M&G Real Estate has acquired Merado Daikai, a retail property in an established urban residential neighbourhood of central Kobe, Japan.
The property was purchased under M&G Real Estate’s core Asia real estate investment strategy overseen by fund manager Erle Spratt, which is aimed at institutional investors in Asia, the UK and Europe. Japan now accounts for three per cent of the core Asia portfolio.
Merado Daikai is a five storey retail and office property adjacent to major transport links in Kobe. The property is primarily non-discretionary retail space, i.e. the majority of customer purchases tend to be regular and comprise mainly essentials such as food and pharmacy items.
Fund manager Erle Spratt says: “This marks another milestone as we look to add value for our institutional clients. I am very happy with what the acquisition brings to our core Asia property portfolio as we continue to diversify and seek to improve risk-adjusted returns for our clients. We are working to source attractive assets in Japan to add to our portfolio in Asia.”
Katsuhiro Ishikawa, managing director, M&G Real Estate Japan, adds: “Merado Daikai is a high quality building boasting a good period of trading history and it is an excellent strategic location in an area with a dense and growing population.
“We continue to look for opportunities in the Japanese market, in particular the retail sector for its reliable income, and the office sector for growth. The non-discretionary retail real estate sector in Japan looks attractive due to its stable quality and relatively high cash yields.”
M&G Real Estate has seen a marked increase in investor appetite for Asian real estate in 2013, with new third party investors committing USD137m to its core Asia real estate strategy since the start of 2013. The firm says that smaller pension schemes and insurance companies are increasing allocations and committing new capital to the asset class, with particularly strong interest from investors in the UK, other parts of Europe and the Americas as well as growing interest from institutional investors in Asia.