As I mentioned in a previous blog, residential real estate data is relatively more difficult to obtain in Japan than commercial real estate data. I found this out during a meeting at the Association for Real Estate Securitization (ARES). [Interestingly, ARES is also the acronym for the American Real Estate Society… we had a good laugh about that.] ARES in Japan provides research and analysis of commercial property capitalization rates (cap rates) as well as Japanese real estate investment trusts (or J-REITs). Cap rate trends are based on a twice-yearly survey, called the “Tankan” survey, of asset managers, developers, commercial bankers, and institutional investors of the ARES member companies. Cap rate trends in Japan are segmented by property type and by region and also include current cap rates and 6-month forecasts of cap rates.

Recently, in October 2012, ARES launched a newly integrated property index called the ARES Japan Property Index (AJPI), which is the property performance index that combines performance data of J-REITs with performance data of unlisted real estate funds. The AJPI is based on the U.S. NCREIF index methodology. The most current research from ARES, which shows the strong performance of J-REITs this year, can be found at this link.

The current chairman of ARES in Japan is Hiromichi Iwasa, Chairman and CEO of the Mitsui Fudosan Co. Ltd., a large real estate developer in Japan with a presence in the United States. My main contact at ARES was Koji Sawada, Senior Researcher at the Association. We discussed J-REITs and cap rates and then ran into each other again later that week at the Asian Real Estate Society (AsRES) Annual Conference in Kyoto.

– Clifford Lipscomb