By Miho Uranaka and Anton Bridge
TOKYO () – Morgan Stanley is amassing approximately 100 billion yen ($684 million) for a real estate fund focused specifically on Japan, according to two individuals privy to the situation. This move underscores investors' enthusiasm towards properties as the globe’s fourth-biggest economy starts recovering from prolonged periods of deflation and stagnant pricing.
The fund managed by Morgan Stanley is scheduled to shut down in June and is anticipated to gather no less than 100 billion yen based on present investor pledges, as per these sources who chose not to disclose their identities since this data has yet to be released publicly. The ultimate amount raised for the fund might still vary by the time it closes, the informants noted.
The investments will focus on office spaces and multifamily residences in big urban centers, along with projects involving logistics and hospitality sectors, according to one person familiar with the matter.
Morgan Stanley chose not to comment. The specifics of the fund are being disclosed publicly for the first time here.
The American company is the most recent international asset management firm to target Japanese real estate, a sector that has regained popularity following years of inconsistent economic expansion, stagnant salaries, and negligible inflation.
The investment scenario has significantly shifted over the past year, particularly following the central bank’s decision to raise interest rates for the first time in 17 years back in March.
Prices, particularly for real estate, have been increasing recently: according to a land ministry survey, land prices throughout Japan rose by 2.7% in 2024, marking the quickest growth rate since 1991, just before the start of the nation’s “Lost Decades.”
"I believe there is significant potential for real estate investments during periods of inflation," stated Ikushin Tsuchida, the managing director at Brookfield Asset Management. "The market conditions are evolving," he added.
Meanwhile, as part of an effort to enhance corporate governance, Japanese publicly traded firms are aiming to better manage their assets and divest certain real estate holdings.
(Reported by Miho Uranaka and Anton Bridge; Edited by Dave Dolan, Chang-Ran Kim, and Sonali Paul)