GE targets $10bn of Japanese RE(2)

General Electric’s real estate investment arm sees continued opportunity in Japan’s property market.

GE Real Estate may purchase up to $10 billion (€6.4 billion) of real estate in Japan this year, according to a Bloomberg report. The firm is looking to capitalize on tighter credit markets and rising borrowing costs.

“The market is very favorable to GE,” head of GE Real Estate Japan Tomoyuki Yoshida said in the report. “Small to medium-sized fund managers have a huge issue about getting financed. They have to dispose of a lot of properties.”

Yoshida said that it planned to buy at least $5 billion of property and real estate asset management companies. The firm had ¥700 billion yen ($7 million; €4.5 billion) of assets in Japan at the start of this year. GE also expects to increase its lending to Japanese property buyers after the exodus of investors in commercial mortgage-backed securities.

Although the real estate market in Japan “is getting weak, meaning growth in property values are slowing down,” Yoshida said, “fundamentals for the real estate industry are still good, the vacancy rate is still under two percent and supply in central Tokyo is limited.”

In January 2008, GE Real Estate partnered with Meiho Enterprise in Japan to launch a new business, “Ecomagination,” to develop environmentally friendly condominiums in the country. The agreement also includes further development of Meiho's “Shellze” building complexes, as well as sales of completed condominiums. GE will also offer its expertise in financial arrangement, making it easier for the Japanese company to secure enterprise funding.