*Tokyo based equity researcher The Lexington Group sees rising demand and sinking interest rates as the perfect catalyst to enter the American Property Market. Housing developments and shopping centres are being planned.
CHIYODA-KU, Japan --* Due to the surge in demand for new homes in the United States and low interest rates The Lexington Group’s board of directors has given preliminary approval the commission of a Real Estate Investment Trust in early 2014. Home prices in major American cities have risen on average by more than 12 percent in the last year, the largest gains since 2006 prior to the subprime crisis.
The recent spike in house prices can be linked to the wider economic recovery in the states, there are more buyers in the market and home inventory has dropped substantially. Inventories declined because the housing construction industry was largely stagnant during the recession. The Lexington Group´s first planned project is to build a development of 125 homes, although a final decision on location has not been reached. A number of other projects are also being developed. The financing for these homes will come from the newly planned Investment Trust due to be signed off in October 2013. According to CEO at The Lexington Group, Mr Itsuki Nakamura the trust will be open to all investors worldwide, with a planned minimum buy in of $50,000.
“I am currently researching locations for our real estate development. Certainly the development will be within 30 miles of a major city; at the top of my list is Seattle, Washington. Economically the city is doing great, as the job market grows, so does the demand for homes,” said CEO Itsuki Nakamura.
Mr Itsuki Nakamura further stated, “I believe that a diversified portfolio of properties will maximize profits for our investors. Our first project will be a real estate development, but we have a number of projects in the pipeline. Retail spaces are also under consideration also due to their huge profit potential. Also we are planning a chain of luxury shopping centres, which we project to generate on average $1,000 per square foot.”
Real Estate Investment Trusts were designed for smaller private investors to enter the income generating property market as opposed to only the wealthy. They are required to pay out 90% of profit as dividends to shareholders and are required to invest 75% of its assets in real estate. Real Estate Investment trusts do not pay corporate taxes.
In closing, CEO Mr Itsuki Nakamura said “This is one of a range of new ideas we are planning to implement over the next two years as The Lexington Group grows and expands.”