AXA IM Alts announced on Tuesday that it has acquired a pair of rental residential properties in Tokyo for JPY 6.9 billion ($54 million), unveiling its first multifamily asset purchase this year in Japan’s increasingly competitive build-to-rent sector after a string of similar deals in 2021 and 2020.
The two new properties add 158 homes to AXA IM Alts’ Japan apartment portfolio, with both buildings located near the megacity’s core districts.
“This transaction further extends our residential portfolio in Japan’s most populous city, adding into the portfolio two assets both benefiting from prime locations and strong local infrastructure,” said Laurent Jacquemin, AXA IM Alts’ head of Asia Pacific. He said the transaction is in line with the firm’s long-term strategy to invest into residential asset classes supported by favourable residential market fundamentals.
The two acquisitions bring AXA IM Alts’ total pick-ups in the East Asian country to 15 over the past year, with a combined value of €3.1 billion ($3.3 billion).
Inside City’s Sweet Spots
The larger of the newly acquired properties, Sugamo 3, is located in Tokyo’s Sugamo neighbourhood, home to the popular Jizo Dori shopping street, with AXA IM Alts noting the area’s high concentration of singles and double-income no kids (DINK) families with greater discretionary spending power.
The 98-apartment asset, which spans 34,000 square feet (3,158 square metres), was built in 2009 and is a four-minute walk from the Sugamo railway station in Toshima district, which provides access to central Tokyo in less than 30 minutes.
The second property, Kuramae 1, is in Taito City and comprises 60 apartments totalling 24,000 square feet in size. The building is located in Tokyo’s Asakusabashi submarket, where many craft and wholesale stores can be found.
Last year, AXA IM Alts purchased a newly built mixed-use property in a central Tokyo tech hub for €41 million ($48 million), as well as a pair of Osaka residential assets for JPY 10.6 billion ($94 million) from the Japanese division of US fund manager PGIM Real Estate.
Across the globe, AXA IM Alts now has a €25 billion ($26.6 billion) portfolio of residential AUM in 15 countries.
The company yesterday announced its acquisition of Villas at West Road, a multifamily asset in Houston, through a joint venture with TruAmerica Multifamily. The property consists of 240 units across 22 two-storey residential buildings.
“These transactions form part of AXA IM Alts’ wider long-term strategy to invest into residential asset classes which it believes are supported by strong demographic drivers,” the company said of the Texas acquisition.
Big on Japan
The latest moves by AXA IM Alts come as overseas investors increasingly target Japanese real estate investments, with a study from CBRE released last month citing 74 percent of overseas investors as saying their acquisition volume this year will increase compared to last year, compared to just 54 percent for their Japanese counterparts.
“CBRE expects demand from overseas investors to remain robust this year, especially for logistics and residential properties, for which foreign groups could be more aggressive buyers than domestic investors,” said CBRE’s Japan research director, Asuka Honda, who added that overseas buyers are also likely to remain active in big-ticket transactions.
Sought for comment about the Japanese market, Nikota Capital managing director Craig Pearce told Mingtiandi that there is currently a wave of capital chasing high-quality central and suburban Tokyo residential assets.
“The challenge for investors at the moment is to secure quality assets at pricing that makes sense and enables them to deliver the necessary distributable yield if they are core funds, or the appropriate IRR if they are focused on total returns,” Pearce said.
He characterised AXA IM Alts’ latest acquisition as representative of the deals that core investors are trying to secure in the market, which he described as newer, high-quality assets in neighbourhoods with the right amenities in central and suburban Tokyo.