Investors eye Tokyo properties - report

According to Reuters, some overseas investors are willing to commit as much as $1 billion to the asset class, which has showed continued resilience in the months after the March 11 earthquake and tsunami.

When asked by the newswire, firms such as MGPA, LaSalle Investment Management, GE Capital and CBRE Global Investors say they expect to strengthen their focus and capital commitment in Tokyo's real estate sector next year, and private equity investors Blackstone, KKR and TPG look poised to follow suit.

Investors expected to see properties hit the market following Japan's nuclear crisis earlier this year, but owners instead held onto their assets. This is poised to change next year in line with the strengthening market.

The report added that property borrowing costs are typically 1-2%, juxtaposed to Tokyo real estate yields of 4-6%. That margin is said to be one of the widest in the developed world.

AVCJ previously reported that real estate typically generates stable cash flow from tenants, but are struggling with re-financing problems. By August, Japan's property market was seen to be undergoing a revival, with rental prices rising and the average vacancy rate for an office building in one of Tokyo's seven major business areas dropping to 7.71%, the Mitsubishi Real Estate Services announced at the time.

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• Topics
• North Asia
• Real estate
• Japan
• Real estate