Tokyo-Listed Real Estate Firm Selling 14 Japanese Residential Assets for Over $99M

Japan’s Global Link Management is selling a portfolio of apartment buildings across Tokyo and two neighbouring prefectures as investors continue to favour opportunities in Asia’s largest rental housing market.

The TSE-listed developer is selling 14 multi-family properties in Tokyo, Saitama, and Kanagawa to an unrelated third-party buyer for around JPY 15-20 billion ($99-132 million), according to an investor disclosure on Wednesday. The identity of the buyer was not disclosed.

“Across Asia, Japan’s investment market for newly built compact condominiums has the advantage of its high liquidity and being one of the few markets where positive yield spread can be expected,” chief executive of Global Link Daejoong Kim said in an interview last year. “Tokyo is especially strong in this regard.”

The apartment portfolio comprises 547 homes with the deal coming after Japanese multi-family properties accounted for 56 percent of all sales of income-earning living sector assets across Asia Pacific in 2023, according to data from MSCI Real Assets.

Forward Purchase Progress

The largest asset in the portfolio by gross floor area is a 2,097 square metre (22,572 square feet) project in Saitama’s Kawaguchi city. Scheduled to be completed in October this year, the 13-storey property consists of 65 apartment units, according to local construction database Kenetsu Databank.

Among the remaining properties in the deal, 11 are located in Tokyo and two are situated in Kanagawa to the south of the capital. Average rents in Tokyo apartments grew 3.5 percent at the end of last year compared to year earlier levels, reaching JPY 4,071 per square metre according to a report from Savills.

Under the terms of the agreement with Global Link, the buyer will be paying for the portfolio in three phases starting from June, with subsequent instalments due in August and October.

Of the $3.4 billion in trades of Tokyo apartments last year, there were $362 million in forward-purchase sales, according to MSCI Real Assets, with purchases of projects in progress having emerged as a favoured method for institutional investors to boost investment yields under core-plus strategies.

Laurent Fischler, head of investments for Asia Pacific at Ivanhoé Cambridge, said on Mingtiandi TV this week that apartment properties in Japan’s major cities are poised to benefit from inward migration despite declining population in the country as a whole.

“There’s this whole demographic topic in Japan on how the overall population of the country is declining, but the population of the four major cities is still growing,” said Fischler. “So while Japan’s population as a whole may be declining, you’re still seeing people move into Tokyo, Osaka and to a lesser extent Nagoya, Fukuoka. We also have increasing numbers of foreign migrants – it’s starting from a small base, but it’s increasing rapidly. So all of these factors are supporting the residential rental market.”

During 2023, 126,515 more people moved into the Tokyo metropolitan area than moved out, with that figure up by 26,996 from a year earlier, according to data from the Statistics Bureau of Japan.

Red Hot Apartments

Global Link is selling its latest set of Tokyo-area apartments around a year after announcing a deal to dispose of 22 residential assets in the capital for a price of JPY 30 billion to JPY 35 billion. A local news report revealed the buyer of that 992-unit portfolio as Mitsui & Co Digital Asset Management.

The sale announced this week aligns with a series of Japanese multi-family investments by both local and overseas investors, with KKR-managed Japan Metropolitan Fund Investment Corporation in February acquiring four Tokyo rental residential assets from a subsidiary of Daiwa House for JPY 9.5 billion.

In January, M&G Real Estate purchased a multi-family residential tower in Shinjuku from LaSalle Investment Management for JPY 30 billion, with that deal coming after investment manager Alyssa Partners spent JPY 20 billion to acquire 12 apartment assets in Tokyo, Osaka, Nagoya and Kobe on behalf of Dai-Ichi Life during December.