Arab investment in Japanese real estate
Abu Dhabi state investor Mubadala, one of the largest sovereign wealth funds worldwide, has formed a joint venture with Proprium Capital Partners and Manulife Investment Management to develop a $600 million property portfolio in Japan. Asset manager Samurai Capital — which has experience in managing multi-family assets in Japan— will also be a partner in this venture. Thomas Wong, partner of Proprium Capital Partners, makes an interesting argument for investing in Japanese residential real estate: “We believe that these properties will outperform the market and generate positive returns for our investors. Through the collaboration between Proprium and our co-investors, we look forward to scaling up in the Japan multifamily sector.” The portfolio will target urban dwellers in Tokyo and Osaka, and these residential dwellings will also offer convenient access to railway stations and nearby neighborhood amenities.
A balanced assessment of the Japanese real estate market
Mitsubishi UFJ Trust and Banking Corporation has published two new real estate market research reports. The reports contain many useful data and are fully accessible (see links on the attached webpage). Here are some findings for Japan: Investors’ willingness to invest in real estate is weakening, especially in the U.S. and Europe. Japan is experiencing a weakening, too, though to a much lesser extent. Also different from Europe and the U.S., lenders’ lending attitudes in Japan generally remain favorable. The number of real estate asset management companies that expect “inflows of investment funds” and “declining yields” as changes that will occur in the real estate investment market over the next year has declined significantly. There is upward pressure on cap rates, and foreign investors, in particular, who have dominated the market, are showing a cautious attitude. Investors who have been looking for opportunities to acquire properties may see this as an expansion of opportunities to acquire properties at yields that suit their needs.
Chip investments to cause property deals
The Japanese government is subsidizing new semiconductor plants. These investments are also supporting fresh real estate investments in rather neglected regions like Kyushu and Hokkaido. According to the South China Morning Post report, the Hongkong-based investor Gaw Capital Partners has noticed this trend. Gaw already manages 3.8 billion dollar of property assets in Japan and now looks at the western island of Kyushu where the Taiwanese chip manufacturer TSMC is building an 8 billion dollar plant in Kumamoto prefecture in collaboration with Sony, to be completed later this decade. The Taiwanese company is planning a second factory in Kumamoto for completion in the late 2020s, Nikkan Kogyo reported in February. Real estate prices in Kumamoto have already gone up.
Japan hotels draw foreign investors at scale unseen in years
Foreign investors are discovering a new target for their real estate asset purchases in Japan. Overseas buyers were responsible for 47% of the 494.3 billion yen ($3.7 billion) invested in hotel deals that closed in the past 12 months — the highest proportion since 2014, according to data at the end of March from research firm MSCI Real Assets. The tourism rebound, low interest rates and the weak yen are fueling interest.
Tokyo Metropolitan Area residential land prices increase for 11th consecutive quarter
Another confirmation regarding the resilience of Japanese real estate: Nomura Real Estate Solutions has announced the results of a survey on “residential land price trends” in the Tokyo metropolitan area as of April 1, 2023. The average rate of change for the January-March quarter of 2023 for residential areas in the Tokyo metropolitan area was 0.7% (previous survey: 0.7%), the 11th consecutive quarter of positive growth. By area, all areas posted positive figures for the 11th consecutive quarter. Tokyo (23 wards) 1.1% (1.3%), Tokyo (overall) 0.9% (0.5%), Kanagawa 0.5% (0.3%), Saitama 0.6% (0.5%), Chiba 0.5% (0.7%).
Sapporo grows its relevance in real estate
A connection to the Shinkansen network usually increases the real estate value in cities that become stops of the new line. You can see such a development in real-time now in Hokkaido: Sapporo Station is undergoing a major transformation in conjunction with the extension of the Shinkansen bullet train. Completion of the last section from Shin-Hakodate to the last stop Sapporo, about 211 kilometers, is scheduled for 2030. The “future shape” of the station was announced by a study group including the City of Sapporo and the Ministry of Land, Infrastructure, Transport, and Tourism. The new Shinkansen station building will be built on Sosegawa Dori, with a 245-meter-high, glass-walled skyscraper in front of it. The bus terminal will also undergo a major transformation. As a result, real estate prices in the area are expected to rise.
Care homes are an attractive and popular investment
AXA IM Alts, an arm of the French insurance company AXA, has made its first investment in the Japanese care home market with a 153 million euro portfolio acquisition. The investor bought a portfolio of 15 nursing homes for 21.9 billion yen, becoming the latest global investor to acquire senior living assets in the country with Asia’s oldest population. The portfolio totals over 800 beds in Tokyo, Osaka, and Aichi, with 14 of the 15 properties constructed after 2013.
Upward price trend for used Tokyo apartments
The average asking price of a 70 square meters second-hand apartment in Tokyo’s 23 wards rose in June for 24 continouus months compared to the previous month to now 68.4 million yen (503,000 euros). In the Tokyo metropolitan area, the average asking price increased in June for the 14th month in a row to 47.05 million yen (346,000 euros).
Nomura establishes real estate asset manager
Japan’s largest investment bank Nomura Holdings and its subsidiary Nomura Real Estate Holdings are establishing a new asset management company. Named Nomura Real Asset Investment, it plans to offer various types of funds for global institutional investors and wealthy individual investors in the traditional sectors (office, rental housing, retail facilities, and logistics facilities) in the first few years.
Japan’s property market booming
More than 10 companies submitted proposals to buy the government-held portion of the Otemachi Place complex in Tokyo before the deadline Thursday. The price could top the Japanese record for a finished high-rise building, set by last year’s estimated 300 billion yen sale of ad agency Dentsu’s headquarters in Tokyo. The bidding war confirms that a weak currency and ultralow interest rates have drawn both foreign and domestic investors eyeing healthy returns. The final decision about the buyer will be made in September.