Foreign investors return to Japan’s property market

Roppongi Arents. Purchased by Grosvenor from Japan Tobacco in October 2011.

According to the Mainichi Shimbun, Foreign investors and foreign capital investment corporations are showing enthusiasm for Japan’s real estate market. European and American property and investment companies are continuing to purchase residential and commercial buildings, while a major US bank has set forth on establishing a REIT in Japan.

The background to this renewed vigor is the outflow of funds in Europe due to the European debt crisis, and a general feeling that the real estate market in Japan has bottomed out. Experts are anticipating that the long-stagnating real estate market is finally reaching a turning point.


Grosvenor Asia Pacific Limited, part of the property development group from England, purchased two high-grade apartment buildings between October 2011, and January 2012. The two buildings are “The Mark Minami-Azabu” and “Roppongi Arents” in the popular expatriate and business area of Minato-ku. A representative said they felt the Japanese market had reached the bottom, and were considering more purchases in the future.

Angelo Gordon

NY-based Angelo Gordon & Co. acquired part of an office building in Chiyoda-ku along with Orix Real Estate, and also purchased Aoyama Bell Commons near Gaienmae Station.


Japanese property manager Kenedix, who has a large number of foreign clients, are planning to acquire Shinsei Bank’s former headquarters in Chiyoda-ku.

Goldman Sachs

Goldman Sachs are preparing to set up a private REIT and have so far secured three properties for 25 billion Yen. It aims to increase its assets to 300 billion Yen in five years.

Have we reached the bottom?

Commercial rents in central Tokyo are at 10 year lows. Although the supply of new office buildings has continued up to this point, from 2013 the supply levels are expected to drop, and the market is expected to bottom out. As the European debt crisis drags out, inflows of capital from Europe and America are expected to continue, pushing prices up.

Eriko Kato, head of the Private Investment Consultancy division of the Sumitomo Mitsui Trust Research Institute, believes that Japanese real estate presents a low risk, similar to the Yen and government bonds. Chief Property Analyst at Mizuho Securities, Takashi Ishizawa, said that the worsening conditions in Europe are causing foreign investors to see the value in Japan’s stable investment climate.

Source: The Mainichi Shimbun, August 8, 2012.

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