Avatar Capital Hits $105M Final Close of Maiden Tokyo Living Sector Fund

Asia-based Avatar Capital Partners has reached the final close of its inaugural fund focused on the Tokyo living sector with committed capital totalling JPY 15.2 billion ($105 million).

ACP Real Estate Fund I will seek off-market residential investment opportunities in Japan, specifically targeting high-quality multi-family assets in prime Tokyo locations, Avatar said Wednesday in a release. The fund manager aims to leverage market fundamentals including urban population growth, robust rental demand and accelerating rent increases.

Mingtiandi reported in June of last year that Avatar had acquired a 70-unit luxury development in central Tokyo, with the inaugural deal coming just three months after the firm’s founding by Macquarie Asset Management veterans Angel Li and Ryuta Ueda.

“The global real estate sector is transitioning into a phase of recovery and expansion, with the Asia Pacific region offering compelling opportunities,” Li said. “Japan stands out due to its attractive financing conditions and inflation-driven growth potential. Characterised by favourable demographic tailwinds and sustained rental demand, Tokyo’s living sector offers a compelling investment landscape.”

Portfolio Set to Double

To date, the fund has acquired five multi-family properties in central Tokyo and identified a pipeline of opportunities from which to secure the near-term acquisition of five additional assets, according to Ueda.

Avatar is targeting returns of at least 20 percent through its opportunistic multi-family investments, with a 90 percent allocation to central Tokyo. The fund manager adopts a strategy of collaborating with smaller local developers to source deals.

“We will continue to partner with leading local Japanese conglomerates to address the evolving needs of future living,” Ueda said.

The oversubscribed fund received an investment from Cleveland-based real estate private equity firm Townsend Group, with the company joining with one of its clients to act as strategic partners in the vehicle. Other backers include “top-tier family offices and foundations throughout Asia” and what Avatar described as one of the largest pension funds globally.

“As the advisor to a consortium of global investors — including some of the largest sovereign and pension plans pursuing strategic stakes in leading investment and operating platforms, we are delighted to partner with ACP,” said Townsend chairman and CEO Anthony Frammartino. “We have strong conviction in ACP team’s strategy and the significant potential of Japan’s dynamic living sector.”

Rents Still Climbing

Strong demographics and stable economic fundamentals continued to underpin Tokyo’s multi-family market in the second quarter of 2025, according to Savills, with average rents in the 23 wards rising 0.9 percent from the preceding three months and 8.4 percent year-on-year.

In the central five wards, average rents grew 0.4 percent from the previous quarter and 9.5 percent year-on-year. Chiyoda recorded the largest quarterly rental growth of 4.6 percent, while Shibuya rents inched up 0.5 percent and the other three constituents saw modest declines, the consultancy said in its residential leasing report.

The prevailing growth trend has attracted investors like Scottish asset manager Aberdeen, which in May announced the acquisition of two rental residential properties in Tokyo under the Edinburgh-based firm’s Japan living strategy.

Earlier this year, Tokyo-based Alyssa Partners acquired a 669-unit portfolio on behalf of Japanese insurer Dai-Ichi Life, while Hong Kong’s Dash Living expanded its Japan portfolio to 19 locations under deals signed with capital partners BlackRock and Greystar.