The Real Deal New York

Move over, NYC and London: Tokyo is the new real estate king

The wealthiest sovereign fund in the world is leading the way for investors
February 10, 2018 03:59PM

Tokyo train station. (Credit from back: Andy Atzert, Pixabay)

The largest sovereign wealth fund in the world’s property group is betting big on Tokyo real estate.

Norges Bank Real Estate Management, a branch of Norway’s $1 trillion fund, purchased a 70 percent stake in a mixed-used office and retail properties for about $852 million as part of a joint venture with Japanese firm Tokyu Land Corp. The fund has earmarked an annual $912 million for real estate deals in Tokyo provided, of course, “the right opportunities come along,” said CEO Karsten Kallevig to Bloomberg.

The Norwegian investor is not the only one eyeing the Japanese’s market. Over $100 million poured into the country in 2017 alone — a figure that tripled the amount of foreign real estate investment Japan received in 2016, according to Bloomberg. Deutsche Asset Management explains the increased interest as being partly due to higher yield spreads from domestic government bonds as compared to cities like New York and London.

To Kallevig, Tokyo real estate investment was “obvious.”

“You still have a lot of economic activity, you still have supply constraints that we typically like in most of our markets,” he told Bloomberg. His team set up shop in Japan in 2015. [Bloomberg]Erin Hudson