CapitaLand Investment (CLI) 9CI , on April 3, announced that it has entered into a forward purchase agreement to acquire six multifamily – or rental housing – assets in central Osaka in Japan for $141.4 million.
The agreement, which was entered into with an “established Osaka-based residential developer”, was for CLI’s flagship regional core-plus fund, CapitaLand Open End Real Estate Fund (COREF).
The off-market deal marks COREF’s foray into the multifamily sector and brings the group’s total investment in Japan to about $1.1 billion across 60 properties.
“Including the six newly acquired multifamily properties by COREF and another three multifamily properties acquired by CLI’s lodging trust CapitaLand Ascott Trust which will be completed between 2QFY2023 and FY2024, CLI vehicles will hold a total of 30 multifamily properties across eight cities in Japan,” says Tan Lai Seng, managing director for Japan, CLI.
“The multifamily sector in key Japanese cities, in particular Osaka and Tokyo, have demonstrated resilience over the past decade, driven by robust demand supported by urban migration to the cities. The Osaka multifamily sector performed well even during the Covid-19 pandemic, demonstrated by growth in rents and strong occupancy rates of above 95%,” he adds.
The six assets are located close to the commercial districts of Umeda and Namba and are within walking distance of their respective subway stations.
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The portfolio comprises 428 premium one-bedroom apartments that are targeted at corporate tenants and middle-income couples.
The properties will be completed in phases from May 2023 to June 2024. They are also said to benefit from Osaka City’s growth potential. The city is undergoing a revitalisation process in the run-up to World Expo 2025, which it is hosting.
Osaka is also a major contender for Japan’s first integrated resort, which is projected to open in 2030.
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“We continue to build on our private fund management’s achievements with the acquisition of a high-quality portfolio of multifamily assets in Osaka for COREF. Japan’s urban multifamily sector is one of the bright spots in the Asia Pacific real estate market that has been growing steadily and demonstrated resilience through economic cycles,” says Simon Treacy, CEO, private equity real estate, real assets, CLI.
“Since its inception in September 2021, COREF has invested selectively in Japan, Singapore and Australia to achieve geographical diversification. Since 2022, CLI has launched 11 new private vehicles and added 17 new investors to our global network of capital partners amidst volatile market conditions, bringing equity raised to date to over $4 billion. Building on this momentum, we will continue to leverage our ground expertise and deep experience in the countries we operate in. We remain focused on seeking attractive opportunities to deliver quality returns to our fund investors as we grow the business,” he adds.
Shares in CLI closed 3 cents higher or 0.82% up at $3.68 on March 31.
