- Average 1F rents in Tokyo saw a slight dip of 3.4% over the past half-year. Vacancies are on a downward trend, with many prime listings having been taken off the market, which has led to the decrease in average listed rents.
- In regional markets, average 1F rents increased by 5.9% over the past half-year, with popular inbound tourist destinations flourishing.
- Investment volumes in the retail sector over the first half of 2024 have been slow, but several big-ticket rumoured transactions likely to be announced in the second half should boost overall investment volumes.
- Luxury brands and high-end retail have continued to perform well, and there has been stiff competition for openings in prime locations.
- There is a considerable disparity between prime and subprime locations, even in popular submarkets, with vacancies visible in the latter.
- Some destinations known typically as tourist hotspots could be potential markets for high-end retail. Areas such as Niseko and Karuizawa have already seen some success with this, and many candidates are likely to follow.
Market continues to recover, but bifurcation persists
Prospects for the retail sector look strong, with vacancies generally on a declining trend, and strong rental growth observed in prime areas. Inbound tourists continue to play an important role in shaping the market, especially for luxury and high-end retail. That said, non-prime areas have not seen similar levels of success, and vacancies in such areas are visible. On another note, the strong performance of high-end retail has spread to tourist hotspots, which could be areas with great potential for future growth.
Savills Research & Consultancy