Union Investment Real Estate GmbH has its sights on high quality office properties in the Asia-Pacific region. The recent entry into the Australian market via acquisition of the Southpoint project in Brisbane has now been followed by Tokyo, where the Hamburg-based property investment manager has acquired the J6 Front commercial building for around €127 million.
The vendor is a Singapore based investment company, Alpha Investment Partners. Comprising 4,939 m² of rental space, the Grade A building is fully let to a total of six Japanese companies. The eight-storey property was completed in November 2008 and enjoys a central location in the established commercial submarket of Jingumae within the central Shibuya Ward. The area is dominated by IT, telecommunications, apparel and service companies, and the property has the added advantage of being adjacent to two busy shopping streets, Meiji-dori and Omotesando. J6 Front will broaden the international mix of open-ended real estate fund UniImmo: Europa, which already holds another office property in Tokyo. In total, Union Investment now holds 13 properties in the Asia Pacific region with a current value of some € 850 million. Touchstone Capital Group advised Union Investment on the transaction.
"Rents in the Tokyo office property market are at a low level in terms of the economic cycle. Since rents are expected to increase going forward, this is the right time for investors to enter the market," said Martin Brühl, head of Investment Management International at Union Investment. Accordingly, Union Investment intends to use the window of opportunity offered by the current upturn to make further investments in the world's biggest office property market. "Despite intense competition for good products, especially from J-REITS, the depth of the market continues to enable investment by foreign players," added Brühl.
Boosted by the economic and monetary policy introduced by prime minister Shinzo Abe at the end of 2012 (dubbed “Abenomics”), Japan has emerged from an extended period of deflation and economic stagnation. In the first half of 2013, Japan posted the second-strongest economic growth in the OECD after Turkey. This sustained recovery is reflected in the country’s property markets, particularly in Greater Tokyo, in the shape of dwindling tenant incentives, rising effective rents and falling vacancy rates. "In the wake of the severe crisis of 2009/2010, Tokyo has now regained its status alongside London and New York as a firm fixture in the investment portfolios of global investors seeking economic stability and sustainable growth," commented Martin Brühl. It is expected that the Olympic Games in the summer of 2020, combined with extensive infrastructure projects, will give additional impetus to Tokyo's real estate market. "Tokyo's strength is set to continue."
Source: Union Investment