Lender Survey 2025: Japan - Favorable Financing Environment Despite Rising Uncertainty

Overview

CBRE's annual "Lender Survey" targeting companies providing real estate financing, the 2025 edition analyzes Japan's real estate financing market trends, covering FY2024 lending performance and FY2025 outlook. ## Key Points ### 1. Survey Overview - Conducted from April to May 2025 - Targeted financial institutions providing real estate financing - Surveyed FY2024 (April 2024 - March 2025) lending performance and FY2025 outlook - Conducted during a period of high uncertainty surrounding U.S. trade policy, but no major changes observed in lending attitudes ### 2. FY2024 Lending Performance - **Senior Lenders**: 32% responded that new acquisition financing accounted for 100% (increased from 25% in previous year) - **Mezzanine Lenders**: 45% responded 100% for new acquisitions (decreased from 50% but remains high) - **Lending Terms**: - Senior lender required spreads remained stable - Mezzanine lender spreads showed upward trend - **Preferred Assets**: Rental apartments continued to top the list from last year ### 3. FY2025 Outlook - **Senior Lenders**: - 50% expect lending volume to "increase" from previous year - Remaining 50% responded "unchanged" - **Mezzanine Lenders**: - 35% expect increases (down from 60% in previous survey) - **Spread Outlook**: - Increased proportion responding spreads will "rise" for both senior and mezzanine - However, majority view is increases will remain under 25bps ### 4. Risk Factors - **Interest Rate Increases**: 60% cited as biggest risk factor (down from 80% last year) - **Recession Concerns**: Response rate increased from last year - **Interest Rate Outlook**: Lenders assume 1-2 additional rate hikes during FY2025 - Continued gradual interest rate increases are lending premise ### 5. Market Environment Characteristics - No particularly significant changes in financial institution lending attitudes - Accommodative financing environment continues - Favorable financing environment despite rising uncertainty - Active financing for new property acquisitions ### 6. Future Outlook - Lending volume expected to increase or maintain current levels - Limited spread increases - Continued preference for rental apartments - Interest rate risk recognized but impact viewed as limited This report demonstrates that Japan's real estate financing market maintains a relatively stable environment despite global uncertainties.

Key Points

1. Survey Overview

Conducted from April to May 2025
Targeted financial institutions providing real estate financing
Surveyed FY2024 (April 2024 - March 2025) lending performance and FY2025 outlook
Conducted during a period of high uncertainty surrounding U.S. trade policy, but no major changes observed in lending attitudes

2. FY2024 Lending Performance

Senior Lenders: 32% responded that new acquisition financing accounted for 100% (increased from 25% in previous year)
Mezzanine Lenders: 45% responded 100% for new acquisitions (decreased from 50% but remains high)
Lending Terms:
- Senior lender required spreads remained stable
- Mezzanine lender spreads showed upward trend
Preferred Assets: Rental apartments continued to top the list from last year

3. FY2025 Outlook

Senior Lenders:
- 50% expect lending volume to "increase" from previous year
- Remaining 50% responded "unchanged"
Mezzanine Lenders:
- 35% expect increases (down from 60% in previous survey)
Spread Outlook:
- Increased proportion responding spreads will "rise" for both senior and mezzanine
- However, majority view is increases will remain under 25bps

4. Risk Factors

Interest Rate Increases: 60% cited as biggest risk factor (down from 80% last year)
Recession Concerns: Response rate increased from last year
Interest Rate Outlook: Lenders assume 1-2 additional rate hikes during FY2025
Continued gradual interest rate increases are lending premise

5. Market Environment Characteristics

No particularly significant changes in financial institution lending attitudes
Accommodative financing environment continues
Favorable financing environment despite rising uncertainty
Active financing for new property acquisitions

6. Future Outlook

Lending volume expected to increase or maintain current levels
Limited spread increases
Continued preference for rental apartments
Interest rate risk recognized but impact viewed as limited

This report demonstrates that Japan's real estate financing market maintains a relatively stable environment despite global uncertainties.