Osaka Soars, Hong Kong Lags: Global Report Reveals Stark Contrasts in Office Building Values

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Osaka, Japan, experiences a 2.1% surge in office building values, outpacing global counterparts, while Hong Kong maintains a 1.3% dip, reflecting diverse real estate landscapes.

In a recent revelation by the Global Property Value and Rent Indices, Osaka emerges as the global leader, boasting a 2.1% increase in office building values as of October 2023. This marks the third consecutive time Osaka has clinched the top spot since October 2022, solidifying its status as a real estate powerhouse.

Contrastingly, Hong Kong has struggled to gain momentum, sustaining a 1.3% drop in office building values since April. Despite global property price downturns fueled by a high-interest environment, Japan, and specifically Osaka, resiliently maintains loose monetary policies and stable rental demand.

The Japan Real Estate Institute, the country’s premier real estate appraisal and consulting firm, unveiled the indices covering 15 major cities across Asia, the United States, the United Kingdom, and Australia. The analysis delves into new buying and leasing contracts for both commercial and residential properties, calculating price and rent per square meter.

Osaka’s dominance is underscored by its 2.1% growth, with Ho Chi Minh City in Vietnam following closely with a 0.8% increase, and Tokyo experiencing a 0.6% uptick. Notably, Osaka outshines Tokyo in terms of lower office building prices and a higher return on investment, with a 4% return rate in Osaka’s Umeda compared to Tokyo’s Marunouchi and Otemachi, standing at 3.2%.

Meanwhile, Hong Kong remains in the middle to lower range among the 15 global cities, grappling with a 1.3% decrease in office building values and a 0.9% drop in rents.

Further global insights from the survey reveal New York witnessed the most substantial decline in office building prices, plummeting by 6%, followed by Sydney with a 4.4% downturn and London with a 3.5% decrease. In China, operational challenges for real estate companies manifest in Beijing experiencing a 2.9% drop, and Shanghai undergoing a 2.6% decline.

Miki Shoji’s data highlights a new low in the vacancy rate for office buildings in Tokyo’s central five districts, reaching 6.10%, the lowest in two years and five months. On the residential front, Tokyo Kantei’s data showcases continuous growth, with second-hand apartment prices in central Tokyo hitting new highs for ten consecutive months since 2002.

Riding the wave of strong demand from overseas investors, Tokyo’s residential rents in the metropolitan area reach a nine-year high in November 2023, with a monthly increase of 0.1%. From August onwards, residential rents in the Tokyo 23 wards exhibit remarkable growth, maintaining double-digit figures for three consecutive months, a feat unseen in the past 15 years and significantly surpassing the previous year’s average of around 5%.