Insights and analysis on the Japan market.
Investors remain bullish about Japan's property market this year. Funding is easy to come by, despite the county's first interest rate hike in 17 years in March. Further fueling their optimism is a flood of overseas tourists, workers returning to the office in droves and rising rents.
Asia Pacific Land is set to invest US$850m in a 120 megawatt data center in Kyushu in southern Japan. The city of Kitakyushu, where the center will be located, is an attractive location in Kyushu for data centers given its proximity to where undersea cables come ashore. Kitakyushu is also in the process of repositioning itself as an alternative "nerve" centre within Japan and planning to attract more corporate headquarters and government agencies to the area.
The Japanese residential sector continues to attract significant capital with Mubadala, Proprium Capital Partners and Manulife announcing a USD600m commitment to the sector. These three major investors will partner with Samurai Capital, a Tokyo-based asset manager, to strategically invest in multi-family assets in both Tokyo and Osaka over the coming years, with a major focus on sustainability. The venture has been seeded with some existing assets.
Mori Trust continues to be acquisitive in the hospitality sector in Japan. The group has announced the purchase of one of Kyoto's largest hotels, the Rihga Royal Hotel. The 489-key property was completed in 1969, fully renovated in 2016, and is located just a few minutes’ walk from Kyoto Station. The seller is SoftBank-backed global real estate investment firm, Fortress Investment Group, which acquired the property in 2015. The purchase price is rumoured to be circa JPY33bn or USD235m.
The FT Weekend's Big Read dives deeper on this and the article below is definitely worth a read.
The outlook for Japan's economy is certainly positive and some of the notable trends are:
· Stable GDP growth
· Lowest interest rates of any developed market
· Healthy levels of inflation and meaningful wage growth
· Large scale onshoring by major manufacturers
· Stock market at a 30+ year high but still widely considered to be undervalued
· Property markets in major cities on a solid growth trajectory
· Marked improvement in corporate governance and shareholder accountability in recent years
· Weaker yen