Japanese investors, plagued by a recession at home and abroad, dramatically reduced their investment in U.S. real estate from $5.1 billion in 1991 to $807 million last year.
And Japanese investors aren't expected to re-enter the U.S. real estate market in large numbers in the near future, given the problems in the Japanese banking industry and stock market, according to Mitch Ellner, managing partner in the Seattle office of Kenneth Leventhal & Co., the Los Angeles-based accounting firm.Since its peak three years ago, the Nikkei stock exchange has lost more than 50 percent of its value.
Last year, most of the Japanese investment into this country was spent on developing properties acquired in previous years. Only 28 percent was spent on new acquisitions. According to the firm's survey, the only bright spot for Japanese investors was affordable housing.
Ellner said the softness in the U.S. real estate market has claimed victims at home as well as abroad. But he said the Japanese were particularly hard hit because they invested when the market was at its peak, focused on the office and hotel sectors where there was significant overbuilding, and were hurt by currency fluctuations.
Japanese banks, which carry large amounts in bad loans, are under pressure to come in line with international lending standards.