Tokyo’s Investment Property Market Is Reborn.

After a thirteen year decline in the fortunes of the property market in Japan - which has seen up to an 80% slash in the value of real estate - the property market in Tokyo just received a major vote of confidence.

Morgan Stanley and Lone Star Funds have invested heavily in commercial real estate in Tokyo in 2004 - it is reported that they in fact bought up to 2.5 billion dollars worth of office space between them in separate deals. 

This is a complete reversal of a 13 year long trend and is prompting buyers to begin examining land and property for sale outside of Tokyo once more, according to both investors and financial analysts in Japan.

Both Morgan Stanley and Lone Star have watched Japan’s three year economic recovery and are making their move now, confident that this recovery is just the start of an all out improvement of Japan’s economy. 

By investing now they are literally cashing in on the 80% decline that property values have suffered, they are expected to hold onto their newly acquired assets for the medium to long term - refurbishing them ready for resale when office occupancy rates are high again and Japan’s economic outlook is confident and stable once more.

Japanese real estate investment trusts (a.k.a JREITs) are also attracting international investors and considerable amounts of financial investment.  And it’s not just Tokyo benefiting from the investment of these funds - in fact competition is said to be too intense in the Tokyo market already - this has prompted investors to look further a field so the likes of Osaka, Kobe, Nagoya and Sendai are reaping the financial rewards as well - this shift in investor confidence and investment fund allocation is expected to continue to increase throughout 2005 according to a senior member of staff at Kennedy-Wilson Japan, a company specializing in Real Estate Investment Advisory, Asset Management, and Note Investment Management.

Further positive steps affecting the property in Japan include the introduction of property trusts back in 2001 together with an ever growing market for transforming rental income into securities. 

Finally, the property market in Japan is waking from its 13 years of slumber, it is becoming liquid once again and it is proving more and more attractive to global investors.

A complete reversal of the falling trend for property prices across Japan is expected to take some time however and analysts are warning caution especially as Japan’s embryonic economic recovery is of course not guaranteed to continue.