Japanese investment in U.S. real estate has a cyclical pattern following the U.S. real estate market. Beginning in the 1980s, Japanese investors went on a “U.S. buying binge” and “loaded up on such trophy properties as Rockefeller Center and the Pebble Beach Golf Course” (Nonko). In the following decades, Japanese investors were badly hurt as the U.S. markets (including real estate) suffered huge losses and began liquidating their U.S. real estate investments. In recent years, the U.S. real estate market has seen an upturn following the 2008 housing crisis, and the Japanese are once again turning their sights toward U.S. real estate investments, particularly in New York City. Christopher Okada, president of Okada & Co., a real-estate company that focuses on Japanese investors, has noticed “‘strictly Japanese real-estate companies enter the market, and they’re diversifying’” (Nonko). Examples of Japanese commercial real estate investments include the $247 million purchase of the office building at 370 Lexington Ave. by Tokyo-based Unizo Holdings, and investments by Rockefeller Group Inc., a Mitsubishi subsidiary. Rockefeller Group Inc. President Atsushi Nakajima stated, “‘we liquidated some of our assets in the ’90s but continued our commitment to the U.S. market, and have recently increased our investments in both the New York and U.S. markets,’” which signals increasing U.S. real estate investments by foreign investments over the next year (Nonko).

 

Another example of Japanese real estate investment is its investments in U.S. REITs.Currently, as yields on Japanese bonds are negative, Japanese investors are desparate for returns. Because of this, Japanese foreign investors started heavily investing in U.S. publicly traded REITs and now own up to 10% of the U.S. REITs market (discussion with Charles Harbin). The Bank of Japan began buying REITs in 2010, and “the Tokyo Stock Exchange REIT Index has doubled in value and land prices in Japan’s biggest cities are rising” (Fujioka). Rising metropolitan prices and the increasing rate of J-REIT purchases could further push Japanese investors to diversify out of Japanese REITs and into U.S. REITs.