JAPAN Trends and Developments Contributed by: Hiroshi Niinomi, Koki Hara, Naoto Yamamoto and Mitsuhiko Murata, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
difficult to set up long-term business plans for redevelopment projects. Market in Each Type of Asset Hotels With the COVID-19 outbreak subsiding, hotel assets appear to be recovering significantly as an investment target due to the increased will - ingness of domestic travellers to travel as well as the recovery of the number of inbound visitors. The hotel market is booming as hotel demand recovers, especially in Tokyo, Osaka, Hokkaido, and Okinawa. According to the Nikkei’s real estate market information, two of the top ten real estate trans - actions (by deal size) in Japan in 2023 were hotel investment projects, although none were ranked in 2022. Office properties Although it does not appear to be depressed to the point of being negative, investment in this asset class appears to have stagnated some - what in 2023, as it did in 2022, due in part to rising vacancy rates. Nonetheless, while office building prices in Europe and the United States have plummeted due to rising interest rates and the establishment of telecommuting, office building prices in Japan have remained relatively stable, which appears to be one of the reasons why a certain level of investment has been main - tained. Logistics Investment in logistics facilities remained strong in 2023, with a number of funds being newly launched. In the first half of 2023, the largest supply has been provided in the Tokyo area, and transactions aimed at strengthening supply chains, such as base consolidation and invest -
ment in logistics systems, are attracting atten - tion. Data centres With the growing demand for cloud computing, data centres are being developed in Japan, and investment in this asset class is also on the rise. For data centres, there are hurdles to obtain - ing non-recourse financing at the land leasehold stage without income generated from a property, and therefore the development of data centres may be conducted through other schemes, such as joint ventures. Renewable Energy Even after the global COVID-19 pandemic exert - ed considerable pressure on economic activity in Japan, domestic and foreign investors have actively and consistently invested in Japanese renewable energy businesses. After the Japanese Feed-in-Tariff regime (the FIT Regime) came into effect in July 2012, the pro - portion of renewable energy in Japan’s power generation mix increased from approximately 9% to 18%. As the next step, for the independence of renew - able energy, a major amendment to the Japanese Renewable Energy Act (Act No 108 of 2011) was promulgated into law in June 2020 and came into force in April 2022, and the Japanese Feed- in-Premium regime (the FIP Regime) has been introduced, shifting away from the FIT Regime. Under its Green Growth Strategy towards 2050 Carbon Neutrality, published in December 2020, the Japanese government plans to achieve around 50% to 60% of total power generation through renewable energy by 2050, with offshore wind power considered a high-growth potential sector. In response to the legislation anticipated
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