Hong Kong equity firm to invest up to US$8 billion in Japanese real estate, tenants face new screening criteria, minpaku operator closes down, and a major landlord sees occupancy rates fall further. Below is a quick weekly summary of some of the recent goings-on in the Japanese real estate market.

PAG may invest up to US$8 billion in Japanese real estate

PAG, a Hong Kong-based private equity firm, plans to invest up to 840 billion Yen (around US$8 billion) in Japanese real estate over the next four years. The firm is anticipating a sell-off of prime assets by corporations and banks amidst the pandemic, and is focused on acquiring office buildings rather than residential. Compared to the US and Europe, however, the impact of the pandemic on Japan’s real estate market has been somewhat limited.

Tenant screening criteria changes

Real estate aggregation site LIFULL Home’s conducted a survey of 290 rental brokerage and management companies in August to find out what criteria they use to judge applications from potential tenants. Before the pandemic, the most important criteria were the tenant’s income, appearance/character, and age. More recently, the top criteria have shifted to income, place of employment, and type of occupation.

Minpaku operator closes shop, owes 4 billion Yen

An Osaka-based minpaku (short-term accommodation) operator has closed up shop leaving creditors owed 4 billion Yen (approx. 38 million USD). The company alleged to manage 900 rooms across the country, and actively appealed investors with promises of high returns. According to a report by ABC TV, some of the thousands of investors were promised guaranteed yields of 20% after attending sales seminars. Investors could log-on to the company’s website to check the rental status of buildings they had invested in, but the Asahi Shimbun newspaper reported that these investment reports were falsified with some of the buildings listed not even being operated.

LeoPalace occupancy rate falls for 5th month

The occupancy rate for apartments operated by LeoPalace21 was 78.2% in August, recording the fifth consecutive month of decline. This is the lowest level since April 2018 when the company’s construction defect scandal came to light. The pandemic has caused a drop in the number of new corporate leases as companies hold off on transferring staff, while new foreign tenants are still affected by travel restrictions. The company manages 574,000 apartments nationwide.

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