Industry experts reported on Tuesday that the Japanese investors are now testing the U.S. commercial real estate market after a 13-year hiatus as they seek higher returns than they can get in their own reviving economy.

According to a 1997 Ernst & Young report, from 1985 through 1993, Japanese investors went on a U.S. real estate buying binge, pouring $77.3 billion into the United States. However, when the bottom dropped out of the U.S. real estate market in the early 1990s, Japanese investors lost billions.

The Japanese investors, this time, aren't looking to directly own the real estate and hold large mortgages on their companies' balance sheets, said Mark Grinis, global real estate partner at Ernst & Young. Instead, Japanese investors are putting money in funds that will own the properties.

On the other hand, Cushman & Wakefield's Latham said that the fund approach is also appealing to some of the Japanese real estate companies that never quit the U.S. market. At least one real estate expert expects Japanese investors to follow the pattern set by their Middle Eastern counterparts, and become next year's big players in U.S. real estate.

By M. Sese
http://realestatepress.org