Norway wealth fund to buy prime properties in Tokyo
The fund and Tokyu Fudosan will jointly spend nearly $1.2bn for five buildings
TOKYO -- Norway's enormous sovereign wealth fund and Japanese real estate company Tokyu Fudosan Holdings will jointly acquire five commercial buildings in Tokyo for a total of 132.5 billion yen ($1.17 billion).
The Government Pension Fund Global will put up 70% of the purchase price, with Tokyu Fudosan shouldering the rest, according to an announcement Thursday. The five buildings, located in Tokyo's Shibuya and Minato wards, have a total floor space of 12,300 sq. meters and include the V28 Building in Shibuya's trendy Omotesando district.
Tokyu Fudosan will be entrusted with management of the properties.
The sovereign wealth fund channels revenue derived from oil into stocks and bonds around the world. It seeks to allocate 5% of its assets to real estate, with plans to purchase property in 10 major cities in the world. The fund set up a Tokyo office in 2015.
Tokyo, with its expected population and economic growth, will bring stable and high returns in the medium to long term, said Karsten Kallevig, head of the fund's property business, to The Nikkei on Thursday. He expressed a desire to keep investing in office buildings and commercial facilities here.
Foreign money continues pouring into real estate in Japan amid ultralow interest rates and a soft yen. Property purchases by foreign-affiliated businesses more than tripled on the year to 657.2 billion yen for the April-September period, according to the Mizuho Trust & Banking-affiliated Urban Research Institute. The tally exceeds the amount bought by real estate investment trusts listed in Japan.