Historical lessons
I remember working in Japan in the early 1990s, but the current investment environment differs from the bubble-era spending of that time, where prominent buildings were often bought at the height of the market and then sold at a loss. Recent deals are on a more proportional scale, and are viewed as complementary to the existing investments in Japan. Buyers are motivated largely by healthy diversification, with the added benefit of more exciting returns than are available domestically.
The weak yen naturally limits the size of the group that will be able to make investments into the UK, so it’s important not to overstate the return of Japanese investment into London. The data shows an increase in volumes, but it’s building from a very low base and is likely to be a steady stream of deals rather than a wave. As the next deals complete, I’d expect to see more institutions following the lead of the likes of Mitsubishi, Mitsui Fudosan and Takenaka, but progress will remain incremental.
Of course, there are always external political and economic factors to consider which may impact future interest from Japan, but for now it’s clear that the momentum is building albeit steadily.