Editor’s Note
This article introduces J-REITs as an accessible vehicle for diversifying into Japanese real estate, highlighting their simplified investment structure compared to direct property ownership.
“J-REITs” refer to listed investment trusts that invest in Japanese real estate. Their biggest appeal is that they allow you to become a part-owner much more easily than direct real estate investment.
In terms of mechanism, professionals use funds pooled from investors to purchase and manage real estate, distributing rental income and capital gains. This eliminates the hassle of property selection and management. Moreover, since they operate with multiple properties rather than concentrating on a single one, buying just one J-REIT allows for diversification.
Additionally, many can be purchased for around 100,000 yen per unit, making it possible to start with a small amount. Being listed investment trusts, they can be bought and sold freely like stocks. High distribution yields are another reason for their popularity. By regulation, J-REITs must distribute over 90% of profits to investors, resulting in a high average market yield of about 4.6% (as of end-September 2025).
Their resilience to inflation is also noteworthy. Since they invest in tangible real estate, price appreciation can be expected during inflationary periods. Furthermore, J-REITs can be purchased within NISA’s growth investment allowance, allowing for tax-free real estate investment.
Room for growth exists against the backdrop of rent increases due to inflation!
However, J-REITs had been in a long-term downtrend since 2021. This trend bottomed out at the beginning of 2025, leading to renewed attention. As seen in the chart of the Tokyo Stock Exchange REIT Index, it rose by about 15% from the beginning of 2025 to September.
The question remains whether they will continue to rise, but J-REIT professionals are bullish, expecting “further medium-to-long-term appreciation.” There are several reasons, with a major basis being the strong sense of undervaluation. Mr. Takashi Nakamura of Tokai Tokyo Intelligence Lab focuses on the “NAV (Net Asset Value) Ratio” of the TSE REIT Index. This is an indicator measuring undervaluation, similar to PBR (Price-to-Book Ratio) for stocks, where a ratio below 1 is considered undervalued.
Furthermore, Mr. Daisuke Seki of Ivy Research predicts, “J-REITs are likely to maintain high yields due to continued rent increases. With US long-term interest rates trending downward, inflows of foreign capital seeking high yields are also anticipated.”
Additionally, there is potential for investment trusts incorporating J-REITs to be included as eligible products in the government’s proposed “Platinum NISA” for seniors, raising expectations.