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- September 1, 2016: Vol. 8, Number 8

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Gaining entry: How institutional investors can best access large-scale core real estate investment in Japan

by Kiyosei Sugioka

Japanese investors’ appetite for stable, income-generating real estate in Japan — typically regarded as the alternative to domestic bond investments — has grown dramatically. In addition, foreign investors’ interest in investing in core real estate in Japan is expanding for portfolio diversification purposes.

Favourable financing conditions surrounding Japan’s real estate market continue to this day, thanks to lower borrowing costs, including decreased interest rates and loan arrangement fees resulting from intense competition among loan providers — domestic banks and insurance companies — and the Bank of Japan’s continuous monetary policy of keeping interest rates low.

In addition to these favourable conditions, the BOJ introduced a negative interest-rate policy for the first time in January 2016, which has prompted Japanese investors, more than ever before, to find alternatives to domestic bonds, which generate historically-lower income.

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