INGPT looks beyond Kiwi’s to Japan

New Zealand listed property group ING Property Trust is setting itself up aggressively to invest in Japanese property.

The trend towards the Japanese property market is a worldwide phenomena with more than $900 million of Japanese property was bought by Australian listed property trusts in the last quarter of 2006.

INGPT managing director Andrew Evans announced yesterday that falling yields and rising prices had made the New Zealand property market less attractive compared with many other world markets.

“The current operating environment in New Zealand has seen property prices continue to increase and yields fall. As a consequence, it is increasingly challenging to acquire quality individual properties or portfolios at prices that will be accretive to unitholders’ returns,” he said.

“After careful consideration and analysis, the board of INGPTML has announced that it is actively investigating international expansion as an additional platform for earnings accretive growth for INGPT unitholders,” Evans said.

Evans stated that Japan currently represents an interesting and attractive market.

Evans said the ING board is considering a number of potential opportunities in this market in conjunction with ING Real Estate’s Tokyo office and expects to provide unitholders with further updates on the progress of these opportunities over coming weeks.

“The Japanese economy is experiencing a steady expansion with robust export-led demand, record industrial production and strong capital investment. This economic recovery is occurring after a long period of flat to negative growth, and it provides an interesting environment for property, with tightening supply and demand dynamics being experienced in a number of sectors.

“This is already evident in the Tokyo office market where published property research shows rentals increasing by an average of 10.5% over the previous year.”

Evans added that Japan also represents one of the most attractive international markets as measured by the spread between interest rates and property yields.

“This enables investors to acquire quality properties at accretive prices due to the relatively low weighted average cost of capital achievable in Japan.

“The combination of the attractive financial returns and strong property market has resulted in increased international activity in the Japanese property market.”

The five central office wards in Tokyo have a 2.93% vacancy rate.

Research reveals that Industrial and retail markets are also beginning to experience the positive impact of Japan‘s improving economy.

On the news, INGPT closed down slightly yesterday at $NZ1.32.

Australian Property Journal