- Average 1F rents in Tokyo have inched up in 1H/2021, though performance is mixed depending on location. The reality of the situation remains grim, however, with all submarkets posting high vacancy rates.
- The change in rents across regional markets was mixed, but like Tokyo, high levels of vacancy remain. Amongst the regional markets, Sapporo is suffering badly, while Fukuoka is faring comparatively well.
- Transaction volumes in 2021 are likely to surpass 2020 levels, with multiple large deals observed over the past two quarters.
- The F&B industry has been badly hit and the damage is likely to linger in the medium term, possibly lowering the NOI of properties, and consequently property valuations.
- Some investors have chosen to exit the tough environment, while other investors are using it as a chance to break into the market.
- High vaccination rates, plunging COVID-19 cases, strong pent-up demand, and excess savings are tailwinds for the retail sector.
On course for a bumpy recovery
The pandemic has predictably taken its toll on the retail sector and vacancy rates are still elevated across all markets as a result. The F&B industry has borne the brunt, and its struggles are likely to linger, possibly lowering the NOI of retail properties in the medium term. Against this backdrop, however, the high rate of vaccinations, plunging COVID-19 cases, strong pent-up demand, and excess savings spark hope for a recovery.
Savills Research & Consultancy