The state of Japan's property market - particularly that of Tokyo - has long been considered a reliable barometer of the national economy. And, with the real estate sector awash with optimism at the moment, that positivity appears to be catching on elsewhere. The latest addition to Tokyo's ever-changing skyline formally opened on June 11, with Mori Building unveiling the Toranomon Hills building near Shimbashi station. Designed to appeal to multinational companies seeking a prime location in the city, the 52-storey tower uses cutting-edge, pillarless office spaces and incorporates one of Tokyo's most expansive conference facilities, top-of-the-range residences, 25 restaurants and a 6,000-square-metre pocket of open space and greenery. The sleek structure will also house the Andaz Tokyo, the Hyatt Group's first boutique hotel in Japan, which aims to attract business visitors as well as leisure travellers. Toranomon Hills also fits in with the national government's plans to enhance the broader infrastructure of Tokyo, a campaign that has taken on added significance after the city was selected to host the 2020 Olympic Games, and underlines the broader resurgence of the property sector. Analysts in Tokyo are confident that all sectors of the market have consigned the worrying last few years to the past and are looking ahead. The market is entering a positive new cycle, banks are looking to lend again, sellers are making optimistic noises, and investors are making their moves. That newfound desire is a result of the efforts of Prime Minister Shinzo Abe's government to inject new life into the national economy. The indicators show a positive impact, with economic growth forecasts converging at the 1.5 to 1.8 per cent mark. "The stimulus measures appear to have reinvigorated the Japanese economy and have stoked investor sentiment," says Will Johnson, head of research and consultancy for Savills Japan. "Japan's total property transaction volume was up more than 70 per cent in 2013, compared to 2012." That optimism spreads across the four key sectors of office, retail, residential and industrial-use properties. "A trend towards centralisation and smaller household sizes is supporting occupier demand for mid-market rental apartments, which offer landlords a steady, low-volatility income stream," Johnson says. As a result, high-quality residential assets in Tokyo and other major Japanese cities are seeing strong interest from domestic and overseas institutional investors. The capital's office sector is also faring well in comparison with rival cities in the Asia-Pacific region, with Hong Kong and Singapore showing signs of rental decline and investors additionally attracted to Japan by its large stock of investment-grade real estate, a mature legal structure, transparent and established business practices, and a lack of restrictions on foreign ownership. Another factor has been the impact of the 2011 earthquake. "After the quake, it was not feasible for tenants to suddenly relocate to new properties, as it takes a great deal of planning," says Andy Hurfurt, head of investment consulting for CBRE in Tokyo. "What we have seen more recently is an increase in emphasis among occupiers for quake-resilient buildings and - for banks and financial trading companies in particular - for power resilience in their buildings. "Occupiers are moving up but, given the broader economic environment, they are also looking to do that with limited impact on the cost side." He adds that this has made a number of new buildings in less-central locations more attractive. In its latest report in the state of the Tokyo office market, CBRE emphasises that the vacancy rate for grade-A office properties has sunk below the all-important 5 per cent level for the first time in more than two years. "This is a significant turnaround, and what we are finding now is that tenants are competing for the most desirable spaces - those that are well-located and have high specifications - and that is a chance for landlords to raise rents," Hurfurt says. For tenants, the most important considerations remain transport links, efficiency in floor plate size, and the age and design of the building, including its resistance to seismic activity.