ING Real Estate to boost investment in Japan

ING Real Estate to boost investment in Japan

ING Real Estate, one of the world’s largest property investment companies, aims to boost its investment in Japan by 20 to 30 percent next year and set up a new fund there, a company executive said.

ING Real Estate, which started to invest in Japanese real estate this year, expect its investments in Japan to reach about $600 million to $700 million by the end of this year.

Major purchases so far include a shopping centre in Morioka, in northern Japan. Ono said his firm was currently processing a couple of transactions to buy retail and industrial assets and added that there were two more deals in the pipeline.

ING launched two funds earlier this year, including the Asia Value Fund, which aims to raise $1 billion in equity, and the Asia Retail Fund, which is looking to raise $600 million.

“If we continue like this, we have to increase by maybe 20 to 30 percent in total in new investments next year within Japan,” Hidetoshi Ono, managing director for ING Real Estate Investment Management Japan K.K., told Reuters on the sidelines of a property conference in Tokyo. “My target is high.”

ING Real Estate, part of Dutch financial group ING (ING.AS: Quote, Profile, Research), came to the Japanese property market late compared with competitors such as Morgan Stanley (MS.N: Quote, Profile, Research) and Goldman Sachs (GS.N: Quote, Profile, Research), which have been actively snapping up Japanese assets, fuelling competition in the market. While the Japanese property market remains buoyant, backed by a gradual economic recovery and a pick-up in land prices, returns on the investments have been falling.

But Ono said investors’ interest in Japanese assets remained strong, and his firm was planning to launch a country-specific fund to buy commercial properties such as retail and office.

“We are designing and at the research stage to raise a Japan fund which specifically targets Japan,” Ono said.

Ono said details such as the timing and the size of the fund had not been decided, but added that ING already had China and Korea funds with about $200 million in equity each.

The low cost of funding, thanks to Japan’s low interest rates, was also a draw, Ono said.

Retail properties are attractive, Ono said, given that a number of Japanese babyboomers are retiring and ready to spend.

“These babyboomers are sitting on a huge pile of money with more time to spend,” he said.

ING Real Estate has 97.7 billion yen of assets under management globally, 47 percent of which is allocated in the U.S., 38 percent in Europe and the UK and only 3 percent in Aisa.