Japanese Investors Return to Overseas Real Estate With Lessons Learned From the 1990s

livemint.com:

TOKYO—Big Japanese investors stumbled disastrously into the U.S. commercial real-estate market in the late 1980s, when they bought high-profile properties like New York’s Rockefeller Center not long before the market fell hard. Now some Japanese institutional investors and real-estate companies are back—but this time it isn’t about flaunting trophy purchases.

It is about diversifying portfolios for the long term and getting good bargains while the market is slumping. Japanese investors in 2023 put $3.7 billion into commercial real estate in the Americas as of Dec. 11, the largest volume since 2016, according to data provider MSCI Real Assets.

“There may be people who need to sell because of their financial straits, which would provide a chance to make a deal at a reasonable price," said Makoto Sakuma, a researcher at NLI Research Institute, which is affiliated with Nippon Life Insurance. “Because real estate is a long-term investment, Japanese investors should look for opportunities when the market is cooling down rather than when it is heating up." In June, Tokyo-based real-estate company Mori Trust said it invested in 245 Park Avenue, an office building next to Grand Central Terminal in Manhattan, which is jointly owned by SL Green Realty. Mori Trust said it was spending ¥100 billion, equivalent to $700 million, for its share in the building plus renovations.

A Mori Trust representative said the company used its own funds for the investment. “In the current U.S. financing environment, a player like us who does not require financing from a third party has competitive advantage in the U.S.