Yokohama Land Price Information Basic Edition 4 Real Estate Investment Market

When it comes to real estate investment, it is easy to imagine how to rent a room in a building built on a property or invest in a one-room apartment, but in recent years laws have been in place and ordinary investors can invest with small funds just like stocks, so the real estate investment market in Japan has rapidly expanded over the past few years and has had a major impact on land market trends.

What does it mean to securitize real estate in the first place?

Generally, "securitization" refers to (1) the owner of "assets" that generate economic benefits, such as monetary claims and real estate, (2) the "assets" are separated from the balance sheet and a special purpose entity (a corporation established for the special purpose of securitization). SPV。 (Refer to Keywords) and (3) SPV will issue small-scale securities and other financial instruments to collect funds from investors, and (4) allocate economic benefits such as rent income generated by "assets" to investors. It's a good idea.

With regard to real estate, in November 2000, the Law Concerning Investment Trusts and Investment Corporations (generally referred to as the Investment Trust Law) was revised and enforced, and real estate was recognized as an asset incorporated in investment trusts. In March 2001, the Tokyo Stock Exchange issued a "Real Estate Investment Trust (J-REIT)." When the market was created, the real estate investment market developed rapidly because ordinary investors were able to freely trade as well as stocks.

In addition to helping investors to reduce the amount of investment units and diversify risks, for real estate owners, by utilizing the securitization mechanism, real estate that is difficult to sell at high prices into the form of securities, etc., and to raise funds, attracted attention, and investment money flows into the land market at once. In other words, real estate securitization transactions are a mechanism that directly connects the real estate market and the capital market.

What will the impact on the land market if real estate investment expands?

Real estate securitization has enabled real estate to have the aspect of financial instruments that can be compared with other financial instruments on a common measure of yield. Financial commercialization of such real estate is progressing internationally, and the real estate market in Japan is becoming increasingly difficult to ignore trends in international investment funds.

Real estate is a property that requires sustained management. In response to changes in the economic and social situation, it is not possible to expect sufficient utility unless necessary qualitative improvements are made. The sound maintenance and development of real estate will be possible only after the funds necessary for management and quality improvement are properly allocated.

On the other hand, rapid inflow of funds and long-term outflows of funds can cause great disruption to the market, hindering proper land use and causing land prices to rise. In turn, it will have a great impact on people's lives, so it is necessary to pay close attention.

[Securitization]
This refers to transactions in which assets such as real estate and receivables are converted into securities and disposed of, and as securitization progresses, the securitization of assets is promoted.
"Securitization of real estate" refers to a mechanism for issuing securities that support the profits generated by real estate and soliciting funds from investors.

[SPV (Special Purpose Entities)]
Abbreviation of Special Purpose Vehicle. General term for special purpose companies, trusts, and unions organized for the purpose of securitization. A typical example is SPC (Special Purpose Company, Special Purpose Company).

[J-REIT] [J-REIT] J-REIT = Japan Real Estate Investment Trust
This refers to an investment trust that targets real estate, and is a real estate finance product that collects funds from investors when purchasing "real estate" such as offices and distributes the rent and real estate revenue generated from it to investors. In 2000, the Investment Trust Law was revised to enable the securitization of real estate, making it possible to invest in billions of large-scale real estate, which was difficult for individuals to do.

• 2008 White Paper on Land (Ministry of Land, Infrastructure, Transport and Tourism)
• Revised edition of the Real Estate Securitization Guidebook (supervised by the Real Estate Investment Market Development Office, Ministry of Land, Infrastructure, Transport and Tourism, edited by the Real Estate Securitization Study Group) published in 2008.