This month, M&G Real Estate (the real estate fund manager for M&G Investments, a UK company that manages 33.5 billion pounds in assets) made a major purchase of Japanese real estate. It bought 12 residential properties, which are currently tenanted at nearly 100%. It bought these buildings in Fukuoka, Kyoto, Osaka, and the nation’s capital, Tokyo. It purchased properties in some of the most expensive parts of each city/metropolis. Prior to this purchase, it already had 23 buildings in Japan, which are composed of 1,700 units, for a grand total of 67,000 square meters of floorspace. These included buildings from another recent purchase. Just two months ago, in October, M&G Real Estate had bought three residential buildings. These are located in Kobe and Nagoya. It was a $57 million deal, and that was M&G Real Estate’s fifth acquisition in Japan for its residential portfolio. M&G Real Estate has been active buying real estate in the Japanese market for about five years now.
To quote Richard van der Berg, who is familiar with the details of the deals:
“This is one of the largest portfolios of residential properties that we’ve acquired and an opportunity for M&G to increase our Japanese exposure to 22% and residential exposure to 10%.”
“We continue to be positive about the fundamentals in targeted areas in Japan, where urbanisation trends remain strong.”
“Coupled with high capital barriers for purchase and the high level of construction cost, we anticipate a moderate supply for new homes in the market, which will sustain the high demand for rental homes.”
Other companies that have recently invested in the Japanese real estate market include Allianz Real Estate. In October, they invested $1.2 billion into their multi-family residential portfolio. Bayerische Versorgungskammer (BVK), a German company, invested in 1,000 residential units in August. The units are located in Osaka.
The Japanese company Sumitomo Mitsui Trust Bank has gone into a joint venture with Aberdeen Standard Investments to invest in residential property. Aberdeen Standard Investments is an asset manager in the UK. The two companies entered into the deal in June.