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KKR's KJRM Eyes $2.8 Trillion Japanese Property Market
13 Apr
Summary
- KKR's KJRM plans a significant expansion into Japan's divestment property market.
- The firm estimates the market for corporate real estate divestments at $2.8 trillion.
- Companies are selling properties due to investor pressure and capital efficiency.
KKR & Co.'s Japan real estate management unit, KJRM Holdings, is preparing for a substantial expansion in acquiring properties that Japanese companies are looking to sell. The firm estimates the size of this market for corporate real estate divestments to be as large as ¥450 trillion ($2.8 trillion).
Japanese companies are facing increased pressure from policymakers and investors to divest non-core assets, including real estate, a trend KJRM Holdings sees as a significant profit opportunity. This movement is driven by a push from the Tokyo Stock Exchange to enhance shareholder returns, with the disposal of idle real estate being a key strategy.
KJRM Holdings president, Naoki Suzuki, stated that corporate demand for selling real estate is robust, likely continuing for the next three to five years as companies seek to improve capital efficiency. The firm intends to increase its purchases of such properties, focusing on assets resistant to inflation and capable of boosting cash flow, especially in major cities like Tokyo, Osaka, and Nagoya.
Japanese firms hold a larger proportion of real estate assets compared to their European and North American counterparts. With global investors seeking low-risk options in the Asia-Pacific region and Chinese assets facing geopolitical concerns, Japan's market offers liquidity and size. Despite rising borrowing costs, the Japanese real estate market is expected to remain relatively stable as long as benchmark government bond yields do not significantly increase.
