In the 2016 real-estate market, while there was concern about an increased stock of real estate for sale, things remained overall favourable.
According to Real Estate Economic Institute Co., Ltd., the supply of condominiums in the Tokyo metropolitan area is predicted to increase by 38 thousand units, a rise of 6.4% compared to 2016. Further, while at the end of November stock had increased to 6,324 units, a 27.9% rise compared to the same time last year, it is expected to remain stable at 6,000 units in 2017. The popularity of large and high class properties in the downtown and gulf areas is strong, and prices are also expected to remain constant.
Although the increase of stock amount is certainly a cause for concern, the post Lehman shock metropolitan-located sales stock amount was well over 10,000 units. Considering this, as long as there is no significant inventory build up then it does not seem to be a serious issue. Meanwhile, real estate research by CBRE predicts that 2017 will become a turning point for both rental and investment real estate. With the large scale of supply around the corner in 2018, demand in the office building market will deteriorate, and there is the possibility of entering a phase of gradual decline from the second half of 2017. However, for real estate investment, it is also predicted that the market will "gain attention as a stable target for investment". They also point to the possibility that the incoming president Trump's policies may accelerate the depreciation of the dollar to the yen, and export companies in Japan may increase investment into facilities, thus driving up demand for rental real estate.
While this is simply the speculation of the writer, it seems that in 2017 indirect support for the real estate market can be expected from the stock market. Currently among specialists, the strength of the position of the "Yen depreciation faction" is increasing, and there are even those who predict that during 2017 it will reach a point of between 130 and 140 JPY to 1 USD leading the Nikkei average to increase from 25,000 to0 30,000 JPY. So far we have been interviewing many individual investors, and there have been many who think that after accumulating some assets via investment in stocks, the next step is real estate investment. There is no doubt that a rising stock market is a plus for the real estate market. Of course, the market itself is a living thing, and what goes on within can't easily be ascertained, meaning that it will be necessary to keep a close eye on stock market trends going forward. In addition, when signs of changing trends in office rent or vacancy rates, land price trends, and real estate sales and stock levels etc. begin to appear, we'll be sure to report them.
Jan. 10, 2017