by Noriyuki Morimoto
Investing in stocks and bonds is not the same as buying securities. Securities as investment assets are instruments that represent property rights, and their investment value lies in the property rights themselves. The fact that property rights take the form of securities is merely a technical matter designed to facilitate transferability.
From the side of property rights, the significance of securities lies in the holder’s ability to assert rights against third parties. Legally, if property rights cannot be asserted against third parties, the investment asset cannot be established. Conversely, the ease of asserting rights against third parties determines the transferability of securities.
In real estate investment, ownership of real estate is necessary to assert rights related to the property. The system of registering rights related to real estate exists for this purpose. In the first place, the use of property for rental purposes is itself based on the premise of ownership.
Investing in real estate means converting it into an income-generating asset, i.e., creating a rental system, and securing the right to receive rent from that system. Throughout this entire process, ownership of the real estate is a prerequisite. This is because ownership is the simplest and most effective method for real estate investment.
Therefore, if it is possible to separate the management and operation of real estate from the property rights associated with it, there is no need to own the real estate itself. This is called the financialization of real estate. While the ownership of real estate, the management and operation of real estate, and the distribution of income generated from real estate are interrelated, it is important that they can be treated as independent from each other.
For real estate investment, the most important aspect is the distribution of income generated from the property. Real estate management can be entrusted to professionals. This is the basis for the establishment of real estate investment asset management as an industry. Real estate investment is not about owning real estate.
[Category /Real-Estate Investment]
Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.