GIC Mulls Sale Of Tokyo Office Bldg

Singapore’s GIC Mulls Sale Of Tokyo Office Bldg For Over US$2bil

JAPAN – Sources revealed that GIC, the sovereign wealth fund of Singapore, is looking to divest a premium office tower in one of Tokyo’s central business districts and has approached would-be buyers, reported Bloomberg on Tuesday afternoon (5 September, SGT).

Known as the Shiodome City Center, the top-grade 43-storey office building could command a price of at least US$2 billion, revealed two of the sources. A sale of this magnitude would make it one of the priciest office properties ever sold in Japan.

However, the GIC’s planned sale comes amidst an oversupply of new office space in Japan’s capital, with several office towers expected to be completed in the next two years. This could potentially soften demand for large office assets. Across the world, the appetite for office properties has declined due to historically high vacancy levels in major cities.

GIC has engaged Jones Lang LaSalle (JLL) and Mitsubishi UFJ Trust to advise on the office transaction, said the sources. Two of them also disclosed that Singapore’s sovereign wealth fund intends to receive bids by the end of the year and complete the sale of the commercial property by early-2024. But because the talks are still at an early stage, it’s still possible that GIC could change its mind and not proceed with the office divestment.

Notably, high-end office buildings in Tokyo rarely change hands, as local builders tend to keep the office assets they construct.

Still, there had been at least two deals involving office towers with a similar grade and size over the past two years. Dentsu Group’s HQ was divested for about 300 billion yen (S$2.8 billion), while Japan’s Finance Ministry sold its stake in Otemachi Place for 436 billion yen. Both prized office properties were acquired by Japanese consortiums.

Furthermore, the office market of Japan’s capital has performed better than many other major office markets across the globe, as the work from home trend has not persisted in the country. While an office vacancy rate of 6.46 percent is relatively high for Tokyo, it is well below rates seen in other cities, such as New York and Hong Kong.

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