UBS Asset Management launches €335m Japan value-add hotel strategy

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UBS Asset Management’s Real Estate & Private Markets business announces the launch of a €335m (400m USD) new initiative to invest in the Japanese hotel sector. This strategy will focus on securing value-add and development opportunities in key metropolitan and regional areas such as Tokyo, Osaka, Nagoya, Fukuoka and Hokkaido, amongst others.


Mitsubishi Corp – UBS Realty, UBS-AM's joint venture in Japan, will source and manage assets for the strategy through its private fund management arm MCUBS Japan Advisors. MC-UBS has a successful 16-year track record and is one of the largest real estate platforms in Japan.


The new strategy will target assets with potential for refurbishment, repositioning or conversion. This is in addition to investing in development projects where there is a third party operator in place. The primary focus will be on the limited service hotel sector.


Commenting on the new strategy, Graham Mackie, Head of Real Estate Asia Pacific at UBS-AM, said: "Our investment thesis is underpinned by the clear gap between strong growth in demand for overnight accommodation and the lagging response in supply of new hotel rooms. We see a particular window of opportunity in limited service hotels, a sector that accounted for over 40% of all hotel stays in Japan last year."


Tourist arrival numbers to Japan reached an historical high of 24 million in 2016 and are expected to hit 40 million by 2020, with Asian tourists being the main driver behind this growth as the emerging middle class continues to propel regional tourism. Despite this robust performance, tourist arrival numbers are still less than one third of the United States and 35% lower than that of Thailand. The headroom for further growth is thus significant.

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