AXA Investment Managers – Real Assets (AXA IM), the real estate fund management division of the French insurance giant, said today that it has purchased a residential complex in Nagoya, Japan for JPY 20 billion yen ($186 million), making what the company says is its largest residential investment ever in the country.
The Paris-based institution, which manages over 20 billion euros ($22.4 billion) of residential assets across 15 countries, said the Grade A residential development at at 4-60-5 Hiraikecho in the Nakamura ward of Japan’s third-largest community caters to multi-generational demand for residential space in the city’s dense urban centre.
With today’s announcement AXA IM is making its fourth investment in Nagoya residential assets, and joins a number of international fund managers including Blackstone and Nuveen in seeking reliable investment yields in Japan’s residential sector this year, with the French firm saying that it was open to further deals in the country’s housing market.
Residential Weathers the COVID Crisis
“We will look for further opportunities to invest in assets of this nature, through acquisition or development, both elsewhere in Asia Pacific and more globally,” said Laurent Jacquemin, Head of Asia-Pacific at AXA IM – Real Assets. “Residential asset classes have proven to be highly defensive, both historically and so far in the current Covid-19 crisis.”
Also known as Royal Parks ER Sasashima, the three-building residential complex offers accommodation for young professionals and families, through 430 residential units and 130 co-living units. It also has 66 units for the elderly that provides care or nursing service options and an English-speaking concierge service.
While AXA IM did not release the name of the project vendor, Royal Parks ER Sasashima was originally developed by Japan’s Daiwa House, the country’s largest homebuilder, which completed the 46,068 square metre structure in 2015.
At the transaction price, the buyer is paying the equivalent of JPY 434,141 per square metre for the asset. Current listings for rental apartments in the project offer homes for around JPY 3,213 per square metre per month.
Located within walking distance of the Nagoya central business district and the Sasashima Live Station, the building offers residents amenities such as a nursery school, gym, a convenience store and other retail shops.
AXA’s Jacquemin indicated that these connectivity advantages were part of the asset’s appeal. “This transaction proved particularly attractive given the city’s continued investment in improving local infrastructure coupled with its growing population, both of which underpin the potential for us to generate stable income.”
The property’s co-living units have their own ensuite bathrooms and tenants have access to common facilities such as a kitchen, library, theatre, outdoor terrace and dining area.
AXA Learns to Love Nagoya
This is AXA IM – Real Assets’ fourth acquisition in Nagoya, Japan’s third largest city with a population of about 2.3 million people, where it has invested 16 billion yen in 12 properties on behalf of clients.
The fund manager has been actively investing in other asset classes across Japan. Last year, it bought a hotel in Hiroshima for JPY 4.6 billion yen and also teamed up with Hong Kong-listed logistics developer jointly ESR in a $1 billion joint venture that purchased core warehouse assets in Osaka and Tokyo.
Other international investors have been snapping up residential properties in Japan, which is attracting investors due to the limited supply of apartments in its highly urbanised cities. In late May, Allianz Real Estate invested €110 million ($122 million) buying an apartment complex in Tokyo and in March Nuveen Real Estate spent $140 million to purchase portfolio of multifamily assets in Japan from PAG.
In February, Blackstone bought back a portfolio of Japanese rental apartments from troubled China’s troubled Anbang Insurance for a reported JPY 300 billion in what was said to be the largest property deal ever in Japan.