Housing & Real Estate: Rerating of real-estate stock driven by offices and improved capital efficiency

Research evidence excerpt

Housing & Real Estate: Rerating of real-estate stock driven by offices and improved capital efficiency

Foundation

June 30, 2026 06:22 AM GMTM

Investor Presentation | Japan Morgan Stanley MUFG Securities Co., Ltd.+ Toshiyuki Anegawa

Equity Analyst

Housing & Real Estate: Rerating of real-estate Toshiyuki.Anegawa@morganstanleymufg.com +81 3 6836-8914

stock driven by offices and improved capital

efficiency Real Estate

Japan

Valuation pressure from rising interest rates is likely to persist near term. However, we see scope for Industry View In-Line

Housing

a rerating driven by office rent growth, ROE improvement, and enhanced shareholder returns. With Japan

Industry View In-Line

concerns lingering that rent increases may not keep pace with higher interest rates and that progress

on shareholder returns remains insufficient, attention will focus on how companies address these

issues.

Key highlights

• Despite heightened uncertainty, the Tokyo office market has remained resilient, but how sustainable is the current pace of rent

growth?

• With long-term interest rates rising, will real estate cap rates begin to trend higher?

• As property flipping in the existing condominium market becomes more prevalent, will this affect new condominium pricing and

sales?

• Have shareholder proposals and activist campaigns largely run their course, with the focus now shifting to company-led

shareholder return enhancement?

• Will the sector achieve a virtuous cycle of moderate rent growth and cost pass-through, or will cost-push pressures from higher

material and labor costs intensify? Morgan Stanley does and seeks to do business with

companies covered in Morgan Stanley Research. As a result,