In 2023, Singapore has become the top investor in Japan's real estate market, capitalizing on the yen's devaluation and rising demand in logistics and hospitality. Knight Frank LLP reports that Singaporean investments in Japan have surged to nearly US$3 billion, surpassing investments from the US, Canada, and the UAE. Japan is seen as an affordable and untapped market, with foreign investors attracted by favourable borrowing costs and a post-pandemic tourism resurgence. The hotel sector is favoured, with foreign investors injecting a total of US$2 billion into Japanese hotels in 2023. However, the office sector in Japan has seen waning investor enthusiasm due to hybrid work setups and increased office space availability. Japan ranks as the third most attractive investment location in the Asia-Pacific region for Singapore-based investors, following China and Australia, according to the Knight Frank report.
In 2023, Singapore emerged as the primary investor in Japan’s real estate market, driven by the yen’s devaluation and increased demand in logistics and hospitality industries. Knight Frank LLP reported that Singaporean investments in Japan reached nearly US$3 billion (RM14 billion) this year, surpassing those from the United States, Canada, and the United Arab Emirates. Notably, GIC Pte, Singapore’s sovereign wealth fund, played a significant role by acquiring six Japanese warehouses from Blackstone Inc. for US$800 million, as highlighted by Christine Li, the head of Asia-Pacific research at Knight Frank.
GIC’s Chief Investment Officer, Jeffrey Jaensubhakij, recently characterized Japan as an exceptionally affordable market with untapped potential. International investors are drawn to its favourable borrowing costs, and they are increasingly allocating funds to the hotel sector due to the resurgence of tourism following the pandemic.
Foreign investors, such as Goldman Sachs Group Inc., KKR & Co, and Blackstone Inc., have collectively invested a total of US$2 billion in Japanese hotel ventures in 2023, marking it as the most favoured sector within the Asian commercial property market, as reported by MSCI Real Assets.
The growing adoption of hybrid work setups and an increase in office space availability have dampened investor enthusiasm for the office sector in Japan, as noted by Knight Frank.
According to the Knight Frank report, Japan ranks as the third most attractive investment location in the Asia-Pacific region for investors based in Singapore, following China and Australia. Over the past decade, a total of $16.2 billion has been poured into the Japanese commercial real estate market, with 12 percent of this amount invested in the first half of the current year. This substantial increase in investor interest underscores a notable upswing in activity.
In conclusion, Singapore's ascendancy as the primary investor in Japan's real estate market in 2023 signifies a significant shift in the dynamics of the Asia-Pacific property landscape. Fuelled by the yen's devaluation and heightened demand in logistics and hospitality sectors, Singaporean investments, led by GIC Pte, have surged to nearly $3 billion, outpacing traditional players like the United States and Canada. The Japanese real estate market's attractiveness stems from its affordability, favourable borrowing costs, and the revival of tourism post-pandemic, making hotels a particularly sought-after sector for international investors. While the office sector has faced some challenges, Japan continues to rank as the third most attractive investment destination for Singaporean investors in the Asia-Pacific region, underscoring the remarkable upswing in activity and the growing allure of Japan's commercial real estate market.
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