Investment by foreign-based funds and corporations in Japanese real estate has reached the highest level since 1996. Between January and September 2015, foreign funds acquired 706.5 billion Yen (5.91 billion USD) of property, an increase of 41% from the same period in 2014.
Meanwhile, some last minute transactions at the end of 2014 put the annual acquisition volume for 2014 at 981.8 billion Yen.
Some of the funds have been seeking capital gains, while others, including government-related funds, have been seeking high yields with a long-term view for holding their assets. In September, average office rents in central Tokyo increased for the 21st month in a row. The average spread between the office yield in central Tokyo and the long-term interest rate is around 3%, versus 1% in Singapore and Hong Kong.