Japan Cautions Companies on Overseas Investments

Japan’s Ministry of Finance is pressuring Japanese life insurance companies to slow investment in overseas real estate, industry sources say, quietly telling the insurers to act cautiously and to avoid making high-profile real estate deals abroad.

The ministry has denied that it issued a particular warning.

Foreign property purchases by Japanese life insurers have led to criticism in some countries, particularly the United States, where some Americans object to well-known buildings shifting into foreign hands. There is also concern in some countries that Japanese purchases could force real estate prices up.

The ministry is concerned that this criticism could lead to trade friction for Japan, industry analysts said. The warning is an attempt to make Japanese insurers look less aggressive and conspicuous in their foreign investment.

“The MOF (Ministry of Finance) is really sensitive about overseas real estate investment by us at present,” said an assistant manager of international business and planning at one major life insurer. “The MOF advice does not mean to stop buying real estate overseas. They just expect us not to take high-profile action there but instead to act in a quiet way.”

But a ministry official said: “We did not give them a particular warning. We have discussions with them in cases where we receive information of planned building purchases. We just advise them to be flexible.”

The value of overseas real estate held by the Japanese life insurers totaled $6.9 billion (1 trillion yen) at the end of June, 1989.