Key Japan real estate sector seen tripling

Source : Business Times - 21 Aug 2008

Logistics property market investments may grow 3-fold in a few years: LaSalle

Japan’s market for investment in logistics real estate - such as warehouses, distribution centres and ports - is seen growing threefold within a few years as more players enter a sector considered stable even in an economic slowdown, an executive of LaSalle Investment Management said.

The real estate securitisation investment market was about 320 billion yen (S$4 billion) in 2007, accounting for only 3.8 per cent of Japan’s total Reit (real estate investment trust) investment.

But LaSalle, which manages US$54 billion assets in global real estate markets, sees such logistics-area investment accounting for more than 10 per cent of total J-Reit investment in the near future, executive officer Yosuke Yoshikawa told a Tokyo seminar.

‘Logistics property investment is still immature here for reasons such as a dearth of investment opportunities and limited information disclosure . . . maybe that’s why only one J-Reit is solely focusing on the logistics field,’ Mr Yoshikawa said.

‘But considering its big and established presence in Europe, especially in Britain, and the relative strength of the economic slowdown, logistics real estate investment has a big growth potential,’ he said.

After raising 360 billion yen, the Tokyo-based investor launched ‘LaSalle Japan Logistics Fund Two’ last year.

LaSalle still has some 280 billion yen left to invest until 2010 after spending 80 billion yen since the fund’s launch, another executive told Reuters after the seminar.

A planned investment would include development of multi-purpose logistics centres and ‘off-balance- sheet’ support for logistics companies.

LaSalle is a unit of Chicago-based property services company Jones Lang LaSalle Group which manages property investments of institutional investors such as pension funds and companies.

Tokyo-based LaSalle bought out an asset management company in 2007 and injected fresh capital into a Reit that has since been renamed LaSalle Japan Reit Inc.

LaSalle Japan Reit closed down 12.3 per cent at 191,200 yen yesterday, while the Tokyo Stock Exchange’s Reit index shed 0.3 per cent to 1,269.54. — Reuters