Japanese residential property emerges as safe haven amid US-China trade war, geopolitical uncertainties

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/business/article/3035171/japanese-residential-property-emerges-safe-haven-amid-us-china-trade-war?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | November 5, 2019 11:01 AM SGT
The number of big, foreign investors flocking to Japan's residential property market has risen by half from a year ago, as global funds seek safe havens amid mounting uncertainties, according to Hideaki Suzuki, director and head of research and consulting, Japan at real-estate services company Cushman & Wakefield.
"I believe the interest of foreign investors in Japan property will grow further. We are having larger groups of investors becoming interested in the market ... particularly in residential," he said, adding that the number of investors who now included residential in their investment strategy had risen by 50 per cent.
Foreign investment in Japanese multifamily residences " apartment buildings, duplexes and town homes designed to house several different families in separate residential units " has hit US$848.4 million so far this year, compared with US$462.6 million in 2018, according to Real Capital Analytics, which tracks property deals worth at least US$10 million. Cross-border investment in the segment is likely to hit at least US$2.1 billion this year, more than four times last year's, with deals worth US$1.2 billion still pending.
Two big acquisitions were announced in October itself. Allianz Real Estate, the property investment arm of German insurer Allianz, acquired a portfolio of 82 multifamily residential assets with 4,600 units for US$1.2 billion, while M&G Real Estate, a unit of London-based M&G Investments, acquired a US$57 million residential portfolio of three assets comprising 307 multifamily residential units.
This is Allianz's first direct investment in Japan, and nearly all properties are located in Tokyo, Osaka, Nagoya and Fukuoka. M&G Real Estate's properties are located in Kobe and Nagoya.
Japan, the world's third-largest economy, has a rapidly ageing population, but big cities such as Tokyo attract net migration, with young people moving in from other parts of the country. In 2018, the Japanese capital's population rose by 9 per cent, with the addition of about 80,000 people. A government initiative aimed at welcoming foreign workers and allowing them to eventually become Japanese citizens is also likely to increase its population.