New opening demand remains stable in the prime retail area

• Tokyo luxury sales grew 20% y-o-y in Jan-Feb. Inbound consumption increased 3% y-o-y in Q1, as foreign visitor arrivals edged up 1% y-o-y. This was despite a marked slowdown in visitors from China which decreased 55% y-o-y.
• Notable new openings in Q1 included Jins opening a global flagship store on Chuo-dori in Ginza. In Omotesando, Millet opened a flagship store on the Harajuku side of Cat Street.

Ginza Novo undergoes a use conversion, with a portion of the F&B area scheduled to be converted into a nightclub

• No new supply entered the prime retail market in Tokyo in Q1.
• The Ginza Novo (formerly Tokyu Plaza Ginza), following a change in ownership, completed its conversion in March, which included converting a portion of the F&B area into a nightclub.

Rental growth trends continue on both ground floors and upper floors on the back of extremely limited supply

• Rents reached JPY 109,179 per tsubo per month in Q1, up 4.8% q-o-q and 9.6% y-o-y from 1.9% in the prior quarter. Growth continued despite moderating luxury demand, driven by casual apparel and visibility-seeking retailers amid severely limited supply.
• Capital values in Q1 increased by 5.0% q-o-q and 8.1% y-o-y, driven by rent growth amid stable cap rates. No notable prime retail transactions were confirmed during the quarter.

Outlook: Capital values are expected to grow, reflecting moderate rent growth

• According to economic forecasts by Oxford Economics as of March, private consumption growth was revised down to 0.5% y-o-y in 2026, given the situation in the Middle East. Signs of weakening consumer sentiment imply further downside risk.
• While demand from major luxury brand groups has moderated, strong demand for high-visibility locations should persist amid constrained supply. Rents are expected to grow at a slower pace. Capital values should rise gradually with rents, while cap rates remain stable.