Savills Investment Management (Savills IM) has added $218m (JPY24b) of assets to its residential portfolio in Japan.
The company has acquired 10 assets located in popular residential submarkets of central and outer Tokyo, central Osaka and central Nagoya on behalf of its Japan Residential Fund II (JRFII).
The Savills IM Japan Residential Fund II has now acquired or committed to acquire 27 properties, 24 of which are located in Greater Tokyo, since its launch in November 2020.
The portfolio now consists of more than 1,500 units and 47,000 sqm of net rentable area. The entire portfolio has been assembled with off-market transactions.
Prior to this, the fund acquired 4 assets between April and May this year, located in highly sought-after districts of the 23 Ward area of Tokyo – Yoyogi-Uehara, Ikebukuro and Ikejiri-ohashi.
”Across the current portfolio of assets, the Savills IM team has achieved a blended stabilized entry yield of 4%, despite the weighting towards more expensive Tokyo assets, and the portfolio has 92% occupancy, excluding forward commitments,” said the company in a statement.
Savills IM believes Tokyo still offers attractive risk-adjusted opportunities in the residential sector, even though increased competition for assets has driven more investment elsewhere in Japan outside greater Tokyo.
According to Savills IM, the Japanese capital is the largest residential rental market in the world and the city continues to benefit from migration from other regions.
”The size and liquidity of the Tokyo residential market means it is very resilient to external shocks, as has been proven during the Global Financial Crisis and more recently during COVID-19,” said Tadaaki Kurozumi, co-head of Savills IM Japan.
However, it is not easy to acquire well-priced assets without the ability to source off-market transactions. Our experienced team has been investing in Japan residential for more than 20 years and has the contacts and execution capabilities required to source high-quality assets at attractive prices.