Japanese investor firms will be less active in the U.S. real estate market during 1991. And they are changing their regional focus of interest.
That's the conclusion of a recent survey of Japanese firms, conducted by Mead Ventures, a noted research-publication firm. About 42 percent of firms surveyed indicated they will be less active in the U.S. real estate market this year -- up from 6 percent one year ago.
The firms that are actively seeking real properties in the United States have widened their geographic scope of interest. Instead of concentrating their search in a few metropolitan areas -- Honolulu, Los Angeles, New York, for example -- they now seek out properties in small and medium-size towns or rural areas at points throughout the country.
Example: Kirk Grossman is a local attorney and real estate broker in Ventura County, north of Los Angeles. He specializes in representing foreign clients. One of his current clients is a large Tokyo-based firm with six active subsidiaries -- one of which is pursuing a varied portfolio of high-potential real estate investments.
The Japanese firm (which Mr. Grossman prefers not to identify) is actively seeking investments in quality single-family residences in Ventura County. They will purchase the properties, rent them for a period, then sell them at a strategic time when values have appreciated.
The executives of the firm take a very sophisticated approach to their research and strategies in real estate acquisitions, Mr. Grossman said. They have determined that properties in Ventura County now have particularly strong investment appeal. Prices are down (from a couple of years ago) and will probably start to move up in the near future, they believe.
The Ventura County housing market also interests another major Japanese firm -- Marufuji America Inc. It is primarily involved in the development and construction of large real estate projects.
One of the largest of their current projects is a 1,700-acre housing subdivision in Simi Valley, a small town in Ventura County.
The firm plans to build 364 single-family homes on the site. And they are negotiating with the city to build two golf courses. An environmental-impact report and specific plan for the proposed development were recently completed. The firm hopes to have all approvals in hand by August.
In some cases, Japanese firms are teaming up with U.S. firms in purchasing, developing and managing real properties. This was the case with three existing office buildings and sites for two more buildings in Camarillo, another small city in Ventura County.
The property, acquired for a price reportedly over $30 million, is part of the new Camarillo Business Center. The purchasing corporation is a partnership of a local development firm and two Japanese firms -- Bermant Development Co., Kajima Development Corp. and Sebou Real Estate Inc. (Kajima is co-developer of Commerce Place near the Inner Harbor in Baltimore.)
"The Japanese investment and development firms were attracted to this property primarily because of its trophy-case position in the market," said Jeffrey Bermant, president of Bermant Development. "That is, it's in a choice location in a growth area and is attracting quality tenants.
"These Japanese firms are true developers. They look for quality long-term investment and development opportunities in this type of growth locale."
That summarizes the philosophy of most Japanese investors seeking U.S. real properties. They now focus on exceptional long-term potential in location and type of development. And they are not limiting their search to certain metro areas.