Review of the development of REITs in Japan in recent 40 years.
1) 19851995 years: from the foam of real estate to the securitization of real estate. After the Japanese real estate foam burst in the late 80s, Japan began to explore the securitization of real estate.
2) 19982000: important legislative period. In 1998, Japan promulgated the law on special purpose companies to realize specific asset liquidity (hereinafter referred to as SPC law), and in November 2000, Japan revised the law on securities investment trusts and securities investment legal persons (hereinafter referred to as investment law), marking the birth of Japan REIT (hereinafter referred to as J-REIT). Compared with listed real estate companies, J-REIT is more like a "shell company", which does not employ employees, has full authority to outsource real estate operations, nearly 100% dividends and tax incentives.
3) 20012007: rapid expansion period. In March 2001, the Tokyo Stock Exchange opened the J-REIT market. In July 2003, Japan opened the investment channel of fof fund to J-REIT. From 2005 to 2007, a large number of international funds poured into Japan's J-REIT market. From 2001 to 2007, the market value of J-REIT increased from 0.2 trillion yen to 5.1 trillion yen; Over the same period, the market value of Japanese stocks increased from 275.2 trillion yen to 509.9 trillion yen, and the market value of bonds increased from 552.1 trillion yen to 790.1 trillion yen.
4) 20072011: turbulence and reorganization. From 2007 to 2008, the subprime mortgage crisis affected the J-REIT market. In January 2009, the Japanese government began the legislative preparation for the merger of J-REIT, clarifying the accounting treatment of negative goodwill in the merger process. In September 2009, Japan established the real estate market stability fund and BoJ announced the purchase of J-REIT in October 2010. Since then, the J-REIT market has gradually stabilized. However, the March 2011 earthquake in Japan has hit the real estate market again. From 2007 to 2011, the market value of J-REIT decreased from 5.1 trillion yen to 2.9 trillion yen, the market value of Japanese stocks decreased from 509.9 trillion yen to 265.0 trillion yen, and the market value of Japanese bonds increased from 790.1 trillion yen to 1014.5 trillion yen.
5) 20122019: recovery period under policy guidance; J-REIT opens the era of diversification. In June 2013, Japan passed some amendments such as the financial commodity trading law. In January 2016, BoJ accelerated the pace of purchasing J-REIT. Many J-REITs no longer hold a single real estate and extend to diversified directions such as hotels, logistics and medical care. From 2011 to 2019, the market value of J-REIT increased from 2.9 trillion yen to 16.4 trillion yen, the market value of Japanese stocks increased from 265.0 trillion yen to 675.0 trillion yen, and the market value of Japanese bonds increased from 1014.5 trillion yen to 1170.8 trillion yen.
6) from 2020 to now: V-shaped recovery supported by the central bank after the epidemic. In 2020, the epidemic affected the J-REIT market, and BoJ bought J-REIT again. From 2019 to 2020, the market value of J-REIT decreased from 16.4 trillion yen to 14.4 trillion yen, the market value of Japanese stocks increased from 675.0 trillion yen to 717.3 trillion yen, and the market value of Japanese bonds increased from 1170.8 trillion yen to 1331.3 trillion yen. The reference significance of J-REIT to China. 1) System design: legislation first and strict supervision. At present, the listed trading, closed operation and 90% income distribution proportion of China's REIT are basically close to the international mainstream. J-REIT is strictly regulated. 2) The long-term cost performance is higher than that of stocks and bonds. Compared with stocks and bonds, the average yield of J-REIT is higher, the volatility is lower than the stock market but higher than the bond market, but the development space is less than that of stocks and bonds.
3) development space: Japan may be more than half, and China can expect in the future. According to a comprehensive assessment, Japan and China may have development space of US $50 ~ 300 billion and US $700 ~ 150 billion respectively in the future.
Risk tip: the understanding of REIT development in Japan is not in place.
