Foreigners continue to be bullish on Japanese Property Market

 

Mitsubishi Estate to sell Nagoya high-rise to Canada’s BGO

 

NAGOYA/TOKYO — Japanese developer Mitsubishi Estate will sell a landmark 21-story building in Nagoya to Canadian real estate fund BentallGreenOak, Nikkei has learned.

The price tag for the Hirokoji Cross Tower, which Mitsubishi developed with homebuilder Sekisui House and opened in 2018, is expected to be around 40 billion yen ($370 million).

Flush with fresh money from American and European pension funds, BGO had been on the hunt for investment opportunities in Japan. The latest deal signals that overseas investors are looking at cities beyond Tokyo and Osaka as the country prepares for the post-COVID-19 era.

The Hirokoji Cross Tower is located on a prime strip of real estate between Nagoya Station and main commercial district Sakae.

Various units of Mitsubishi UFJ Financial Group form the main tenants of the 44,000-sq.-meter high-rise.

A local real estate broker told Nikkei that this will be one of the largest building sales in the greater Nagoya area.

BGO, with $53 billion in assets under management, is set to invest up to $10 billion in Japan over the next two to three years. It will purchase the headquarters of Japanese music and entertainment production company Avex in Tokyo’s Omotesando for around $660 million.

The relatively high returns in Japan’s real estate market have attracted foreign investment funds in recent years.

Real estate investment in Tokyo ranked third in 2020, after Paris and London, according to JLL.

New York-based private equity investor Blackstone Group has also been buying up Japanese real estate assets and recently hired one of former Japanese Prime Minister Shinzo Abe’s top policy advisers, Eiichi Hasegawa, to help guide expansion in Japan.

Meanwhile, pounded by the coronavirus pandemic, many Japanese companies are eager to offload buildings they own. Advertising giant Dentsu plans to sell its headquarters in Tokyo, and apparel company Onward Holdings is preparing to sell a building in Nagoya.