A steady stream of investments has been making their way into Japan, all of them coming from international property funds. These investment values have been a recent surprise, as Japan has not been a destination for property investment in well over a decade.
Based on Nikkei Asian Review's report, Japan has experienced investments in the figures of about 1.3 trillion yen in 2017. The record-setting mark was last established in 2007 at 1.46 trillion yen. The current surge had been attributed to favorable market conditions which attracted the interest of foreign investors. This was the comment of Koji Naito, director of Japan capital markets research at JLL.
Such is the atmosphere of Japan's real estate investment grade that funds have actively sought companies based on real estate portfolios. This is a new direction; a departure from funds traditionally hunting for properties. Real estate funding for companies with successful portfolios is, in the view of these companies, also saving them time and the trouble of seeking up-and-coming companies which have a good record of blossoming.
An example of a Japanese firm with a robust portfolio is the Government Pension Investment Fund, which recently hired CBRE Global Investment Partners. Pensions and Investments Online reported the pension fund announcing the partnership in its annual report released last July.
This mandate is the pension fund's first for real estate, citing its recognition of the rise of Japanese real estate investments. It is also a first for the pension fund since they issued an RFP in April 2017. This was for "multimanager alternative strategies for real estate, private equity, and infrastructure," among other things.
The fund has since then created an allocation for domestic real estate fund-of-funds and awarded it to the investment firm for handling. It has also created three mandates for infrastructure fund-of-funds.
Not all Japanese firms are comfortable being under the limelight due to their investment performance. Most of them are beginning to sell off their properties. Some of them are even buying back their own investment units, all in the name of defending their shares from global purchases. This is evident in Nippon Telegraph and Telephone and Orix' strategies of taking over bids to create "wholly owned subsidiaries."
It is understandable that some companies and officials fear the encroaching globalization. However, from a financial perspective, investments are good for the economy and globalization's good points outweigh the bad.
