If you've missed riding the Nikkei rally so far, don't worry says Goldman Sachs – real estate stocks are still undervalued and a buy.
"Speaking with investors around the world, everyone's looking for laggard plays in Japan because the market's doubled from its lows," Goldman Sachs' chief Japan strategist Kathy Matsui told CNBC. "One that has really lagged heavily is real estate, despite pretty decent fundamentals – vacancy rates are at multi-year lows, rents are going up [and there is] no commercial supply," she said.
Japan's benchmark stock index, and, to a lesser extent the broader Topix index, have been rising for two years, ever since Prime Minister Shinzo Abe's return to power.
But the momentum escalated in April when global investors finally jumped on board and began buying Japanese cash equities, pushing the Nikkei to fifteen year highs and on its longest winning streak for 27 years.
One notable laggard has been Japan's unloved real estate stocks. The Topix real estate sector index has risen by just 15 percent over the past year, compared to the broader index's nearly 40 percent gain.
Loans to the real estate industry rose to a record 63.7 trillion yen ($515 billion) in the first quarter of 2015, "signifying that real estate prices could rise further," Deutsche Bank property sector stock analyst Yoji Otani said in a research note last week. "We estimate the sector's laggard status will very likely disappear," he said.