SH by the Square Hotel Kyoto Kiyamachi was built in 2018 (Image: Google)
Healthy tourism in Japan continues to fuel a hotel investment boom in Kyoto, with a 75-room property the latest hospitality asset to change hands in the country’s ancient capital.
Tokyo-based real estate investor Kasumigaseki Capital sold the SH by the Square Hotel Kyoto Kiyamachi for an undisclosed price in a transaction announced late last week by JLL, which advised Kasumigaseki on the disposal. The unnamed buyer was advised by Singapore-based Anglo Fortune Capital Group.
The 2018-vintage hotel on Kawaramachi Street is close to several of the city’s famous temples and shrines and within walking distance of Kyoto Kawaramachi and Kiyomizu Gojo railway stations. The nearby Kiyamachi historical street has over 40 restaurants, cafes and shops.
“The age and prime location of this asset was particularly attractive, and we are delighted to achieve a successful result for our client, Kasumigaseki Capital,” said James Abe, managing director for Japan investment sales in JLL’s hotels and hospitality group.
Visitors Top Pre-COVID Total
According to government data cited by JLL, the number of foreign visitors to Japan in October reached 2.51 million, surpassing the 2.49 million seen during the same month in 2019 — just before the COVID crisis began.
James Abe of JLL’s hotels and hospitality group
JLL said hotel transaction volumes in Japan reached JPY 262 billion ($1.9 billion) for the eight months to August, up 33.1 percent compared with the same period in 2022. The agency expects the trend to continue into 2024 with several transactions agreed or on the market.
Kasumigaseki Capital got its start rebuilding a shopping centre damaged by the March 2011 earthquake. The firm led by president and CEO Koshiro Komoto has since expanded by developing solar power plants, day care centres, apartment-hotels, logistics facilities and healthcare-related properties.
For Anglo Fortune Capital Group, SH by the Square marks the fourth Japan hospitality deal in the last 12 months. AFCG also invests in real estate in Australia and Britain.
“We are delighted to have completed this transaction opposite the terrific JLL team who have performed with the utmost professional integrity, and we look forward to our next deal together,” said Benjamin Cho, a partner at AFCG.
Pegasus Picks Up a Pair
A few minutes’ walk south of SH by the Square, Pegasus Capital has acquired two hotels, Kyoto Machiyado Shijo Karasuma and Kyoto Machiyado Gojo Ohashi, for an opportunistic fund managed by the Hong Kong-based firm. The seller was a Tokyo-based property management company, said Pegasus managing partner Perry Tan.
The two assets, which are appraised at close to JPY 1.7 billion, will be rebranded as Wayfarer Shin and Wayfarer Gojo and managed by Wayfarer Hotels. Pegasus now commands a 385-key hotel portfolio, with the most notable deal being a five-hotel buy in early 2023 for JPY 10 billion alongside US-based BGO Strategic Capital Partners.
Kyoto is also on the radar of global giants including Blackstone, which recently acquired the 158-key Moxy Kyoto Nijo hotel from Goldman Sachs for a reported JPY 8 billion.
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