- In the current market regime where interest rates are likely to stay elevated for longer, Japan remains attractive as one of the few countries where properties continue to offer a positive yield-spread (asset yields in comparison to borrowing costs).
- Despite our view of a potential adjustment to the yield curve control (YCC) policy in the later part of the year, which might create some short-term volatility in the Japanese market, any rate increases by the Bank of Japan (BoJ) are likely to take place gradually and in a controlled manner, while remaining significantly lower than many other major economies. This also means that REITs looking to gain exposure to Japanese real estate will be able to finance acquisitions with cheaper JPY debt.
- - Read this at SGinvestors.io -
- In view of our recent upgrade of Japanese equities from Neutral to Overweight in our tactical asset allocation, we take a deep dive into the nuances of the various sub-sectors in the Japanese real estate market in search of potential bottom-up investment opportunities using S-REITs as an investment vehicle.
- - Read this at SGinvestors.io -
- We also like the hospitality sub-sector in the near term as the travel recovery continues, but remain watchful of recessionary risks and longer-term headwinds.
- The office sub-sector is our least preferred sub-sector as rental corrections and vacancies persist, though soft market conditions are likely to bottom out later this year.
Selected S-REITs with exposure to Japan
- Read more at SGinvestors.io.
Above is the excerpt from report by OCBC Investment Research.
Clients of OCBC Securities may be the first to access the full report in PDF @ https://www.iocbc.com/.
OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-06-13
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