RCA Insights

Cross-Border Interest Boosts Japan’s Multifamily Sector

By on March 24th, 2021

Alongside logistics, the apartment sector has been one of the most sought after investment targets for commercial real estate investors during the Covid-19 era. Six of the 10 largest global apartment markets in 2020 recorded an increase in activity compared with the year before. One of those was Asia Pacific’s sole representative, Japan, where deal volume climbed by over one-half to reach 930 billion yen ($8.5 billion), making it the third biggest residential market in the world.

Japan multifamily acquisition volume and pricing by capital type and geography

Japan’s multifamily market has traditionally been dominated by domestic investors. Before 2014, more than three-quarters of investment into the sector involved a Japanese buyer. Domestic activity reached its zenith during the post-Global Financial Crisis recovery in 2010, with Itochu Corporation’s 260 billion-yen merger of Nippon Residential with its own REIT, Advance Residential. For the next five years, J-REITs were also very active in the market, plowing in at least 100 billion yen per year.

In some ways 2014 was a turning point for Japan’s residential market, as Blackstone’s $1.6 billion buyout of General Electric Co’s property unit (which in Japan held a portfolio spanning more than 10,000 units) heralded a wave of overseas institutional investment in the sector. Since then, other cross-border investors have become increasingly active. Anbang Insurance, Allianz, and AXA Real Assets are some of the names to have followed Blackstone’s lead on big ticket deals in recent years. Domestic REITs, meanwhile, have been much quieter in the sector since 2016.

The onset of the Covid-19 pandemic last year has only served to intensify cross-border interest in the sector. Blackstone’s repurchase of a 220-property portfolio in May 2020 — which it had sold to Anbang Insurance just three years earlier — was the biggest ever deal in the sector in local currency terms. At 300 billion yen, it made up almost a third of investment activity for the year. AXA IM’s purchase of a 661-unit property in Tokyo’s Central Ward for 70 billion yen was the most expensive individual property traded. The trend is not isolated to a couple of supersized deals however: there were a total of 37 deals by overseas investors.

This concentration of cross-border interest in Tokyo apartments has pushed both yields and price-per-tsubo to record levels. Yields as shown by RCA’s Hedonic Series contracted by some 20 bps nationwide and 40 bps within Tokyo throughout 2020. Despite these elevated pricing levels, momentum doesn’t appear to be slowing just yet, with deals by the likes of PGIM Real Estate and Allianz already added to the pipeline in 2021.

Student housing deals are excluded from this analysis. 


Real Capital Analytics publishes the Asia Pacific Capital Trends report each quarter, covering investment activity, pricing, top deals and players, and capital flows across the region. To learn more about how RCA’s reports, data and tools can inform your investment decisions, contact us.

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Benjamin Chow

Head of Analytics, Asia

Benjamin Chow is the Head of Analytics for Asia, based in RCA’s Singapore office and a lead author on Asia Pacific Capital Trends. His expertise spans both the commercial and residential real estate markets in Asia Pacific.