AXA Investment Managers (AXA IM Alts), an alternative investment arm of the eponymous French insurer, has acquired 33 rental apartments in Japan for 420 million euros ($460 million) from institutional investors advised by JP Morgan’s real estate unit for Asia Pacific.
Spread across Tokyo, Greater Osaka, and Nagoya with close access to mass transit, the portfolio comprises high-quality residential buildings, predominantly one-bed apartments, according to a company statement on Thursday.
“This transaction further extends our residential footprint in three of Japan’s most densely populated cities where demand for high-quality rental accommodation exceeds the current supply. All the properties in the portfolio have a strong track record of high occupancy and proven appeals to the respective cities’ thriving professional communities,” said Laurent Jacquemin, head of Asia-Pacific at AXA IM Alts.
“The decision to further scale our Japanese residential portfolio is a testament to the market’s dynamism.”
Fourteen assets of the portfolio have been awarded a DBJ Green Building Certification as AXA IM Alts remain laser-focused on ESG as a key part of its strategy. “For all our assets, we are focusing on green certifications and reducing carbon emissions,” Jacquemin had told DealStreetAsia in a previous interview.
The world’s third-largest economy is witnessing migration into urban areas, reversing the outflow of populations during the pandemic, according to property brokerage firm JLL in its latest report. The positive net migration is “setting the stage for higher occupancy rates and giving impetus to faster rental growth for more central locations”, said the report.
“Global institutional investors will continue to be attracted to Japan’s multifamily sector due to the asset class’ favourable relative cash returns and income generating stability. We’re extremely confident in the prospects for this sector and expect to see a steady influx of new foreign investors looking to enter Japan’s maturing multi family market, ” said Stuart Crow, CEO of capital markets for Asia Pacific at JLL, which advised on the deal.
The investment marks AXA IM Alts’ first acquisition in Japan this year, following its entry into the country’s care-home market in December. The firm paid €156 million ($171 million) for 15 nursing homes, comprising more than 800 beds across Tokyo, Osaka, and Aichi, in its fourth acquisition in Japan in 2022.
While core strategy remains dominant among fund managers, deployment strategy is still diverse as private investors are seeking to capture different pools of capital from the sector. US-based Nuveen’s 2022-vintage fund for Japan Alternative Living mainly focuses on senior housing with the rising elderly population, unlike AXA IM Alts which continues to hunt for all types of multifamily assets in Japan, including student housing.
Last September, the investment vehicle purchased a portfolio of multi-family and purpose-built student accommodation assets in the country for a combined $420 million a month before its $93.5-million acquisition of two residential assets from PGIM Real Estate Japan, an Asian real estate investment arm of Prudential Financial.
One of the latest market entrants is Patrizia, a German-based real estate investor, which recently launched its first Japan-focused rental residential fund with a $1-billion target.