Japan stands out as the most compelling APAC real-asset market for the coming year, offering a rare combination of visible income growth, supportive policy, and improving capital discipline.

From a policy standpoint, even as the Bank of Japan edges toward gradual normalization, monetary conditions remain highly accommodative in real terms. Long-term rates are still low by global standards, financing remains available, and cap rates have stayed resilient despite higher JGB yields. This has allowed transaction volumes to remain robust, with Tokyo again ranking as one of the world’s most active real estate investment markets.

Fundamentally, Japan offers clear growth, not just yield. A structurally tight labour market is driving sustained office rent growth, with prime Tokyo vacancies below 3% and rents rising mid-single digits. At the same time, supply is constrained by labour shortages and sharply higher construction costs, delaying new development across offices, logistics, and hotels. In hospitality, new supply remains minimal despite strong demand, supporting outsized cash-flow growth.

Crucially, inflation is now socially and contractually accepted, enabling rent increases across renewals and the introduction of CPI-linked clauses, even in traditionally rigid segments. Listed REITs and developers have responded with stronger capital allocation, record buybacks, asset recycling, and explicit earnings-growth targets, improving total-return visibility.

Overall, Japan uniquely combines defensive yield, cyclical rental upside, and policy stability, making it the most attractive APAC real-asset market heading into next year.

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