Tokyo just stole the global spotlight. In the first quarter of 2025, investment in Japanese real estate soared past ¥2 trillion for the first time ever.
JLL’s data show Tokyo alone attracted 11 billion US dollars, pushing the city past New York and Dallas to claim the world’s top spot for property deals.
Foreign capital multiplied, landmark assets changed hands, and office rents marched higher, signalling a market that remains compelling for international buyers.
Global context: Tokyo overtakes New York
Global transaction volume hit 185 billion US dollars in Q1 2025, up thirty-four percent year-on-year, driven by liquid debt markets and cross-border activity. Within that total, Tokyo secured 11 billion US dollars, beating New York at 7.3 billion and Dallas–Fort Worth at 6.3 billion. Japan’s nationwide tally rose to roughly ¥2.095 trillion, a twenty-three percent gain on Q1 2024.
Tourism lifts retail and hotels
Japan welcomed 10.5 million visitors in Q1 2025, forty-four percent above the prior year, according to JNTO statistics. Higher footfall boosted prime retail rents and daily hotel rates, expanding net operating income.
Offices tighten
Savills reports that average Grade-A rents in Tokyo’s central five wards climbed to ¥33,947 per tsubo per month, a four-point-two percent annual rise. Vacancy continued to edge down, so offices captured about sixty percent of quarterly investment.
Domestic institutions chase yield
Japanese life insurers and pensions have been raising allocations to alternative assets, including domestic real estate, in search of higher returns during a rising-rate cycle. Fitch noted that alternatives now account for nearly twenty percent of some insurer portfolios.
Landmark transactions in Q1 2025
| Asset | Buyer | Reported price | District | Significance |
|---|---|---|---|---|
| Tokyo Garden Terrace Kioicho | Blackstone | ≈ ¥400 bn | Chiyoda | Largest single asset purchase by a foreign investor in Japan. |
| Tokyu Plaza Ginza | Gaw Capital + Patience Capital | > US $1 bn | Ginza | Prime retail trophy benefiting from luxury rebound. |
Several logistics and data-center portfolios also traded above ¥100 billion, highlighting sustained appetite for scale.
By Sectors
| Sector | Share of Q1 capital | Trend highlight |
|---|---|---|
| Office | 60 % | Rents rising, limited pipeline |
| Retail | 15 % | Tourism recovery lifts sales |
| Hotel | 10 % | Average daily rates hit record highs |
| Logistics & Data | 9 % | E-commerce and AI spur demand |
| Residential & Other | 6 % | Select high-rise sites remain competitive |
Outlook for the rest of 2025
JLL projects that commercial real-estate investment across Japan could reach almost ¥6 trillion by year-end, a full trillion more than the roughly ¥5 trillion recorded in 2024.
Rising funding costs are prompting many listed and privately held corporations to unlock balance-sheet value by selling non-core buildings, a trend already visible in planned asset disposals by groups such as Seibu and in activist pressure on blue-chip landlords like Sumitomo Realty.
Analysts warn that higher hedging expenses will slowly narrow yield spreads, so companies keen to recycle capital may accelerate transactions before borrowing becomes more expensive. J-REIT managers are following the same playbook, off-loading secondary stock to finance share buybacks and pursue better-quality acquisitions, according to recent sector commentary from B&I Capital.
Global dry powder is ready to absorb that pipeline. Morgan Stanley is currently raising a ¥100 billion vehicle dedicated to Japanese property , while other international funds, including Blackstone and Brookfield, have flagged fresh deployment plans to capture yield and currency upside. The weak yen continues to sweeten entry pricing for overseas buyers, and corporate-governance reforms are making it easier for foreign capital to negotiate carve-outs directly with domestic owners.
Together, these forces suggest a busy deal calendar through the second half of 2025, with Tokyo expected to keep drawing the lion’s share of activity as investors chase scale, liquidity, and rising rents in the capital’s core districts.
Invest in Tokyo Real Estate Today
Tokyo’s record-breaking quarter confirms the city’s status as a magnet for global capital. If you want exposure to this dynamic market, browse the latest hand-picked listings on Tokyo Portfolio or contact our bilingual advisors for a tailored investment brief today.
