CBRE

MARKETVIEW|JAPANINVESTMENT|Q32025

InvestmentvolumetopsJPY2trillion,settingnewquarterlyrecord;

Year-to-dateinvestmentvolumeapproachesJPY5trillion

+68%y-o-y

Totalinvestmentvolume(Q32025)

OtemachiOffice

3.15%

±0bpsq-o-q

ExpectedNOIyield(September2025)

q-o-q

1.65%＋20bps

10-yearJGByield

(endofSeptember2025)

-Japancommercialrealestateinvestmentvolume*1increasedby68%y-o-ytoJPY2.092trillioninQ32025,establishinganewquarterlyrecordsinceCBRE’ssurveysbeganin2005.LargetransactionsinexcessofJPY10billiondoubledinvolumefromthesameperiodofthepreviousyear.Investmentvolumerecordeddouble-digitpercentageincreasesy-o-yforallsectorsotherthanhotels,withofficetransactionsexpandingby2.6xoverthesamequarterofthepreviousyear.Hotelinvestmentvolumeremainedlargelyunchangedy-o-ybutstillrecordeditsfourthhighesteverquarterlytotal.

-J-REITacquisitionvolumeforthequarter(alltransactions,includingthosebelowJPY1billion)fellby38%y-o-ytoJPY

253.7billion,withofficesthemostpopularassettypeforathirdconsecutivequarter.SalesvolumesurgedtoJPY296.1billion,2.1xthatofthesamequarterinthepreviousyear.Retailandlogisticssalesvolumerecordedall-timequarterlyhighs.

-ExpectedNOIyieldsforTokyoprimeassets*2remainedunchangedfora12thstraightquarterforoffices,slippedby3bpsq-o-qforbothlogisticsandhotels,andremainedunchangedforretailandrentalresidential.TheDIfor“vacancyrate”inthelogisticssectorrecordedathirdconsecutivequarterofimprovementinCBRE’slatestTankanSurvey*3,indicatingthatinvestors’sentimentisinlinetheleasingmarketoutlookthatlogisticsvacancyratesarelikelytopeakout.

*1InvestmentvolumecoverstransactionsofJPY1billionorlarger,excludinglandtransactionsandacquisitionsbyJ-REITsatIPO.

*2ExpectedyieldsarebasedontheresultsofCBRE’sinvestorsurvey(CBRECapRateSurvey),calculatedastheaverageofthemedianofupper/lowervalueonaNOIbasis.SurveysstartedinJuly2003foroffices;inOctober2007forresidential;andinJanuary2009forretail,hotels,andindustrial.

*3CBRETankanSurvey(DI=Diffusionindex)subtractstheratio(%)ofrespondentsthatexpectedan“improvement"fromtheratio(%)ofrespondentsthatexpecteda“deterioration”.

Figure1:QuickStats

Investmentvolume*1

Q32025(JPY,bn)

y-o-y(%)

Totalinvestmentvolume2,09268

273

-27

Domestic(J-REITs)

Domestic(Others)1,16491

154

Overseas

656

ExpectedNOIYield*2

Sep.2025

(%)

q-o-q(bps)

±0

3.15

Office(Otemachi,Tokyo)

±0

3.15

Retail(GinzaChuo-Dori,Tokyo)

Industrial(TokyoBayarea)

3.65

-3

CBRETankanSurvey*3

GradeA

Office

(q-o-q:pp)

Multi-tenant

Logistics

(q-o-q:pp)

Salesprices

23

(＋13)

8

(－7)

Expectedyield

-1

(＋5)

9

(－2)

Lendingattitudeoffinancialinstitutions

9

(＋2)

13

(－1)

Stanceoninvestmentandloans

18

(＋4)

12

(－2)

Source:CBRE,Q32025.

1CBRERESEARCH?2025CBRE,INC.

MARKETVIEW|JAPANINVESTMENT|Q32025

2CBRERESEARCH?2025CBRE,INC.

Investmentvolumesurgesby68%y-o-y,settingnewquarterlyrecord

CommercialrealestateinvestmentvolumeforQ32025(transactionsofJPY1billionorlarger,Figures1to3)surgedby68%y-o-ytoJPY2.092trillion,thelargestsingle-quarterfigurerecordedsinceCBRE’ssurveysbeganin2005.ThemarketwasdrivenbylargetransactionsinexcessofJPY10billion,whichdoubledinvolumefromthesameperiodofthepreviousyear.Totalinvestmentvolumeforthefirstthreequartersof2025reachedJPY4.99trillion,justunderthe5trillionmark,andalreadyaheadoflastyear’sfull-yearfigureofJPY4.97trillion.

AcquisitionvolumebyJ-REITsfellforafourthconsecutivequartertoJPY273.0billion(adropof27%y-o-y),butacquisitionsbynon-J-REITdomesticinvestorssurgedby91%y-o-ytoreachJPY1.164trillion.Acquisitionvolumebyoverseasinvestorsalsoroseto2.5xthefigureofthesamequarterinthepreviousyear,reachingJPY656.0billion(Figure2).

Investmentvolumerecordeddouble-digitpercentageincreasesy-o-yforallsectorsotherthanhotels.Themostsignificantincreaseininvestmentvolumewasobservedintheofficesector,whereitreachedJPY804.0billion,some2.6xthatofthefigurereportedinQ32024.ThelargesttransactionsthisquarterinvolvedtwodealsthattoppedtheJPY100billionmark.ThesewerethesalesofShiodomeCityCenter(a44%stakeforJPY130.1billion)andOsakaDojimahamaTower(forJPY100.0billion).Sale-and-leasebackofpropertiesownedbytheFujisoftGroup,whichwastakenprivatebyKKR,alsocontributedsignificantly.Thisdealmarkedanotherexampleofacorporaterealestatecarve-outtransactionledbyKKR,followingonfromlastquarter’sacquisitionofAlpsLogistics’properties.Corporaterealestatesaleslooksettocontinue,withOctoberalsoseeingtheannouncementofKKRandPAG’sacquisitionofpreferentialnegotiatingrightsforthepurchaseofSapporoHoldings’realestatebusiness.

Thenextlargestincreaseininvestmentvolumewasobservedintheresidentialsector,whichloggedariseof96%y-o-ytoreachJPY302.0billion.Severalportfoliotransactionswerenotedagainthisquarter,ledbyGIC’sacquisitionof30buildingsfromSamtyforatotalofJPY49.0billion.Transactionsintheretailsectorwereup72%y-o-ytoJPY160.0billion,drivenbyseveraldealsofoverJPY10billion,includingtheShinsaibashiOPAMainBuildinginOsaka(JPY43.1billion).InvestmentvolumeinthelogisticssectorreachedJPY346.0billionafterstrongy-o-ygrowthof70%.Thisincreasewaslargelytheresultofseveralmajortransactions,includingacquisitionsmadeaspartofKasumigasekiCapital’sformationofafundfocusedoncoldstorage(JPY82.0billion),andatransactioninvolvinga50%stakeintheESRAmagasakiDistributionCenter(JPY70.0billion).Althoughhotelinvestmentvolumeremainedlargelyunchanged,slippingby2%y-o-y,thesectorstillrecordeditsfourthhighesteverquarterlyinvestmentvolumeofJPY333.0billion.Hotelscontinuedtoprovepopularwithforeigninvestors,withacquisitionsbyoverseasbuyerssurgingby4.5xthevolumeofthesamequarterofthepreviousyear.Amongotherassettypes,theacquisitionofadatacenterinChibaPrefecture’sInzaiCitybySingapore’sKeppelDCREITforJPY82.1billionsignificantlyboostedinvestmentvolume.

Figure2:Investmentvolumebyinvestortype(acquisition)

6,000

JPYbn

5,000

4,000

3,000

2,000

1,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Q32024

Q32025

Q1-Q32024

Q1-Q32025

0

Domestic(J-REITs)Domestic(Others)Overseas

Note:IncludestransactionsofJPY1bnorlarger,excludingacquisitionsbyJ-REITsatIPO.

Source:MSCIRealCapitalAnalytics,CBRE,Q32025.

Figure3:Investmentvolumebyassettype

6,000

JPYbn

5,000

4,000

3,000

2,000

1,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Q32024

Q32025

Q1-Q32024

Q1-Q32025

0

uOfficeuRetailuIndustrialuResidentialuHoteluOthers

Note:IncludestransactionsofJPY1bnorlarger,excludingacquisitionsbyJ-REITsatIPO.

Source:MSCIRealCapitalAnalytics,CBRE,Q32025.

MARKETVIEW|JAPANINVESTMENT|Q32025

3CBRERESEARCH?2025CBRE,INC.

SalesfaroutstripacquisitionsforJ-REITsinretailandlogisticssectors

J-REITacquisitionvolume(alltransactions,includingthosebelowJPY1billion)droppedby38%y-o-ytoJPY253.7billion.Salesvolumesurgedto2.1xthefigurerecordedayearago,reachingJPY296.1billion.ThisensuredsalesvolumeoutstrippedpurchasevolumebyJPY42.4billion.

TheofficesectorrecordedtotalacquisitionvolumeofJPY110.6billion(up61%y-o-y),makingitthemostpopularwithJ-REITinvestorsforathirdconsecutivequarter.ThemostnotabletransactionwasJapanMetropolitanFund’sacquisitionof14propertiesfromtheFujisoftGroupforatotalofJPY68.7billion.OnthebackoftransactionsincludingHulicREIT’spurchaseoftheAsakusaViewHotelfromitssponsorcompanyforJPY38.0billion,hotelacquisitionvolumereachedJPY102.1billion.However,thismarkeda42%y-o-ydecline,largelyduetoaregressionfollowingseveralmajortransactionsconcentratedinQ32024.J-REITacquisitionvolumewassubduedinothersectors,reachingjustJPY24.0billionintheresidentialsector(down56%y-o-y),JPY4.2billioninthelogisticssector(down92%),andJPY3.6billionintheretailsector(down93%).AlthoughtheperioddidseethelistingofKasumigasekiHotelREITontheTokyoStockExchange,nopublicequityofferingsweremadebyJ-REITsinQ32025.

SalesvolumereachedJPY99.4billionintheretailsectorandJPY70.8billioninthelogisticssector(5.9xand3.8xthevolumeofayearago,respectively),settingnewsingle-quarterrecordsforbothsectors.SeveralmajorsalesofoverJPY10billionwereobserved,includingUnitedUrban’ssaleoftheShinsaibashiOPAMainBuilding(amajorretailholding)andMitsuiFudosanLogisticsPark‘ssaleofthelogisticsfacility,iMissionsParkInzai.Asaresult,salesbyJ-REITssignificantlyoutstrippedacquisitionsforbothsectors(Figure4).Intheofficesector,J-REITsalestotaledJPY64.8billion(adropof28%y-o-y),withthelargesttransactionbeingHulicREIT’ssaleofHulicKamiyachoBuildingforJPY37.5billion.ResidentialsalesreachedJPY33.8billionor3.1xthevolumeinthesameperiodayearago,buthotelsalesfellby64%y-o-ytojustJPY2.3billion.Asaresult,J-REITacquisitionshavefaroutstrippedsalesinthehotelsectorfortheyear-to-date,underscoringtheconsistentlystronginterestinthesectorfromJ-REITs.

TheTokyoStockExchangeREITIndexsurgedby7.3%q-o-qthisquarter,withsharepricesrisingbyatleast5%forallassettypes(Figure5).SpecializedhotelREITsandresidentialREITsrecordedgrowthofover10%,whileretailandlogisticsREITsrecordedrelativelysmallerincreasesinshareprices,suggestingthatassettypesprovidingagreaterexpectationofcashflowgrowtharecurrentlyfavored.Shouldfundprocurementcapacityimproveasaresultofrisingshareprices,acquisitionsbyJ-REITsviaequityofferingsmayreturn.

Figure4:Acquisition,saleandnetinvestmentvolumebyJ-REITs

300

200

100

0

-100

-200

-300

-400

JPYbn

TotalOfficeRetailIndustrialResidentialHotel

AcquisitionnSale●Net

Source:CBRE,Q32025.

Figure5:J-REITsharepricebyassettype

endofJune2025=100

115

110

105

100

95

2025.06.302025.07.312025.08.312025.09.30

OfficeRetailResidentialLogisticsHospitalityDiversifiedTSEREIT

Source:Macrobond,CBRE,Q32025.

MARKETVIEW|JAPANINVESTMENT|Q32025

4CBRERESEARCH?2025CBRE,INC.

CBRECapRateSurvey:

Expectedyieldsforlogisticsfacilitiesandhotelsfalltoall-timelow

ThemostrecentquarterlycapratesurveyofTokyoprimeassetsconductedbyCBREinQ32025showedthatexpectedNOIyields(averages,Figures6and8)remainedunchangedfora12thsuccessivequarterforoffices(Otemachi).Expectedyieldsforretail(GinzaChuo-dori)andresidentialapartments(bothstudioandfamily-type)werealsounchangedfromQ22025.Forbothlogisticsfacilities(LMTincoastalGreaterTokyo)andhotels(fivecentralwardsofTokyo,managementcontract),expectedyieldsfellby3bpsq-o-q,settingnewrecordlows.

CBRE’slatestTankanSurveyfoundthatthediffusionindex(DI,Figure9)recordedimprovementsinallcategoriesforTokyoGradeAoffices.“Transactionvolume”,“salesprices”,and“NOI”allrecordeddouble-figureincreasesof10pp.,13pp.,and17pp.,respectively.Forlogisticsfacilities,although“transactionvolume”(down2pp.)and“salesprices”(down7pp.)worsened,”rent”improvedby8pp.and“vacancyrate”by9pp.Whileitremainsinnegativeterritoryoverall,theDIfor“vacancyrate”inthelogisticssectorhasnowimprovedforthreestraightquarters,indicatingthatinvestors’sentimentisinlinetheleasingmarketoutlookthatlogisticsvacancyratesarelikelytopeakout.

Investorsentimentremainspositivedespitelong-terminterestraterises

TheDIfor“stanceoninvestmentandloans”inthisquarter’sCBRETankanSurveyimprovedfortheofficesectorandonlyrecordedamarginaldeclineinthelogisticssector.Inadditiontothecurrentsituation,thesurveyalsoasksforfuturemarketprojections,withbothofficeandlogisticsDIsremainingindoublefigures,suggestingthatmanyinvestorsarekeentoaccelerateinvestmentovertheperiodbetweenthreemonthsandayearfromnow(Figure7).

Thelong-terminterestrate(benchmark10-yeargovernmentbondyields)stoodat1.65%attheendofQ32025,anincreaseof20bpsq-o-q,asexpectationsforanearlyBoJratehikeintensifiedduringthequarter.Thethree-monthTIBORalsorecordeditsfirstincreaseinroughlysixmonths,risingby5bpsq-o-qto0.82%attheendofthequarter.FollowingtheelectionofSanaeTakaichiasthenewleaderoftheLiberalDemocraticPartyonOctober4,marketparticipantspushedbacktheirforecastsforthetimingofthenextpolicyratehike,whilefiscalconcernsledlong-terminterestratestorise,temporarilyreaching1.7%forthefirsttimein17years.However,long-termrateshavesincedroppedagaintothemid-1.6%levelwiththelaunchoftheTakaichigovernment.Unlessinterestratesspikedramatically,theyareunlikelytoexertasignificanteffectoninvestorsentiment.

Figure6:ExpectedNOIyield(primeassetsinTokyo)

6%

5%

4%

3%

2014.09

2015.09

2016.09

2017.09

2018.09

2019.09

2020.09

2021.09

2022.09

2023.09

2024.09

2025.09

Office(Otemachi,Tokyo)Retail(Ginza,Tokyo)

Industrial(TokyoBayarea)Hotel(Tokyo5wards,managementcontract)

Studio-typeapartment(Tokyo5wards)Multi-roomapartments(TokyoSouth,TokyoEast)

Note:Theaverageofthemedianofupper/lowervalue

Source:CBRECapRateSurvey,September2025.

Figure7:CBRETankanSurveyDIon“stanceoninvestmentandloans”

2025Q2

2025Q33months6monthsayearlater

laterlater

(asofSep2025)

TokyoGradeAofficebuildings

2025Q22025Q3

Logistics

(GreaterTokyo,multi

6monthsayearlaterlater

(asofSep2025)facilities

-tenanttype)

25

20

15

10

5

0

*CBRETankanSurvey(DI=Diffusionindex)subtractstheratio(%)ofrespondentsthatexpectedan“improvement"fromtheratio(%)ofrespondentsthatexpecteda“deterioration”.

Source:CBRECapRateSurvey,September2025.

MARKETVIEW|JAPANINVESTMENT|Q32025

5CBRERESEARCH?2025CBRE,INC.

Figure8:ExpectedNOIYield

Sep.2025(%)q-o-q(bps)

Office(Otemachi,Tokyo)3.15±0

Residential(Studio,Tokyo5wards)3.55±0

Residential(Family-type,Tokyosouth/east)3.65±0

Industrial(Multi-tenant,TokyoBayarea)3.65－3

Retail(GinzaChuo-Dori,Tokyo)3.15±0

Hotel(Managementcontract,Tokyo5wards)4.25－3

Tokyo

Osaka

Office

4.25

-5

Nagoya

Office

4.45

±0

Sapporo

Office

4.63

-3

Sendai

Office

4.80

-5

Hiroshima

Office

5.05

-5

Fukuoka

Office

4.33

-2

Note:ExpectedyieldsarebasedontheresultsofCBRE’sinvestorsurvey,calculatedastheaverageofthemedianofupper/lowervalueonaNOIbasis.SurveysstartedinJuly2003forofficesandresidential;andinJanuary2009forretail,hotels,andlogistics.Source:CBRECapRateSurvey,September2025.

Figure10:SelectedMajorTransactions

Figure9:CBRETankanSurvey(DI)

Transactionvolume13＋10

Salesprices23＋13

NOI(NetOperatingIncome)17＋17

Expectedyield－1＋5

Lendingattitudeoffinancialinstitutions9＋2

Stanceoninvestmentandloans18＋4

Sep.2025q-o-q(pp)

Officebuildings

(TokyoGradeA)

Logisticsfacilities

(GreaterTokyo,

multi-tenant)

Transactionvolume

-4

-2

Salesprices

8

-7

Rent

16

+8

Vacancyrate

-7

+9

Expectedyield

9

-2

Lendingattitudeoffinancialinstitutions

13

-1

Stanceoninvestmentandloans

12

-2

Note:CBRETankanSurvey(DiffusionIndex=DI)subtractstheratio(%)ofrespondentsthatexpectedan“improvement"fromtheratio(%)ofrespondentsthatexpecteda“deterioration.”ExpectedyieldDIsubtractstheratioofrespondentsthatexpecteda“fall”fromtheratioof

respondentsthatexpecteda“rise”.

Source:CBRECapRateSurvey,September2025.

Date*1

BuildingName

Location

Sector

Seller

Buyer

Acquisition

Price*2

(JPYMillion)

Priceper

Tsubo*2

(JPYThousand)

CapRate*3

(%)

Sep-25

SiodomeCityCenter(44%ownership)

Minato-ku,

Tokyo

Office

GIC

GKViaNex(KKR)

130,094

-

-

Jul-25

OsakaDojimahamaTower

Osaka-shi,

Osaka

Office

OM4TMK(MitsubishiEstate,MitsubishiCorporationUrbanDevelopment,SekisuiHouse,MitsubishiHCCapitalRealty)

GKDojimahama

(MitsubishiUFJFinancialGroup)

100,000

-

-

Sep-25

TokyoDataCentre3

Inzai-shi,

Chiba

DataCenter

Undisclosed

KDCRTokyo2TMK

(KeppelDCREIT、Keppel)

82,100

-

-

Aug-25

KasumigasekiCapitalColdStorageFundPortfolio

Japan

Industrial

SPCs

(Undisclosed)

ColdStorageFund1GK

(KasumigasekiCapital)

82,000

-

-

Jul-25

ESRAmagasakiDistributionCenter(50%ownership)

Amagasaki-shi,

Hyogo

Industrial

RWAmagasakiTMK(ESR)

BegoniaGK

(Hulic,Ricohlease,SMTB,Daiichilife)

70,000

-

-

Sep-25

GranTokyoSouthTower(14-18FL)

Chiyoda-ku,

Tokyo

Office

GKTokyoCentralProperty

(GoldmanSachs)

GKJREASTFund10

(JREastRealEstateAssetManagement,etc.)

50,000

-

-

Aug-25

MatsushitaIMPBldg

Osaka-shi,

Osaka

Office

GawCapitalPartners

GreenRecoveryInvestmentAGK(MizuhoRealEstateManagement)

50,000

-

-

Sep-25

ResidentialPortfolioof30Properties

Japan

Residential

Samty

GIC

49,000

-

-

*1Announcement/release,orcontract/deliverydate.*2Acquisitionpricemaybeapproximate,estimated,appraised,bookvalue,ortotalassetvalue.*3J-REITcapratesarebasedonNOIestimatedbytheJ-REIT’sassetmanagerorappraisalNOI,andtheacquisitionprice.Source:MSCIRealCapitalAnalytics,CBRE,Q32025