Tuesday, September 13, 2005

Japan Real Estate Index - 2004 Total Returns Increase, but NOI Falls

IPD Japan, a UK-affiliated research firm, announced the results of its survey of Japanese real estate investment returns for 2004. Total returns went up to 6.3%, up from 3.7% in 2003, with component return measures for capital return at 0.0% (2003: -2.4%) and income return at 6.3% (2003: 6.4%).

However, average NOI for all properties decreased by 4.1%. This may have been caused by a drop in rents, increased vacancy, and free rent periods.

By asset class, the returns averaged 6.9% for shopping centers, 6.7% for residential, and 6.2% for office buildings. Average cap rates (on NOI) were 6.2% for retail, 6.6% for office, and 5.9% for residential. Cap rates for offices in the central Tokyo 5-ward region were 5.7%, while those in Osaka averaged 7.9%.

The survey was based on data from 503 properties, including REIT-owned buildings, owned for the full year.

Full Story - IPD : 2004 Total Returns Increase, but NOI Falls / Reuters Story

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