Publications

- December 1, 2010: Vol. 2, Number 11

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Bullish on Japan: How Investors Can Create Real Estate Investment Value in Japan

by Makoto Arai and Pip White

It is easy to understand why some global investors are not bullish on the prospects for the Japanese economy. The demographics are not positive, politics continue to interfere with an economic reform program and the fiscal situation seems dire, at least on the surface. In the face of all this, can investment value be found in Japanese real estate? We believe it can, but it is achieved by creating value in the property rather than by relying on a market recovery.

TOKYO IS “FUNDAMENTALLY” DIFFERENT

While real estate may be an attractive option in the current environment, it is all driven by fundamentals going forward and therein lies the challenge. A common concern among investors is that they do not see any real growth prospects in the Japanese economy, so it is unclear what will drive rent and income growth for real estate. Couple that with the level of government debt approaching 200 percent of GDP and a failure to implement robust

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