A rising stock market is deemed to have stimulated domestic consumption

• Sales of luxury goods at department stores in Tokyo remained robust in April and May. With foreign visitor arrivals continuing to decline in the same term, a rising stock market is deemed to have stimulated domestic consumption.
• Occupier demand from luxury brands remained healthy in Q2 2026. Notable new openings included Hunting World on Omotesando. In addition, F&B Smith & Wollensky opened on an upper floor on Chuo-dori in Ginza.

Three buildings added to the development pipeline in Ginza and Omotesando scheduled for completion in 2027- 2029

• No new supply was introduced to the prime retail market of Ginza and Omotesando in Tokyo in Q2 2026.
• Development projects confirmed in Q2 included the Matsuzawa Building New Construction (GFA 1,400 sqm), due in 2027, the Ginza Trade Building Redevelopment Project (GFA 20,000 sqm), due in 2029 along Chuo-dori, and the Omotesando I Development Project (GFA 1,500 sqm), due in 2028 on Omotesando.

Rental values and capital values continue to grow albeit at a slower pace

• Rents reached JPY 112,686 per tsubo per month in Q2 2026, up 3.2% q-o-q and 12.9% y-o-y. Growth moderated slightly. While new store openings by luxury brands have largely run their course, prime spaces continue to attract bidders when they come onto the market.
• Capital values increased by 3.8% q-o-q and 12.2% y-o-y in Q2. Rental growth continued to underpin capital value appreciation as cap rates remained stable. However, no actual investment transactions were recorded in the prime retail market in Tokyo during the quarter.

Outlook: rents and capital values growth expected to continue, albeit at a slower pace

• In the leasing market, the tight supply-demand balance is expected to continue on the back of limited supply of prime spaces sustaining upward pressure on rent growth. However, growth is expected to slow as demand from luxury brands appears to have peaked.
• In the investment market, cap rates are expected to remain stable for the foreseeable future. On this basis, capital values are projected to continue increasing moderately, primarily supported by rental growth.