Reforming Japan: Japanese corporate governance and pension fund changes have implications for real estate
After two decades of deflation, Japan once again is poised to provide significant investment opportunities in real estate. With recent corporate-governance and public-pension reforms, the Japanese real estate market is primed for a period of positive growth that also will provide fertile ground for opportunistic investors seeking to buy underperforming properties.
Several factors underpin the growth we expect in the Japanese real estate market. Japanese companies control a tremendous amount of inefficiently-operated real estate, which is creating a drag on earnings. In addition, as a result of quantitative easing, Japanese capital is moving away from the safe assets of cash and Japanese government bonds into higher-risk investments. As investors move up the risk ladder, we expect a substantial amount of capital will flow into core real estate assets. Last, corporate governance reforms have produced stronger shareholder rights that ultimately will prompt Japanese listed compan