Abu Dhabi Investment Council buy into Japan tower

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Shiba Park Building
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The Abu Dhabi Investment Council has partnered with two other Japanese investors to buy a billion dollar Tokyo office tower.

Shiba Park Building
Shiba Park Building – Tokyo, Japan

Market information shows that this is the biggest property deal in Japan since February, and the largest involving a foreign investor since the 2008-2009 global financial meltdown.

The group of investors includes Abu Dhabi Investment Council, Japan’s Secured Capital Investment Management Co. and C V Starr & Co. which is run by former U.S. insurance magnate Greenberg.

Nicknamed, the Gunkan, or the Warship building, the towering Shiba Park Building has more than 83,510 square metres available for rent. With a total floor space of 102,300 square metres, the building is iconic and a prime commercial property in the capital’s busiest business district.

The investors will pay about ¥10 billion in cash in the 14-storey Shiba Park Building. Lenders including Mizuho Bank, Shinsei Bank and Commerz Japan Real Estate Finance Corp will provide a loan of about ¥90 billion to complete the deal.

The deal highlights investor confidence in Japan’s real estate sector. Property values in Japan are expected to surge on the back of favorable economic policies being pursued by Prime Minister Shinzo Abe. Under the Abenomics program, property prices are set to rise because of heavy government spending and massive monetary easing. With the lending rates set very low, the government is encouraging investors to increase borrowing in an effort to end 15 years of deflation. The government’s policies are likely to boost investor sentiment and revive their risk appetite.

Rentals in Tokyo failed to recover in the aftermath of global financial crisis as investors have remained on the sidelines. However, there have been positive signs that the Japanese real estate market is on the verge of making a strong comeback. Since last year, vacancy rates in some of the most sought-after Tokyo buildings have fallen and monthly rents in central Tokyo have stabilised. The Shiba Park Building deal will further bolster market confidence and attract tenants to Tokyo’s office space market.

Image courtesy: flickr/bestofasia

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