The Straits Times - Singapore property firms developing a yen for Japan real estate

SINGAPORE, May. 02 2025 / The Straits Times / - SINGAPORE - Japan is shaping up to be the land of the rising sun for property developers in Asia.

After receiving a record 36.9 million international tourists in 2024, Japan is expecting 60 million visitors by 2030. And with a relatively strong Singapore dollar vis-a-vis the yen, and abundant potential to develop tourism in other less visited areas in the country, Singapore real estate and property developers have been making their mark there, collectively investing hundreds of millions of dollars in the first quarter of 2025 alone.

First off the post was CapitaLand Ascott Trust, which announced the acquisition of the ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae in Japan for 21 billion yen (S$190 million) in January, bringing its Japan portfolio to a total of two serviced residences, four hotels, 23 rental housing properties and a student accommodation property.

The following month, Far East Hospitality Trust (FEHT) Reit announced its acquisition of the 319-room Four Points by Sheraton Nagoya hotel at Japan’s Chubu International Airport for six billion yen.

Mr Gerald Lee, chief executive officer of FEHT, said four-star business hotel properties like its acquisition are “more tradeable”, and are versatile as they cater to both business travellers and tourists.

While there has been talk about potential interest rate hikes by the Bank of Japan, Mr Lee said the real estate investment trust (Reit) had managed to lock in a four-year fixed rate loan for the Nagoya acquisition.

FEHT had announced in a bourse filing on April 16 that it had entered into a $22 million sustainability-linked facility agreement with an institutional bank, though it did not specify what the agreement would be used for.

Private equity firm Patience Capital Group (PCG), meanwhile, raised a total of $370 million for its Japan Tourism Fund, of which much will go into further developing the ski resort town of Myoko in Niigata prefecture. It is building a mountain resort and a township, two hotels, and residences, and intends to improve facilities.

Much of it is funded by private equity and includes a number of Japanese banks such as Mizuho, and local banks from Niigata and the neighbouring prefecture of Nagano.

PCG intends to completely develop the entire mountain area, including the surrounding township, by building hotels and high-end residences. It is also working with the local government to ensure jobs for locals throughout the year beyond the peak winter season, and intends to create a base with convention facilities to host international or big-scale events such as the Davos conference, said PCG’s CEO Ken Chan.

“We are working with the local prefecture governments to build that. It’s a mountain resort, not just for skiing, so we are also focused on the non-white season. We’re very excited about it,” he added, referring to the non-winter seasons.

The group holds a gathering for local residents every two or three months to address concerns, such as how water flows may affect their rice padi fields.

“(We) let them know we are accessible. We also have taken in a very important Myogo city office ex-employee and he helps to build local relationships with the village. We do hear a direct voice from the locals. We do address them quite openly... like youngsters if they want to move to the mountains instead of Tokyo,” said Mr Chan.

He hopes to get started on construction work in 2026, and estimated that it may take 18 to 24 months to complete. He hopes to open before Japan’s winter season in 2028.

PCG is also raising money for its 25 billion yen residential fund, which is part of its lifestyle strategy in Japan.

Earlier in February, the group bought the Tokyu Plaza Ginza in central Tokyo for US$1.6 billion (S$2.1 billion) with real estate private equity firm Gaw Capital. Gaw Capital holds 91 per cent of the property, with PCG holding the remaining 9 per cent.

Mr Chan said they are looking to update the tenant mix, and are considering tenant requests to be moved to more strategic locations such as those facing the main road or at the ground floor.

He added: “We’re trying to put a whole tenant mix that is appropriate for this building and location, as well as the mindset not just for domestic tourists but also for inbound tourists. Especially for us, we kind of know the shopping patterns of the Asian customer, so we have an idea of how to balance it out.”

Mr Keith Ong, co-founder and CEO of real estate firm RealVantage, said there are good reasons why Japan is quickly becoming a hot spot for real estate investments in East Asia.

“For one (thing), the country offers a great blend of stability and potential. With a mature economy, solid infrastructure and clear legal processes, it feels like a safe bet for anyone looking to invest and get reliable returns. This is a big contrast to some other East Asian markets, where the political and economic climate can feel a little uncertain,” he said.

Still, investors need to do their homework. He said that RealVantage had reviewed several potential opportunities in the country back in 2024, including a co-investment in a 300-key business hotel located in Namba, Osaka, and a development project to build a resort with approximately over 300 hotel and apartment units in Niseko, Hokkaido. However, Mr Ong said the firm was not satisfied with the findings from the due diligence conducted and decided not to pursue these opportunities.

Investments are not just limited to the hospitality sector.

Wide-scale adoption of cloud computing and generative artificial intelligence (AI) is also fuelling exponential growth, and demand, for data storage.

Mr Hideto Yamada, CEO of CapitaLand Investment (CLI) Japan, said that CLI is in a strong position to expand in this sector given its vertically integrated data centre capabilities.

He said: “Japan is a Tier 1 data centre market poised for strong growth. It is projected to expand at a compound annual growth rate of 10 per cent, from US$23.8 billion in 2023 to US$38.7 billion in 2028. It is also the Asia-Pacific’s largest data centre market outside of China, with both Tokyo and Osaka being key data centre hubs in the region.”

Mr Yamada added that CLI intends to increase its global funds under management to $200 billion by 2028, which the company will do by continuing to ramp up capital raising and deployment, scale up operations, and widen its fund product offerings in Japan.

Ms Pamela Ambler, head of investor intelligence for Asia-Pacific at global commercial real estate and investment management company JLL, said the yen’s weakness against the Singapore dollar is an advantage that enhances the investment appeal.

“On the fundamental side, it’s very stable on the supply and demand dynamics. Because of inflation being sustainable around that 2 per cent inflation target well over two years now, we see that coming through rental growth. Demand is picking up across various asset classes as corporate restructuring takes place.”

She added that Singaporean investors also get higher risk-adjusted returns in Japan compared with the home market of Singapore, so one “will see more Singaporean capital finding opportunities in Japan”.

About RealVantage

RealVantage is a leading real estate co-investment platform, licensed and regulated by the Monetary Authority of Singapore (MAS), that allows our investors to diversify across markets, overseas properties, sectors and investment strategies.

The team at RealVantage are highly qualified professionals who brings about a multi-disciplinary vision and approach in their respective fields towards business development, management, and client satisfaction. The team is led by distinguished Board of Advisors and advisory committee who provide cross-functional and multi-disciplinary expertise to the RealVantage team ranging from real estate, corporate finance, technology, venture capital, and startups growth. The team's philosophy, core values, and technological edge help clients build a diversified and high-performing real estate investment portfolio.

Get in touch with RealVantage today to see how they can help you in your real estate investment journey.

Disclaimer: The information and/or documents contained in this article does not constitute financial advice and is meant for educational purposes. Please consult your financial advisor, accountant, and/or attorney before proceeding with any financial/real estate investments.