On October 12, the Nikkei newspaper reported that Canadian investment firm BentallGreenOak (BGO) plans to invest up to 1 trillion Yen (approx. US$9.5 billion) in Japanese real estate over the next two to three years. The company is anticipating that corporations will start selling off their office and hotel real estate holdings as the global pandemic continues, creating buying opportunities.
Unlike other major markets such as Europe and the US, Japan’s real estate market has, so far, remained relatively unscathed by global turmoil, with properties providing comparatively stable returns. BGO is allocating as much as 80% of their Asian-targeted acquisitions to Japan. They are no stranger to Japan, having purchased 21 assets from Takeda Pharmaceutical Company for over 50 billion Yen (approx. US$473 million at the time) in early 2019.
Other major investment funds have also turned their attention towards Japanese real estate. In September it was announced that Hong Kong-based private equity firm PAG is planning to invest up to 840 billion Yen (approx. US$8 billion) in Japan over the next four years, with a focus on acquiring commercial assets. Brookfield Asset Management opened an office in Tokyo in 2015 to further their growing business in Asia Pacific.
While other international markets embrace the new work-from-home trend, funds are expecting telecommuting to be somewhat limited in Japan due to the small size of Japanese homes and apartments and challenges with IT infrastructure, making office buildings an attractive proposition. While demand for office space is lower, funds are not expecting tenant demand to crash.
Source: The Nikkei Shimbun, October 12, 2020.
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