Japanese investment in Australian real estate surged last year to a record $2 billion as this country’s housing crisis draws a new wave of investors wanting to put their capital and skills to work. Of the 53 deals in various sectors involving Japanese investors last year, 13 were property transactions – up from six a year earlier – Herbert Smith Freehills’ (HSF’s) Japan-Australia Investment Report 2023 shows.
Decisions such as the NSW Minns government’s plan to boost housing density around 39 transport hubs in Sydney– expanded to 45– and build 185,800 homes over 15 years are creating new opportunities. “That was huge and makes us excited,” Kanji Ochiai, a director of Odakyu Australia, a subsidiary of Tokyo-listed ¥675 billion ($6.8 billion) Odakyu Electric Railway Company, told. “It’s very good news for us. Developing residential products along the railway is in our DNA. We would like get involved in this opportunity.”
Odakyu, along with Hankyu Hanshin Properties, JR West Real Estate & Development and Kintetsu Real Estate – as well as Mitsubishi UFJ Financial Group and Nishimatsu Construction – invested in the Mitsubishi Estate-led acquisition of Sydney’s 60 Margaret Street complex from Mirvac and Blackstone last year for $777 million. Japanese investment in 2023 strengthened as capital from other Asian destinations such as Singapore, Malaysia and Hong Kong eased, HSF partner Michael Back said. “It was the activity from the Japanese that really kept the commercial market going,” Back said.
Japan’s ageing population and shrinking workforce was also creating a need for stable revenue sources offshore to replace declining domestic demand, HSF partner Damien Roberts said. “It’s not just looking at leveraging their skill sets and reimagining their Australia as an investment destination,” Roberts said. “It’s actually this is part of their own growth story, because it can no longer be domestic.”
