Last month, construction giant Kajima Corporation announced plans to enter the luxury sector of the real estate market, and has already kicked things off with the acquisition of two properties from British developer Grosvenor. Within the year, the company is also expected to complete the purchase of luxury housing to lease to wealthy domestic and foreign tenants.

Kajima established a subsidiary to manage retail tenant leasing and high-end rental housing. The goal is to leverage Grosvenor’s skill base by creating luxury real estate products that can be sold off to overseas investors, especially at a time when the cheap Yen has made Japanese real estate seem relatively inexpensive. The Yen recently hit a 30-year low against the US dollar, and foreign investors have been eager to snap up the relatively low-priced real estate on offer in Tokyo. 

One of the purchases is Namiki-kan Ginza, a retail building, the other is Cura Ginza, a mixed-use office and retail building. The total purchase price is around 19 billion Yen (approx. US$129 million). The Ginza retail will target tenants such as foreign brands and luxury travel agencies with the aim of appealing to the recovery inbound tourist market. The 13-story mixed-use complex is under construction with the goal of obtaining a Zero Energy Building (ZEB) qualification by its completion in 2023. 

The combined floor space of the two Ginza buildings is approximately 12,560 sqm (135,145 sq.ft), resulting in an acquisition price of around 1.5 million Yen per square meter (US$950/sq.ft), based on building size.

In early 2021, the Recruit Ginza 8 Building was suggested to have sold for around 1.18 million Yen per square meter, based on building size. In mid-2020, the Tiffany Building was sold at a price rumored to have exceeded 5 million Yen per square meter, based on building size.

Source: The Nikkei Shimbun, November 1, 2022.