German asset manager Patrizia has signed a strategic partnership agreement with an unnamed Asian institutional investor to invest up to JPY 150bn (c. €1bn) in Japanese real estate.
Patrizia aims to increase its AUM in Japan and accelerate the company towards its mid-term growth ambition of JPY 300bn (c. EUR 2bn) of Japanese AUM by 2027.
The dedicated fund, in which Patrizia will co-invest, will target residential assets in Tokyo, the world’s largest metropolitan area, as well as other major cities and metropolitan areas across Japan.
The investment strategy will focus on core plus and value-add opportunities in the multi-family sector, while an active asset management strategy on the ground will drive value through the renovation of units, new exterior designs and effective operations.
Wolfgang Egger, CEO of Patrizia, said: “Japan is an incredibly attractive market thanks to the large size of its real estate sector, political stability and strong economy. Our partnership with one of the world’s major institutional investors is a step change in our APAC growth story and Patrizia’s international investment activities as a truly global real assets player. We have built a solid track-record as a strong and reliable partner for our clients, so we are very proud to have secured the trust of a well-established Asian client to invest Asian capital in the very attractive Japanese real estate market. Not only does this landmark partnership underline our conviction to grow our Japanese platform against a backdrop of global economic challenges, it also showcases our ability to execute across the entire region, with a Singaporean domiciled fund that is underpinned by an APAC-wide team of real asset experts.”
Katsumi Nakamoto, President of Patrizia Japan, said: “With this new partnership we have the investment capacity to significantly grow Patrizia’s AUM in Japan and reach JPY 300bn (c. EUR 2bn) by 2027. But in order to be a strategic investor for our clients and accelerate this growth, it’s important we have solid foundations in place. Since founding our Japanese office in 2019, we have expanded our leadership team and expertise on the ground, which perfectly positions us to deliver on this new mandate, be even more client-centric and drive the growth of our footprint of prime assets in key Japanese cities. While this particular fund will focus on purely residential opportunities, we will also continue growing our portfolio of high-quality commercial assets to ensure we meet our mid-term growth ambition in the country.”
Investor demand in the Japanese real estate market is underpinned by favourable macro-economic trends. Compared to other developed global markets, Japan’s low interest rate, low inflation environment means financing and development opportunities remain attractive for investors. The economy is also seeing a robust post-pandemic recovery, with GDP expected to grow by 1-2% a year from 2022-2025, according to Oxford Economics.