In a world wrecked by hikes in interest rates and inflationary pressure, this year’s Asia award winners have reflected industry players’ strong interest in Japan where the country’s low interest rate environment has continued to provide a low financing cost for real estate buyers. Indeed, the biggest winners KKR, GLP and GIC have all completed notable milestones in the country in 2022.
Led by 2022’s Industry Figure of the Year and its Asia-Pacific head of real estate, John Pattar, KKR has stolen the show by taking home three regional awards: Firm of the Year, Deal of the Year and Industry Figure of the Year. The firm’s success was marked by its $2 billion acquisition of Japanese REIT manager Mitsubishi Corp-UBS Realty. The transaction allowed KKR to get a foothold in one of the largest real estate markets in Asia-Pacific and access a capital market that has previously proven difficult for non-domestic managers to access.
Pattar told PERE in an interview earlier that “KKR has looked at our real estate portfolio globally and said, we really want to be in the Japan market. You have got to understand with Japan, it’s always been about scale.” MC-UBSR has $15 billion in assets under management, and so the acquisition expanded KKR’s $41 billion global real estate business to $55 billion in one go, rapidly accelerating its growth.
Runner up to KKR in the Firm of the Year award was logistics heavyweight GLP. The firm had an outstanding fundraising year where two of its funds were shortlisted for Capital Raise of the Year: GLP China Income Partners V and GLP Japan Development Partners IV. The former won the Capital Raise of the Year award by reaching a final close on $5 billion, while the latter represented the largest-ever amount of capital raised for a Japan-focused private real estate strategy. Apart from these, GLP was also crowned Logistics Investor of the Year by closing several landmark logistics funds in the region, including its first Vietnam fund GLP Vietnam Development Partners and first discretionary value-add fund in China, GLP China Value-Add Partners IV.
Japan becomes investor favorite
Besides the managers, some of the world’s biggest institutional investors have also gone on a shopping spree in Japan. Qatar Investment Authority acquired 32 Japanese residential assets in the country through a separately managed venture with Gaw Capital. The acquisition has partly made the Hong Kong-headquartered real estate firm the winner for Japan’s Firm of the Year. In addition, Gaw also purchased its first logistics portfolio in Japan from Blackstone at the end of last year. The portfolio comprised seven fully-let assets across Greater Tokyo. Currently, the Hong Kong firm manages $3.7 billion of assets in the country and plans to increase that to $8 billion within the next three years, according to a PERE report.
GIC is another active investor in Japan and the winner of 2022’s Institutional Investor of the Year award in Asia as it bought 30 hospitality assets from Japanese corporate Seibu Holdings for $1.3 billion. The sovereign wealth fund also won Firm of the Year in Australia and India with more than 40 percent of the votes. Notably, some of its biggest investments in these two countries were made with its long-term partner and logistics specialist ESR. These included a partnership to establish a $750 million joint venture to develop and acquire industrial and logistics assets in India and the extension of its core-plus logistics strategy through the launch of ESR Australia Logistics Partnership III in Australia.
While the global economy is facing the uncertainties caused by an interest rate hike, most of the world is finally moving on from the covid pandemic. The hospitality sector is expecting a significant rebound as travel returns to normality.
Real estate powerhouse Blackstone was one of the earliest movers to capture the opportunities in the sector. The firm has won the region’s Hospitality Investor of the Year for two consecutive years. GIC and SC Capital were the other runners-up to Blackstone in the hospitality category; the former bought the hotel portfolio from Seibu while the latter secured $500 million for its Japan Hospitality Fund with a further top-up option to increase total commitment to $1 billion of equity. In addition, Blackstone’s $6.3 billion buyout of Australian entertainment group Crown Resorts last year put it on the shortlist for Deal of the Year in Asia.
Alongside the return of the hospitality sector, multifamily is emerging as another popular asset class in the region for institutional investors. Having said that, most of the landmark transactions in this sector are happening in Japan and Australia. Multifamily specialist Greystar has won the Residential Investor of the Year award in Asia for two consecutive years. In 2022, the firm launched a $1 billion first pan-regional Asia-Pacific multifamily fund focusing on value-add investments in Japan, Australia and China. Meanwhile, Allianz, Ivanhoé Cambridge and AXA Investment Management has also boosted its foothold in the sector with some large deals. For example, Allianz and Ivanhoé Cambridge together formed a $2 billion core-plus residential program while AXA IM launched its Australian build-to-rent strategy by teaming up with Australia’s National Housing Finance Investment Corporation.
Finally, China was still largely inaccessible to foreign investors due to the zero-covid policy in 2022, so activity in the country was dominated by domestic firms and firms with a long history in the country as reflected in the shortlist for this year’s country award. Notably, Shanghai-based real asset platform DNE Group was crowned Firm of the Year again for the region after completing a $1.2 billion joint venture with an Asian institutional investor to invest in the country’s life science parks. It also partnered with Guotai Junan Securities to list its DNE New Economy C-REIT on the Shanghai Stock Exchange.