At Home in Japan
01/07/2005 12:00 am EST
Despite the bull market in real estate in the US, Japanese real estate has seen a bear market since 1990. Elliott Gue, editor of Wall Street Winners and Trading Floor Pro, thinks the tide may be turning and for his top pick, selects Japan's largest homebuilder.
"Sekisui House (SKHSY Other OTC) builds, leases, and sells condominiums and homes in Japan. The Japanese real estate market was in a bear market from 1990 up until last year. This vicious cycle was the direct result of the pricking of a massive property and real estate bubble in back in the 80's. Consider that by 1990, the average home cost nearly 40 times the average annual Japanese income- a lifetime's worth of earnings.
"But real estate in Japan is coming back and just over a year ago, according to surveys undertaken by the Japan Real Estate Institute, property prices for Tokyo's most expensive real estate started ticking higher for the first time in nearly 15 years. Since then, other categories of real estate around Japan have shown significant pricing improvement.
"As the nation's largest homebuilder, Sekisui House sits at the heart of this trend and stands to benefit from better pricing as it sells new homes. But, this is the early stages of a new bull market for Japanese real estate and the stock is still trading at a tiny fraction of the valuations it fetched back in the early and mid-1990s. Adding to the investment case, Sekisui has little debt and sports a nice 1.5% dividend yield."