Japanese real estate REITs buy opportunity?

Discussion in 'Economics' started by amylase, Feb 14, 2008.

  1. amylase


    Japan's land prices have been falling for 17 years, but prices in central Tokyo have started to rise since 2005.

    There are 41 listed J-REITs on Tokyo stock exchange, more than half of them are trading at below their net asset value.

    I believe the fall of J-REIT is caused by cash stripped U.S. investment banks selling their foreign holdings (at great loss) to finance their balance books.

    The dividend yield on J-REITs are extremely stable (they are required by law to distribute 90% of income at least) and have become mouth watering due to depressed prices.

    For example, Re-Plus REIT, Joint REIT, yields appx. 9% and MID reit, DA Office, LaSalle japan (formerly eAsset) also have solid yields of around 8%.

    Japanese themselves tend to be quite pessimistic about their future, the result of 17 years of economic and asset prices decline (know as the "lost decade").

    But i think as the No.2 economy in the world, current price levels are way too low. What do you guys think?
  2. Daal


    I agree with you completly, the stocks slide in japan is offering a terrific opportunity, specially now that inflation is back there. I'm trying to find a list of the reits there with all the fundamentals, do you know where to find this?
  3. Goldman to Buy Japanese Real Estate Co. with JV for $1.1B

    Must be a reason why Goldman is joint-venturing....

  4. GS will put up no money in the joint-venture but still demand a "3 & 30" compensation arrangement.
  5. Daal


  6. amylase


  7. Whats the ratio between real estate prices and annual net rental income in Japan, for both commercial and residential properties? Always a good metric to see if owning/investing in real estate makes sense in a given market.
  8. Daal


  9. Daal


    according to this its varying around 5% to 7%

    and housing spending as a % of household income is pretty low according to this

    the big question is how hard will japan will get hit by a recession and a global slowdown, if incomes nosedive then those price and rent gains on big metropolitan areas could prove to be temporary and only happened because of the big global growth and not because of a pickup on japans economy