As Japan repatriates foreign investments in order to rebuild at home, many experts believe that the British REIT market may be hit particularly hard as Japan reduces stakes in one of the world’s largest real estate investment trusts (REITs)[1]. Land Securities Group Plc is the U.K.’s biggest REIT, and Japan owns about 11 percent of it. If Japanese investors pull money out of this REIT and other types of properties, the trust could experience selling pressure on stocks, say analysts. Japan has ranked 19th among countries investing in London over the last decade.
Japanese real estate is, of necessity, experiencing trouble at home as well as abroad. The country had struggled with its real estate market before the earthquake and tsunami, and appeared on the verge of a “nascent recovery” when disaster struck[2]. Now, while foreign investors are emerging from the rubble relatively unscathed thanks to modern building and safety measures, property values throughout the country are “set to tumble,” say experts, thanks to the potential for lower demand for office space, storage and hotel rooms. This is due, in part, to worry about the situation at the Fukishima Daiichi nuclear power plant, where the situation is described as “liquid.” Jon-Paul Toppino, president of SCJ Investment Management, a firm with an $8.5 billion Japanese real estate portfolio, has said he does not believe that the Japanese real estate market will sustain any long-term impact “absent the nuclear uncertainty.”
As always, our thoughts and prayers are with the people of Japan.
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[1] http://www.bloomberg.com/news/2011-03-16/japanese-may-liquidate-u-k-property-investment-after-quake-on-rebuilding.html
[2] http://online.wsj.com/article/SB10001424052748703566504576202502786245750.html
