Japan’s rate hikes raise bar for real estate investor PGIM
Japan's booming real estate sector has come under pressure as the economy adjusts to higher borrowing costs following decades of near-zero rates.
PGIM Real Estate is taking a more selective approach to acquisitions in Japan as rising interest rates drive up deal costs in the country. | bloomeberg
Sep 10, 2026
PGIM, the asset management arm of Prudential Financial, is taking a more selective approach to real estate acquisitions in Japan as rising interest rates drive up deal costs.
“We are at a point where it is becoming significantly more expensive” to acquire assets, said David Fassbender, the firm’s head of Asia-Pacific real estate, in an interview. PGIM is taking higher debt costs into consideration in underwriting, he said. “So we are more selective now than we were two years ago.”
The narrowing yield premium between Japanese government bonds and real estate is also raising the bar for investments, particularly in competitive sectors like office space, Fassbender added. “The historically wide yield spread has been eroded or disappeared entirely in some cases,” he said. “That’s generally a sign that something needs to give.”
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