Despite weak data spurring doubts over whether Japan's economy is really recovering, property investors remain keen on the market.
"We're backing Abenomics reflating the Japanese economy and feeding through to real assets like real estate," said Andrew Jackson, head of real estate funds at Standard Life Investments, which has around $318 billion under management. "We're seeing a number of international investors starting to move into the Japanese real estate market."
Standard Life still plans to increase its exposure to Japan, both through listed developers and real estate investment trusts (REITs) and by directly purchasing properties. Its Select Property Fund has 9.5 percent of its assets invested in the country.
That may be a bold call. Faith in Abenomics, Prime Minister Shinzo Abe's plan to kick start Japan's long-moribund economy out of deflation, has taken a few dents in recent months. In the second quarter, the country's gross domestic product (GDP) shrank an annualized 6.8 percent after a consumption tax hike in April weighed on the recovery.
"After many decades of occupiers retrenching and vacancy rates rising, what we're now seeing is vacancy rates are coming down consistently," Jackson told CNBC, citing interest from both domestic and international tenants in Tokyo's central office market.
Jackson isn't overly concerned about the yen slipping to its weakest level against the U.S. dollar since April, viewing it as positive for international investors.
"At this stage, we probably expect a little bit further depreciation in the yen, but we expect that to be more than offset by reflation of asset prices," he said, noting Standard Life's funds sometimes hedge the currency risk.
Others also have noticed increased interest in Japan's property plays.
"People are quite positive on the market," said Peter Churchouse, publisher of the Asia Hard Assets Report. "The office market has definitely seen vacancy rates trending down in Tokyo and certainly seen rentals trending gently up. It's not a huge leap, but definitely up."
Foreign private equity funds have been making acquisitions in the market and Japan's listed REITs, or J-REITs, have also been active, he said.
"One of the reasons for this is obviously low interest rates," Churchouse said, but he also noted that many J-REITs are trading near their net asset values, allowing them to make acquisitions without diluting shareholders much.
Churchouse also sees some activity in Japan's residential sector from smaller funds and individual investors, noting that the yields on small apartment blocks can run as high as 6 percent in Tokyo and 7-8 percent in secondary cities.
"At the moment, that is higher than most markets in the world, although the prospect for upside in capital values is perhaps not that great," he said.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1