CDL invests in 25 freehold residential assets in Japan for $321.9 mil

A building in Tokyo's Minami-Oi, one of the 25 assets invested in by CDL. Photo: CDL

City Developments Limited (CDL) has purchased the interests in 25 high-quality freehold residential assets in Japan for JPY35 billion ($321.9 million). The interests were purchased from the affiliates of BGO, a leading global real estate investment manager, and will form a part of CDL’s private rented sector portfolio.

The properties comprise a total of 836 units, including four retail units. They have an average age of less than two years old and are located in Tokyo’s 23 wards. All of the 25 assets are located within a 10-minute walk from a train station. Three of the assets are located in ultra-prime residential areas within Tokyo’s central five wards.

The investment, which is CDL’s largest private rented sector transaction in Japan, is said to have strong investment potential due to the recovery of economic activities and rising demand for rental accommodation in Tokyo. “Amidst the current global uncertainty, Japan has become an attractive destination for global institutional investors, securing the portfolio's potential to benefit from both steady rental growth and sustainable capital appreciation,” says CDL in a Sept 28 statement.

Japan’s favourable interest rate environment presents a timely and strategic opportunity for the group to expand our residential rental portfolio through a rare off-market transaction for well-performing assets,” says Sherman Kwek, CDL’s group CEO.

“Despite economic volatility over the past few years, our Japan residential portfolio has remained resilient, with stable rental growth and strong occupancy of above 95%. This investment marks the group’s entry into Tokyo’s rental housing market, enabling us to further scale up in this asset class while leveraging on the sector’s strong growth potential,” he adds. “This move is aligned with our strategy of expanding in the global living sector to enhance our recurring income.”

Following the completion of the transaction, CDL’s Japan private rented sector portfolio located across Tokyo, Osaka and Yokohama has tripled to 38 assets with a total of over 2,100 units. The portfolio has an asset value of over JPY70 billion.