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Going to the Mezzanine: What Does Japan’s Real Estate Mezzanine Debt Market Have to Offer Investors?
As in most markets worldwide, Japan also suffered from a decline in real estate prices following the financial crisis in 2008. Although the loss in asset value varies depending on individual assets, some properties experienced a decrease in real estate value of more than 30 percent.
However, transaction volume has been indicating signs of recovery since the financial crisis, and fiscal year 2011 (April 2011 to March 2012) is expected to be an active year. Overall, the cap rate trends also have been showing stability. In some sectors, such as residential properties in central Tokyo, cap rates began to compress from late 2010. The general view is that the current Japanese real estate market seems to be near the bottom, which may be attractive timing for investment.
Although overseas investors have expressed their concerns about the impact of the earthquake in March 2011 and ongoing nuclear power plant situation, the fundamental real estate market in Japan seems quite sta