Singapore Institutional Investors Target Japan Properties
SINGAPORE – Institutional investors from Asia Pacific, particularly Singapore, are attracted to Japan’s property market thanks to the weaker yen and lower interest rates, reported The South China Morning Post (SCMP) on Wednesday morning (9 November, SGT).
“Virtually every client I’ve spoken to here in Singapore in the past two months is targeting the Japanese market,” said MSCI’s Head of real assets research for Asia Pacific, Ben Chow.
He said during an online conference by MSCI Real Assets that borrowing costs are low in Japan and the yen had plunged to a 30-year low against the US dollar.
One Singapore-based institutional investor that has been active in the Japanese property market is Q Investment Partners (QIP). With a US$40 million war chest raised mainly from investors in Singapore & Hong Kong, the private equity company purchased 3 multifamily assets in Osaka and Nagoya, said its Chief Executive Peter Young. The assets contain 207 units and have an occupancy of around 90 percent occupancy as of June.
“We see a lot of opportunities in Japan. The US$40 million investment is the start, and we anticipate growing that north of US$100 million,” Young said in an online interview.
“Our target is to build a portfolio… that’s really focused on the four major cities in Japan of Tokyo, Nagoya, Fukuoka and Osaka.”
Similarly, real estate consultancy CBRE revealed that Japan is presently considered the “number one market” for property investors.
“If we use the CBRE capital markets’ business in Japan, we have never been busier,” said CBRE’s Managing Director for Asia Crystal Palar
“We were busy across asset classes, retail, hotels, office and industrial… [with] deals from US$50 million up to… some billion dollar(s). Because the Japan market offers that positive spread, we expect strong trading conditions to remain going forward.”
On the other hand, even though the Chinese yuan is also weak, MSCI’s Chow said China’s US$2 trillion property market remains “in the doldrums”.
“[It’s] is one market where plenty of assets are up for grabs, but there are few takers,” he explained.
“Investors from North America and Europe appear to be staying away for the time being, [while] those from Singapore and Hong Kong have been… picking up choice assets amid the sell off. Only time will tell which strategy will pay off in the long run,” he added.