The annual capital return for Japanese real estate investments was -9.1% to the end of the first quarter of 2009, according to the IPD Japan Monthly Indicator. This new figures continues the rapid downward return trend over recent months, bringing the annual total return to end of March 2009 to -4.5%. The income return, which increases if capital values fall faster than rental income, is at its highest level for a year, at 5.0%.
The capital return for the last six months, expressed on an annualized basis, is -13.3%, suggesting further falls in the months to come. Sector level returns are shown in the Monthly Indicator to the end of November 2008. On a six months annualized basis, the Office sector shows a negative total return for the first time, at -1.9%, 196 basis points down from the previous month. Capital returns for Offices on this basis drop further by 189 basis points to -6.4%. Offices in Tokyo show a negative capital return of -5.6%, down by 209 basis points, which is the biggest fall across the detailed segments monitored.
Toshiro Nishioka, Managing Director at IPD Japan, said: "The Retail sector's annualized capital return for six months to November 2008 goes down further to -11.6 %. The same return for Non-shopping Center Retail in Tokyo deteriorates quickly and turns to be negative at -10.8%, compared with -2.3% a quarter ago. In the Residential sector, annualized capital growth for the last six-month to November 2008 is double-digit negative for the first time, at -10.5%. As it has for the entire last quarter, Osaka continues to show the most rapid downturn amongst the residential segments, recording a drop of 177 basis points."