Across the Pacific

May 6, 2013 admin

A few weeks ago, our “Love on the rocks?” blog post discussed how investors are now less enamored with U.S. apartment REITs than when the love affair began after the U.S. recession, with the happy union holding steady from 2009–2012. However, apartment REITs’ total return was just 0.11 percent during the first quarter of this year, reports NAREIT.

Across the Pacific, though, the relationship between investors and Japanese apartment — or residential — REITs still runs hot, with residential J-REITs outperforming other property sectors during the past five years through March 2013, including Japan’s stock and bond markets, according to the Bloomberg Riskless Return Ranking:

REITs that buy apartments benefited from a shortage of new supply and a stable number of tenants in a nation where less than half of Japanese under the age of 40 own their own home. … The government has a target to increase assets owned by REITs by 40 percent by 2020.

Indeed, as the Japanese government seeks to end deflation, undertaking additional quantitative easing measures, all J-REIT types had outstanding total returns in the first quarter, outperforming all other Asian REIT markets, according to first quarter’s The Asian REIT Report, released to subscribers of The Letter – Asia Pacific on May 2. The best-performing J-REIT, Invincible Investment Corp., returned 115.75 percent in the first quarter, while even Kenedix Residential Investment Corp., the worst-performing J-REIT, was far into positive territory with a total return of 25.41 percent.

Jennifer Molloy is editor of The Institutional Real Estate Letter – Asia Pacific.

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