Additionally, there is a growing interest in coworking spaces and flexible office solutions, as companies seek to adapt to changing work patterns and reduce costs. Local special circumstances in Japan contribute to the development of the commercial real estate market. The country's aging population and low birth rate have led to a shortage of labor, prompting companies to invest in technology and automation. This has created a demand for specialized industrial and logistics spaces, as well as research and development facilities. Furthermore, Japan's strong tourism industry has resulted in a need for more hotels and accommodation options, particularly in popular tourist destinations. Underlying macroeconomic factors also play a role in the growth of the commercial real estate market in Japan. The country's stable economy, low interest rates, and government initiatives to attract foreign investment have created a favorable environment for real estate development. Additionally, the upcoming Tokyo Olympics and Paralympics have spurred investment in infrastructure and hospitality projects, further driving the demand for commercial real estate. In conclusion, the Commercial Real Estate market in Japan is developing in response to changing customer preferences, urbanization trends, local special circumstances, and underlying macroeconomic factors. The focus on mixed-use developments, urban centers, and sustainable buildings reflects the evolving needs and preferences of customers. The shortage of labor, strong tourism industry, and government initiatives also contribute to the growth of the market. Overall, the commercial real estate sector in Japan presents lucrative opportunities for investors and developers.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.