The third Japanese exchange-traded fund to launch this year focusing on real estate, and second to trade on the Tokyo Stock Exchange (TSE), opened on Tuesday.

It follows the introduction by Northern Trust's NETS ETF family of its Tokyo Stock Exchange REIT Index Fund (NYSEArca: JRE) for the U.S. market. Japanese REITs represent 10% of the global REIT marketplace.

While JRE is the only Japanese REIT ETF available on a U.S. exchange, the new TSE-listed REIT is the second for Japanese investors to be listed locally in Tokyo. It has been launched by Nikko Asset Management, fund management rival of Nomura Asset Management Co., which launched the first locally listed Japanese REIT ETF in September, the same time that JRE launched in the U.S. 

The Japanese REIT ETFs have launched during a period of time that many market watchers have pegged as a bottom for the Japanese real estate market. However, predictions about a trough being reached in the Japanese REIT market were being made before the worst of the credit crisis roiled the markets from mid-September through the present.

The TSE REIT Index, on which the ETFs are all based, dropped 60% off its starting year value, as of Oct. 16, and its plummet increased between the mid-September Lehman Brothers' bankruptcy and Oct. 16. The index has dropped 73% since a peak reached in May 2007. For the past year, the Japanese REIT market is down 49%, according to AME Global REIT Indexes, which is an even larger drop than markets in which the subprime credit crisis had a direct influence on performance (34% in U.S.; 33% in the U.K.).

The Lehman Brothers bankruptcy, and some of the worst weeks in recent market history, coincided with the launch of Nomura's Japanese REIT fund, and came only two weeks after JRE launched in the U.S., on Sept. 3. The TSE REIT Index reached an all-time low on Oct. 10. Some Japanese REIT stocks, in particular, have been hit hard by the recent poor real estate performance. New City Residence Investment Corp. filed for bankruptcy last week and will soon be delisted by the TSE. It was the first Japanese REIT to declare bankruptcy this year.

JRE's net asset value has dropped 32.94% in the last one month, through Oct. 17, according to Morningstar, though in the past week, as the markets settled down, it was up 4.36%.  It has yet to amass assets from investors, with a total of $3 million since its launch, according to Morningstar data.

NETS officials have always said that the fund was not designed to time a market bottom in Japanese real estate, or to amass short-term assets. NETS launched the fund in September to complement its existing Japanese equity ETF, TOPIX Index Fund (NYSEArca: TYI), and take advantage of its existing relationship with the Tokyo Stock Exchange (see story here).