With cross-border investment about to hit at least $2.1 billion in 2019, the number of big foreign companies availing of Japan's residential property market increased by half from 2018 as the world's funds need a safe place because of trade uncertainties.
Hideaki Suzuki, director and head of research and consulting at Japan's real-estate services company Cushman & Wakefield, confirmed this and said he believes that the interest of foreign investors in Japanese property will grow more.
He pointed out that there is a large group of investors interested in the Japanese residential market and they are adding this segment in their investment strategy causing it to rise by 50 percent.
Suzuki stressed that when you look at the geopolitical risks, Japan is now a haven for investors.
Real Capital Analytics, which tracks property deals worth at least $10 million, said that foreign investment in Japanese multifamily residences that include apartment buildings, duplexes and townhomes hit $848.4 million so far in 2019, compared with 2018's $462.6 million.
Cross-border investment in the segment is poised to hit at least $2.1 billion in 2019, more than four times from 2018, with deals still pending in the vicinity of $1.2 billion.
In October, Allianz Real Estate, the property investment arm of German insurer Allianz, beefed up their portfolio of 82 multifamily residential assets with 4,600 units amounting to $1.2 billion.
In the same month, M&G Real Estate, a unit of London-based M&G Investments, acquired a $57 million residential portfolio of three assets composed of 307 multifamily residential units.
This is Allianz's first direct Japanese investment and nearly all properties they got are in Fukuoka, Nagoya, Osaka, and Tokyo.
M&G Real Estate's acquired properties are in Kobe and Nagoya.
Suzuki said that in the case of institutional investors, the residential segment is popular now with the global financial crisis proving the resilience of this market because housing expenses and rents are non-discretionary.
He added that people just can't move houses even in financial turmoil.
Gross yield for such assets on a net income basis was at 4 percent to 5 percent with capital values growing by 8.1 percent.
Richard van den Berg, who manages M&G's investments and whose latest acquisition is the fund's fourth residential portfolio in Japan, said that the country's "predictable and resilient income streams from real-estate assets' low borrowing costs" are all attractive investment conditions.
Rushabh Desai, Asia-Pacific chief executive at Allianz Real Estate, pointed out that Japan is one of the largest real estate markets in the world and that Japanese multifamily [assets are] great for investors looking for stable cash yields.
