The hotel sector is at the top of investors' interest in Japan

Interest rates in Japan hit a 17-year high. Investors have become optimistic about the country's housing sector after the central bank's decision in March. Those concerned think that investment in the hotel sector will increase, especially in front of foreign tourists. News Nikkei Asia.

Yuto Ohigashi is senior director of research at the housing sector analyst firm Jones Lang LaSalle (JLL). He said, "Although not like last year, this year there will be more demand for hotels and apartments than for warehouses."


He added, 'Investors are not much affected by the rising interest rates. Rather, they can invest more in the housing sector abroad.


Fears of continued inflation and the prolonged tightening of monetary policy in the United States are putting pressure on Japanese financial markets. However, analysts believe that the country's housing sector will face this challenge and move forward.


Yoshikazu Funakubo, an analyst at Mitsubishi UFJ Trust and Banking (MUTB), said, "Interest rates in the United States are not going down anytime soon." And this is positive for Japan's housing sector.


Japan's housing sector experienced a 44 percent contraction in terms of global investment. Investments rose 4 percent last year due to low-interest rates. Yoshikazu Funakubo said, "If the United States lowers interest rates, the Japanese market will lose its attractiveness."


According to JLL data, 20-25 percent of total investment in Japan's housing sector is foreign. Currently, investors are looking to increase their contribution in this sector. MUTB's Funakubo said, "In most cases, market activities are determined in terms of their activities."


Top investors in Japan include Singapore's sovereign wealth fund GIC. The company bought a large warehouse from Blackstone last year. Explaining the market situation in Japan, Yuto Ohigashi said that property prices are becoming increasingly expensive in terms of market value. Due to which investors will spend money depending on the type and location of the asset. They will also keep an eye on what kind of housing can bring in the amount of income.

The dollar-yen exchange rate is important for the housing sector. Foreign investors see the cheap yen as a positive, noted Koji Ishizaki, senior credit analyst at Mizuho Securities. A lower yen exchange rate will lower the cost of purchasing assets. It has brought forward the tourism industry as well as the hotel sector at the domestic level.


Mizuho's Ishizaki forecasts that investment in Japan's hotel and accommodation sector will pick up slightly this year.


According to market participants and analysts, foreign investment in Japan's real estate sector fell significantly in the second half of last year. But it increased again in the first quarter of 2024 (January-March). A real estate investment trust owned by KKR bought 29 warehouses from Logistid in February.


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