Samty Residential Investment Corporation

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Investment Environment

Demographics and residential rental market trends

Growth rate trend of total households is similar to that of Tokyo's 23 wards

The growth rate of households from 2000 to 2016 was around 23.0% in Tokyo's 23 wards and around 20.1% for all major regional cities, indicating a very similar increase.

Growth rate of households (2000 = 100)

Stable surplus inflows of population similar to Tokyo's 23 wards

Since 2000, major regional cities overall have seen stable surplus inflows of population just like Tokyo's 23 wards.

Ratio of surplus inflows

Source: Prepared by Sumitomo Mitsui Trust Research Institute based on "Basic Resident Registers" Ministry of Internal Affairs and Communications.

Characteristics of residential investments in major regional cities by listed J-REITs

Occupancy rate generally over 95%

The occupancy rate of residential properties held by listed J-REITs generally averaged over 95%, with some variation based on the city. Some cities have even exceeded the level seen in Tokyo's 23 wards. Volatility in the occupancy rate has been around 1 to 3 percentage points, which is generally on a par with Tokyo's 23 wards.

Range of occupancy rate (2011 to 1H 2014)

Source: Prepared by Sumitomo Mitsui Trust Research Institute Co., Ltd. based on the publicly disclosed data from listed J-REITs.

The variation coefficient has been less than 2.0% in Tokyo's 23 wards

The variation coefficient of rents in major regional cities has generally been within 2.0 percentage points of Tokyo's 23 wards, with the exception of the city of Sendai, which has seen rising rents given demand produced from the earthquake reconstruction work and despite a variation seen in certain cities that is attributed to their economic cycle.

Variation coefficient of rents (2011 to 2Q 2014)

Source: Prepared by Sumitomo Mitsui Trust Research Institute Co., Ltd. based on the rent index following the example of closed contracts for lease condominiums developed jointly by At Home Co., Ltd. and Sumitomo Mitsui Trust Research Institute Co., Ltd.

Over 60% of listed J-REITs residential property investments are concentrated in Tokyo.

Over 60% of residential property investments by existing listed J-REITs (based on number of buildings) are concentrated in Tokyo. This shows that compared to Tokyo listed J-REITs are focusing less on investing in residential properties in major regional cities.

Investments in residential properties by listed J-REITs (most recent reporting period)

Source: Prepared by the asset management company quoting from the ARES J-REIT Property Database.
Note: Total residential properties' ownership (1,678 buildings) of listed J-REITs in the report as of September 28, 2017.

Income return of properties owned by listed J-REITs
1% in Tokyo's 23 wards and 0.2% risk (standard deviation)

The income return of major regional cities in terms of residential properties owned by listed J-REITs is around 1 percentage point higher than Tokyo's 23 wards. The makeup of residential properties owned by listed J-REITs shows that while the return is higher for major regional cities, the risk (standard deviation) exceeds that of Tokyo's 23 wards, but only by around 0.2%.

Income return of residential properties owned by listed J-REITs

Source: Prepared by Sumitomo Mitsui Trust Reserch Institute Co., Ltd. based on the data of listed J-REITs.
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