Business and financial news -

Thursday, May 08, 2008

Investing In Japanese REITs

Here' a few good reasons why Japanese real estate is a great place for our money:

• Japanese real estate investment trusts (REITs) are a great bargain, down 29% since June 1.

• Dividend yields are the highest income plays in Japan, in the 4% range.

• There's a huge incentive to borrow and buy real estate, as "cap rates" (essentially the rent minus the costs of upkeep) are 4%-6%, while the cost of borrowing money is only 1.5%.

• Rents in Tokyo are up 30% in the past two years.

• The city is crawling with investment bankers looking to buy properties... companies like Goldman Sachs, which has already spent billions investing in Tokyo real estate.

• There is no supply... vacancy rates in Tokyo real estate are tight at 2.6% and there isn't much new building taking place.

The opportunity is enormous. Japanese real estate is literally selling at 1980s prices which leads many people to belive that its a really safe investment.

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