Real estate investment in Japan surged to a quarterly record of 2.1 trillion yen in the first quarter through March, driven by strong overseas demand and Tokyo's status as the world's top city for property deals, Nikkei Asia reported Thursday, citing Jones Lang LaSalle (JLL) data.

The figure marks a 23% year-on-year increase and the first time quarterly investment topped 2 trillion yen since JLL began tracking in 2007, the report said.

Global real estate investment rose 34% to $185 billion during the same period, with gains in Europe, the US, and Japan, while China's market declined 33% amid its property slump, Nikkei said.

Tokyo led all cities with $11 billion in investment, followed by New York at $7.3 billion and Dallas-Fort Worth at $6.3 billion, it added.

Foreign investment in Japanese real estate nearly quadrupled to 633.1 billion yen. Notable deals included Blackstone's $2.6 billion purchase of Tokyo Garden Terrace Kioicho from Seibu Holdings and Hong Kong's Gaw Capital Partners acquiring Tokyu Plaza Ginza in Tokyo, according to the report.

Asian family offices and Japanese life insurers also increased their real estate allocations. Rising rents in office and hotel sectors, fueled by inbound tourism and tight supply, are boosting profitability in major cities, Nikkei noted.

JLL forecasts Japan's real estate investment to approach 6 trillion yen in 2025, up from around 5 trillion yen in 2024, according to the report.

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