Dash Living and BlackRock Team Up to Acquire Tokyo Multi-Family Property

Dash Living has teamed up with US investment management giant BlackRock to acquire an upscale 29-unit multi-family property in Tokyo, as the Asian rental housing provider continues to expand its residential portfolio in Japan amid growing demand for accommodation in the world’s fourth largest economy.

Acquired by Hong Kong-based Dash and a fund managed by BlackRock’s real estate business, the property marks the inaugural investment under the newly-established partnership, which seeks to generate value-add returns by repositioning residential buildings into flexible accommodations catered to business and leisure travelers in Japan.

“We are thrilled to introduce our multi-family assets investment in Japan alongside BlackRock’s Real Estate business, seizing opportunities in the country’s thriving real estate market,” Dash Living founder and chief executive Aaron Lee said in a release on Tuesday. “Our collaboration with the real estate arm of the world’s largest asset manager demonstrates our ability to deliver attractive returns for investors.”

Terms of the transaction and partnership, as well as the identity of the vendor, were undisclosed. All binding agreements for the acquisition have been signed, with the asset set to be fully handed over to the partners upon completion of the remaining construction deliverables.

15th Location in Japan

Located in Tokyo’s Higashi Komagata area, the property is within a five-minute walk to the Ginza and Asakusa subway lines and is situated near tourist attractions including the Asakusa Shrine and the Asahi Beer Factory.

The newly-developed property has a gross floor area of over 12,000 square feet (1,115 square metres) and comprises studios, 1 bedroom units and 2 bedroom units. The partners aim to achieve rental uplifts through upgrades to the property, including furniture, fixture and equipment as well as branding for the rooms and public areas.

“Japan’s real estate market for multi-family assets is highly attractive and offers substantial opportunities given the surge in business travel and tourism,” said Daigo Hirai, managing director and head of Japan real estate for BlackRock. “We are excited to be collaborating with Dash Living to capitalise on this burgeoning demand by repositioning multi-family assets to generate value-add returns for our investors.”

The acquisition marks Dash Living’s 15th location in Japan, with the company’s portfolio spanning serviced apartments, co-living facilities, hotels and residences across Tokyo, Osaka and Kyoto. Last November, a joint venture between Dash and UK-based investment manager Schroders acquired the 49-unit Palms Ryogoku multi-family property in Tokyo.

“With a strong commitment to Japan, we are dedicated to further expanding our investment and growth opportunities to offer upscale and flexible accommodations in convenient and charming neighborhoods throughout Tokyo,” said Lee.

Ramping Up in Asia

Dash Living and BlackRock have also been expanding their respective residential portfolios elsewhere in the region. In January, Dash teamed up with US-based PGIM Real Estate to acquire The Sheung Wan hotel in Hong Kong as their second residential project in the city, with Dash also managing PGIM’s Dash Living on Hollywood project.

In February, a joint venture between a BlackRock-managed fund and Hong Kong-based rental residential provider Weave Living purchased the 154-unit Citadines Mount Sophia serviced apartment block near Singapore’s Bugis area from CapitaLand Ascott Trust. The world’s largest asset manager by AUM had also in late 2023 acquired Blackstone’s economic interest in a City Developments Ltd residential project on Singapore’s Sentosa island.

In addition to its Sentosa venture and its partnership with Weave, BlackRock said in December that a fund under its management is teaming up with Japanese property crowd-funding platform Syla Technologies to expand its investments in Japan’s residential market.

Dash Living’s portfolio totals over 2,000 rooms with properties located across Hong Kong, Singapore, Japan, and Sydney. The company counts MindWorks, Grosvenor, Taronga Ventures, and Chinachem among its backers.

Japan Multi-Family In Vogue

With $6.3 billion in transactions last year, according to MSCI Real Assets, Japan’s residential sector ranked as Asia Pacific’s top market for multi-family investors on the back of continued population growth in major cities like Tokyo and Osaka, low financing costs, and abundant liquidity.

The re-emergence of inflation in Japan has also increased the country’s appeal for multi-family investors, who are now able to factor rising rents into asset models as wages and other economic factors continue to climb.

“Stable rents for multi-family properties are expected to shift towards a significant upward trend due to wage increases,” consultancy JLL said in an April commentary. “In the investment market, multi-family property investment yields have decreased since 2010…however, rental increases driven by wage growth are expected to positively impact the multi-family sector.”

Last month, Asia-based Avatar Capital Partners closed on the purchase of a 70-unit luxury residential development in central Tokyo, with the inaugural deal coming just three months after the founding of the multi-family focused real estate fund manager.

In April, Tokyo-based Alyssa Partners and Hong Kong private equity firm Gaw Capital Partners acquired a portfolio of 29 Tokyo apartment buildings from a major Japanese conglomerate, with the purchase of 835 homes representing the country’s largest trade of rental residential assets so far this year. Gaw Capital invested in the deal on behalf of separate accounts for the Qatar Investment Authority and other investors, while Alyssa Partners took a minority stake in the deal.

Earlier this year, a Tokyo-listed REIT sponsored by KKR made its 12th acquisition of rental residential assets in Japan with a JPY 9.5 billion deal for a set of four apartment buildings in the capital city, while the property division of UK asset manager M&G bought the 298-unit Frontier Shinjuku Tower residential complex in Tokyo’s Shinjuku area from LaSalle Investment Management for JPY 30 billion.