Japan has become an area of big worry of late. The reason being its extravagant quantitative easing (QE) program. The Bank of Japan has pledged to double its monetary base. The money printing is bigger than even the one unleashed by the US Federal Reserve.

Japan's QE plan has sent asset prices soaring. While the Japanese yen has plunged, the stock markets have been soaring. But the rise in asset prices has been quite uneven.

We came across an interesting article in the Wall Street Journal that highlights this fact. For instance, the shares in real estate investment trusts (REIT) have shot up quite a lot. During the first four months of 2013, the Tokyo Stock Exchange REIT index was up 43.5%. This was higher than the 35.5% gain delivered by the broader index. Among others, the central bank of Japan was a buyer of listed property investments.

Now here is the worrying part. While REIT prices have soared, the underlying property prices haven't moved much. The activity in the physical property market has been lacklustre. Prime office vacancy rates are still hovering around 8%. Apartment prices in Tokyo are still 22.8% below their level in 2000. As per the article, the sector is trading at a hefty premium to the underlying property assets. How will that gap close? Either property prices will have to rise. Or REIT prices will have to tumble. Certainly, a very risky environment for investors!