(Bloomberg) -- Japan’s real estate shares were the biggest winners on Tuesday after a widely expected move by the Bank of Japan to end its negative rates regime, with investors focusing on the dovish tone by the central bank and the inflation outlook.

A measure of Topix’s real estate companies surged 4.5%, its biggest gain since March 2022. Following a two-day meeting, the BOJ announced its new policy rate while indicating that financial conditions will remain accommodative. The BOJ said its stable inflation target of 2% has come into sight as a virtuous cycle of wages feeding demand-led inflation is solidifying.

Japanese banks meanwhile slid after the BOJ announcement. The sector, which has surged over the past year on expectation the central bank will lift rates and profitability will improve, had lost momentum in recent days.

Investors are likely shifting their money from bank shares to real estate stocks following the BOJ’s policy decision, said Takashi Nakamura, a senior strategist at Tokai Tokyo Intelligence Laboratory. “The perception of a continued accommodative environment and a shift from deflation to inflation” are also driving demand for property stocks, he said.

Japanese real estate giant Mitsubishi Estate Co. jumped 5.3% on Tuesday, while Sumitomo Realty & Development Co. soared 8.3%. Mitsui Fudosan Co. gained 5.4%. The broader Topix index rose 1.1%.

The Topix real estate index has surged leading up to the BOJ’s announcement, soaring more than 10% over the past four days and extending its highest level since October 2007.

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