Smitten but not shy: Japan eyes overseas property

By Eriko Amaha

SINGAPORE (Reuters) - The purchase of New York's Rockefeller Center nearly two decades ago became synonymous with the folly of Japanese investors rushing into the U.S. property market just before a crash.

Now, with global real estate prices soaring, Japanese firms are looking abroad again -- and Mitsubishi Estate Co. (8802.T: Quote, Profile, Research, Stock Buzz), which bought the Rockefeller Group in the late 1980s, is leading the way with a confidence that markets still have further to go.

Mitsubishi owns a couple of buildings in Paternoster Square where the London Stock Exchange is located and a few projects are in the pipeline, including one in Central Saint Giles, in London's Westend district.

Japan's second-largest property firm also plans to buy foreign property investment management firms to capture investments opportunities around the globe.

"Rents are going up in England and lease contracts are long and that's great for landlords," said Kazuo Sakai, general manager for Mitsubishi Estate's international business department. "Overseas business is our growth area."

In the early 1990s, office prices in some U.S. cities dropped as much as 70 percent, and Japanese firms struggling with a similar property market crash at home had to sell many of their overseas assets.

Mitsubishi Estate was caught short on a $1.3 billion mortgage for Rockefeller Center. The property was later put into bankruptcy.

But undeterred by history, Mitsubishi Estate is one of a band of Japanese companies which have set their eyes on foreign assets as competition and prices heat up at home.  Continued...