The pension fund of the world’s largest ink maker – Japanese manufacturing firm DIC Corporation – is gearing up to return to real estate investments for the first time since 2006, Bloomberg reports.
“One of the best investment decisions we made was to exit all our real estate investments in 2006 on the view that property prices worldwide were expensive,” commented Hideo Kondo, the asset management director of the fund. “But now, we’re starting to see some investment opportunities in the real estate market,” he added.
Some of those opportunities are located in its home market, where commercial land prices have slumped to their lowest in 36 years, Bloomberg says. But the pension fund, which invests 55 percent of its assets in domestic bonds with the remainder in domestic and international equities, will also target real estate investments overseas.
The pension’s shift to real estate reflects a broader trend within the Japanese pension market. A recent survey by JP Morgan found that 37 percent of Japanese pension funds expect to boost allocations to alternative investments, a category which includes real estate.
DIC’s pension fund manages some 87 billion (€778 million; $959 million) of assets and targets a yearly return of 3.5 percent, Kondo said. He added that about 16 percent of its portfolio comprises alternative investments, including private equity investments in Asia and emerging markets as well as infrastructure investments in the US and the UK.