APPD Market Report Article


February 28, 2023

Takeshi Akagi, Head of Research, Japan


JPY 77,570


Consumer confidence recovers for the first time in four months

  • Retail-related indicators saw an improvement entering 4Q22. On the back of the complete lifting of restrictions on behaviour, consumer sentiment recovered across all indices in December, for the first time in four months. Department store sales continued to recover in November, with luxury goods outperforming 2019 levels, supported by domestic customers. 
  • Demand for ground floor space with high visibility remained healthy in 4Q22, especially in Omotesando. New openings in the quarter included Chanel Watches and Fine Jewelry, and Canada Goose flagship stores along Namiki-dori in Ginza. In addition, Delvaux relocated its flagship store to Omotesando Hills from Jyre.

Jingumae 6-chome Redevelopment scheduled for completion in 2024

  • Jingumae 6-chome Redevelopment Project will open in Spring 2024. Located advantageously in a corner lot fronting Jingumae crossing, the retail-led facility will offer GFA 20,000 sqm.
  • The Miyamasuzaka District Redevelopment Project has been announced. Located in Shibuya, a market adjoining Omotesando, the B block of the project will offer retail space that is seven storeys above ground and a GFA of 9,000 sqm at a site adjacent to Shibuya Hikarie.

Rental and capital value growth continue to accelerate

  • Rents averaged JPY 77,570 per tsubo per month, at end-4Q22, increasing 3.1% q-o-q and 5.9% y-o-y. Rental growth accelerated for the third consecutive quarter, driven by rent increases in ground floor spaces in both Omotesando and Ginza. 
  • Capital values increased by 3.6% q-o-q and 7.8% y-o-y in 4Q22. Growth accelerated for the sixth consecutive quarter. Transactions in 4Q22 included Eaton Real Estate’s acquisition of Namikikan Ginza. In Shibuya, FPG acquired the Himanten Shibuya Building (renamed FPG Links Shibuya Dogenzaka) alongside Dogenzaka.

Outlook: Capital values expected to grow, reflecting rental growth

  • According to Oxford Economics as of December 2022, private consumption was downgraded to grow by 0.9% in 2023. Private consumption is expected to pick up, supported by pent-up demand and savings. The risks include the impact of inflation on disposable income.
  • On the back of healthy sales supported by domestic consumption, and with some aid from the return of foreign visitor arrivals, demand from various retailers is expected to remain robust and underpin rental growth for the foreseeable future. In the investment market, capital values are expected to rise, reflecting rental growth, while cap rates are expected to remain stable.

Note: Tokyo Retail refers to Tokyo's prime retail markets of Ginza and Omotesando.

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