Those of us who have long worked with Japanese investors are wary of headlines proclaiming a “wave” of Japanese capital. Japan does not do waves. It does accumulation, observation, and then – quietly – commitment.

In that context, the last 18 months have been significant for central London offices. Not because Japanese investors suddenly rediscovered the UK, but because they have returned in a way that feels deliberate and familiar to anyone who lived through the exuberance of the late 1980s, the retreat of the 1990s, and the long rebuilding of confidence that followed.

This renewed activity has occurred despite – not because of – the weakness of the yen. Portfolio diversification, income durability, and the strategic need to deploy capital outside a low-growth, low-yield domestic environment are driving the investment.

Recent deals reveal approaches

The clearest illustration of Japanese investors seeking certainty is at 21 Moorfields, which attracted a minority stake from Japan because of its bond-like income underwritten by Deutsche Bank. The income from a long lease to a global covenant is intelligible, defensible, and far easier to justify internally than speculative rental growth.  

One Portsoken Street highlighted another important trend: the quiet diversification of private and corporate capital. Japan has substantial private wealth and corporate liquidity, which is increasingly constrained at home by low yields and limited growth prospects. Overseas real estate is not a tactical currency play, but a strategic diversification tool, and investors are prepared to accept currency headwinds if the income and fundamentals justify it.

Daibiru (MOL Group) buying Capital House in the City is significant because the building is MOL’s European headquarters. Owning real estate that anchors overseas operations can be seen as both a natural hedge and a strategic necessity. It is long-term investment that is relatively insensitive to valuation volatility.

Elsewhere, the consortiums behind 125 Shaftesbury Avenue and Warwick Court are textbook Japanese club deals. Pooling capital with trusted counterparties is an effective way of managing risk, aligning governance, and building internal conviction, particularly overseas.

It creates a framework that plays to each party’s strengths. Risk is shared, decision-making is disciplined, and exposure is calibrated to suit each balance sheet. It reflects a distinctly Japanese approach to overseas real estate: patient, collective, and deliberately incremental. Club deals also serve a second, more nuanced function: partnering with established operators provides a way to learn about a new market without disproportionate exposure.

London’s enduring appeal

For Japanese investors, clarity matters more than headline returns. London’s supply is constrained, demand for best-in-class space is real, and the legal and planning framework is well established. When the yen is weak, uncertainty elsewhere becomes magnified and London offers a degree of predictability.

Pressure on Japanese institutions to deploy capital more productively – including overseas – is likely to increase. Should domestic growth remain subdued, and yields compressed, outward investment will remain a rational response. Building on 2025’s evidence, the market is beginning to treat Japan as a core, dependable constituency again.

Japanese capital is not exuberant. It is thoughtful, experienced and shaped by memory. And for a market that values stability as much as liquidity, that may be precisely the kind of capital London needs.

Further information

Contact Stephen Down

Central London Office Market Watch Q4 2025