World’s Largest Pension Fund Commits $63M to Phoenix Japan Strategy

Japan’s Government Pension Investment Fund (GPIF), the world’s largest public pension investor, has committed JPY 10 billion ($63 million) to Hong Kong-based Phoenix Property Investors for real estate investments in Japan.

GPIF, which managed nearly $1.94 trillion in assets as of December, directed the capital to Phoenix Asia Real Estate Investments VII Japan, a Japan-specific limited partnership linked to the manager’s flagship opportunistic real estate strategy, according to a March disclosure. 

The commitment adds Phoenix to a small group of overseas managers selected by GPIF for Japan-focused real estate investments, following mandates awarded last year to BentallGreenOak and Morgan Stanley, with the Tokyo-based titan also having last year invested JPY 40 billion into US fund manager DigitalBridge’s DigitalBridge Japan Partners strategy.

Among the GPIF’s $454 million in limited partner commitments to real estate funds over the past two years, around $234 million, or more than 48 percent have now gone to Japan specific strategies, according to Mingtiandi calculations based on statements by the institution. 

GPIF Diversifies

The GPIF is putting more funds into real estate in its home market, where it not only avoids currency exchange risk, but also can invest in one of the few major markets where, despite recent interest rate hikes property yields still exceed borrowing costs, according to JLL. 

Phoenix’s Japanese win comes after then GPIF president Masataka Miyazono had said in 2024 that the fund would work to broaden the pool of firms managing its assets, with the liberalisation seen as creating opportunities for more foreign fund managers.

Phoenix first established Phoenix Asia Real Estate Investments VII in 2024, with the firm having reached a final close on $1.15 billion for its Phoenix Asia Real Estate Investments VI in 2019. The GPIF’s commitment is for an investment period of eight years.

In 2020 Phoenix had been forced to restructure the capital stack for a commercial project near the Shanghai Railway Station, after the pandemic undermined its funding plan. 

While the company’s investment in the Tower 535 in Hong Kong’s Causeway Bay area had reportedly resulted in offers of over $1.15 billion for the property in 2019, the project later faced challenges when major tenants such as WeWork vacated their premises. While Phoenix Asia Real Estate Investments VII focuses on developed Asian markets including Japan, Singapore, Korea and Australia, the fund does not invest in China.

Boots on the Ground

While company founders Samuel Chu and Benjamin Lee remain based in Hong Kong, Phoenix has been investing in Japan for more than two decades and now has a team of 11 people on the ground in Tokyo. In addition to its opportunistic strategy, Phoenix also manages a core and core-plus vehicle, the Pan-Asia Core-Plus Investments Fund, launched in 2015.

The investment manager’s existing portfolio spans office, rental apartments, hotels and logistics assets focused in Tokyo and Osaka, with additional exposure to other cities. Since its founding in 2002, Phoenix has managed over $17 billion of gross real estate assets across 18 Asian cities, including $8 billion of current assets under management.

In December, Phoenix sold a three-storey Grade A warehouse near Sapporo on behalf of its Phoenix Asia Real Estate Investments VI fund to an unnamed Japanese developer at a premium, after acquiring the site off-market in May 2022 and completing construction in June 2024. The property achieved full occupancy before Phoenix’s exit.
Last month, the firm sold a 10-storey Grade B office building in Osaka on behalf of the vehicle to a Japanese private REIT, exiting the investment 25 months ahead of its underwritten sale date after acquiring the asset off-market in April 2023. The deal marked the fund’s first exit.

Pension Fund Favourite

GPIF started investing in real estate in 2017 and had built a diversified global portfolio of JPY 1.26 trillion as of the end of March 2025, with Japan accounting for 21 percent of that total — the second largest share after the US at 42 percent, according to the fund’s website.

In 2023 the Japanese institution shifted from investing in diversified fund of funds strategies to backing specific vehicles, to capture opportunities in higher-quality projects and gain more control over risks of its investments, according to its website.

Last year, GPIF committed JPY 15 billion to BentallGreenOak Asia IV Japan Investment Feeder in October and JPY 10 billion to Morgan Stanley’s North Haven Real Estate Japan Strategy Fund I-A in September, to capture value-add and opportunistic investments in its home market.

Other than its Japan-focused mandates, GPIF has also committed EUR 300 million ($353 million) to Blackstone’s Real Estate Partners Europe VII fund, $500 million to Blackstone’s Real Estate Partners X fund and $500 million to Brookfield’s Strategic Real Estate Partners V fund for global opportunistic investments.

Since the GPIF began investing in domestic real estate through its multi-manager strategy in December 2017, the internal rate of return for the institution’s investments stands at 7.17 percent as of last March. The IRR for its overseas real estate investments, which started in September 2018, is 2.32 percent in US dollar terms, translating to 8.37 percent in yen terms, driven by the depreciation of the yen against the greenback.