Tokyo Marine, ASIN Employees Pension Fund and DIC Pension Fund are among a limited group of Japanese pension funds to have invested in overseas real estate. But the number will grow, delegates heard at the PERE Tokyo Forum, last week.
In the view of Hideo Kondo, asset management director at the latter, more pension funds are gradually beginning to increase their outbound investments to earn a stable income. DIC has currently allocated 3 percent of its portfolio to real estate, all of which is in overseas investments, for example.
“After the global financial crises, we are now focused on the US and UK market, including the secondaries real estate market,” he specified.
With the country’s largest pension fund, GPIF, expected to increase its alternative assets allocation in an upcoming portfolio announcement, Albert Tan, partner at law firm Haynes and Boone, said that the news will further encourage other pension funds to re-evaluate their real estate strategy.
Many Japanese investors have been slow in investing overseas because they have been burnt before, he said. As the country’s pension funds start to move their money into overseas property markets, they don’t want that to happen again.
Some, he felt, might continue to track a well beaten path of sticking to previous investment options. “The investment returns expected from a Japanese pension plan is around 3 percent, which they can easily get by investing in bonds and other fixed income securities,” he added. “They don’t need to take the risk of investing in real estate.”