By Kosaku Narioka
TOKYO--U.S. investment firm Blackstone Group L.P. said Friday
that it had reached an agreement to buy General Electric Co.'s
residential real-estate business in Japan for more than Yen190
billion ($1.6 billion), another sign of foreign investors'
confidence in the nation's property market.
A big decline in the yen over the past two years has made Japan
more attractive to international investors, who are moving beyond
office and retail spaces in central Tokyo as prices keep
rising.
Blackstone will buy a portfolio of 200 residential properties,
with more than rental 10,000 units, primarily in the major cities
of Tokyo, Osaka, Nagoya and Fukuoka.
Alan Miyasaki, Singapore-based senior managing director who
oversees Blackstone's real-estate acquisitions in Asia, said the
properties in the portfolio are mostly standard, non-luxury
apartments, and the biggest Japanese cities are seeing inflows of
people even as the nation's total population declines.
Mr. Miyasaki said he likes the stability of residential
properties and the geographic diversification the portfolio offers.
Apartments in Japan performed well throughout the economic downturn
following the global financial crisis.
"We like that," he said in an interview.
Residential property investments in Japan generated a total
return--income plus capital gains--of 8.0% in 2013, compared with
9.7% in the U.S., according to Investment Property Databank Ltd. In
2009, the worst year for both countries in the past decade,
Japanese properties returned a negative 3.8%, while those in the
U.S. lost 16.3%.
Keisuke Yanagimachi, head of research for Japan at Cushman &
Wakefield, said the yen's continued decline is generating greater
appetite for investment in Japanese property. He, too, noted the
stability of residential property.
"There may be capital loss during a 'once-in-a century'
financial crisis, but income gains support returns," Mr.
Yanagimachi said.
The yen has fallen by around 33% since Prime Minister Shinzo Abe
started campaigning two years ago to lead the nation out of
deflation, partly with aggressive monetary easing that has lowered
borrowing costs and made local banks more willing to lend.
Year-to-date through September, real-estate investment in Japan
totaled Yen3.5 trillion, the most since 2007 and a 13% increase
from the same period last year, according to data from Urban
Research Institute Corp., a real-estate think tank operated by
Mizuho Trust & Banking Co.
In late October, Singapore sovereign-wealth fund GIC Pte. said
it bought 24 floors of Pacific Century Place Marunouchi, a building
next to Tokyo Station. A person with knowledge of the deal said the
cost was US$1.7 billion.
Some investment managers say now is a good time to sell
properties because they can find many buyers.
Francois Trausch, chief executive officer for Asia-Pacific at GE
Capital Real Estate, said the sale to Blackstone supports its
strategy of building debt operations.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
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