In stating the current case for real estate, one might wonder if real estate is on trial — especially after the subprime residential mortgage crisis of 2007 led to frozen credit markets around the world. Indeed, the meltdown brought on bankruptcy filings and government intervention in an effort to jumpstart stalled economies as all asset classes faltered. The fundamental case for real estate has been and continues to be sorely tested by the financial crisis, but investors with a long-term perspective on the asset class should continue to benefit from real estate’s inherent qualities, as well as take advantage of new opportunities presented by the global economic downturn.

The J-REIT market, like the U.S. REIT market and others around the world, has struggled during the past two years. J-REITs peaked in May 2007 according to Bloomberg, and while the index level has risen substantially from the recent low reached in February 2009, as of September it remains well below the May 2007 peak.

After some of the most severe falls in country GDPs on record, there are signs that the worst of the global economic crisis is behind us, leading many to believe that the post–Lehman Bros. fears of deflation have proved alarmist in the face of unprecedented government intervention. However, in the United States total hours worked in the private sector are down by a dramatic 7 percent year-on-year and total pre-tax household income was recorded as falling by 3.4 percent year-on-year in July. In short, although the specter of deflation may have receded for now, it has not gone away.