San Francisco-based Prologis Inc said it intends to increase rents and will allocate USD 600 million annually for warehouses in Japan. The move comes in the wake of increased corporate confidence in the policies of Prime Minister Shinzo Abe, a Bloomberg report said.
In a Bloomberg interview, Prologis Chairman and Chief Executive Officer Hamid Moghadam said the company expects a 3% annual increase in rents to be in place for a while. Prologis is also set to invest USD 500 million to USD 600 million annually in developing warehouses. According to Moghadam, the figures can be compared with the historical average yearly investment ranging from USD 400 million to USD 600 million.
The report said Abenomics have bolstered investor sentiment, which helped spawn a recovery in Japan's property market. Abenomics refers to Prime Minister Abe's promise to put an end to the deflation the country has experienced for 15 years and stop the central bank's policy of monetary easing.
Citing data from London-based Investment Property Databank, the report said businesses in the industrial space, like that of warehouses, were able to return an average of 7.6% for the year ending July. This represented a return of over two times that posted by office buildings. The report added that confidence among the large manufacturers in Japan also jumped to its highest in six years based on a quarterly survey done by Tankan in October. Real estate and investment management services firm Jones Lang LaSalle Inc also said deals in the real estate segment in Japan will increase up to JPY 4 trillion or USD 39 billion for 2013.
Moghadam told Bloomberg, "Abenomics has created a lot of confidence and that is an added bonus. Going forward, I am actually pretty optimistic about the business even more so than before."
After the US, Japan is the second largest market for Prologis, the report said.
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