The Savills IM Japan Residential Fund II (JRFII) reported today that the fund has settled or will soon settle 27 multi-family properties, with a heavy majority in the central Tokyo area. The fund was created in November, 2020 which now contains 1,500 units and 47,000 sqm of rentable floor space.
"The size and liquidity of the Tokyo residential market means it is very resilient to external shocks, as has been proven during the Global Financial Crisis and more recently during COVID-19. " Tadaaki Kurozumi, Co-Head of Savills IM said on their website.
According to the Savills IM statement, the fund has a 92% vacancy rate and a blended stabilized entry yield of 4%. Citing the Japanese captial being the largest rental market in the world, the fund will continue to evaluate non-Tokyo properties but the main focus will be in the capital.
Tom Silecchia, Co-Head of Savills IM Japan stated "JRFII will selectively invest outside Tokyo, but we will continue to focus on the capital, where we can acquire the best assets at compelling yields. We have a strong pipeline of high-quality acquisitions and the capacity to considerably increase the size of the fund without compromising quality."
Given Japan's low interest rates, central Tokyo multi-family properties have been a global focal point for investors looking for stable returns over the mid-to-long term. In March, 2021, LaSalle Japan Property Fund (LJPF) acquired 9 Tokyo multi-family buildings and 1 Osaka logistics facility.
Keith Fujii, Head of Asia Pacific at LaSalle Investment Management, citing why Tokyo multi-family was of interest, stated "In Tokyo, despite the pandemic, we are seeing relatively stable wages and tight labor markets, which will continue to support the multifamily sector."
Savills IM JRFII's latest purchases further continue a trend noted by Benjamin Chow of Real Captial Analytics who wrote on March 24th, 2021 "Alongside logistics, the apartment sector has been one of the most sought after investment targets for commercial real estate investors during the Covid-19 era. Six of the 10 largest global apartment markets in 2020 recorded an increase in activity compared with the year before. One of those was Asia Pacific’s sole representative, Japan, where deal volume climbed by over one-half to reach 930 billion yen ($8.5 billion), making it the third biggest residential market in the world."
Further Reading:
Spotlight: Savills Research Asian Cities - 1H 2021 Tokyo Residential Report (June 25th, 2021)
Market in Minutes: Savills Japan – Q1/2021 Tokyo Residential Leasing Report (April 1st, 2021)
