Issues in securitization of real estate under the Japanese economy in transition

Abstract

Since the end of the Bubble Economy of 1992, Japan has been suffering from the severest and the longest lasting recession it has experienced in the 50 years following the World War II. In this thesis, the true implications of real estate securitization and its potential contribution to the recovery of the Japanese economy are examined. Repairing real estate market is one of the keys to reversing the economic downtrend. The results show that real estate securitization will contribute significantly to the effort to save the Japanese economy. However, it is important to reform the practices, systems, and infrastructure of the real estate market to carry out successful securitization. The major positive implications of real estate securitization include diversification of financing and investment opportunities, the reduction of liquidity risk of real estate, the expansion of the real estate market by increasing the numbers of transactions, promotion of direct financing rather than indirect, use of widened techniques for managing Japanese individual assets, the identification of new business opportunities, and finally, by promotion of reform of a land evaluation method to meet a global standard.