Japanese public pension fund Chikyoren has hired UBS Asset Management for overseas real estate, and JP Morgan for foreign infrastructure investment.
The country’s second-largest public pension fund – which acts for local government officials – last month chose Nomura to manage a domestic real estate mandate.
The move by the institution, one of Japan’s ‘big four’ public pension funds, could prompt Japanese investors to invest in global real estate, according to Japanese private fund placement agency Asterisk.
Yukihiko Ito, managing director at Asterisk, said: “Chikoyren’s first shot for overseas real estate can be a great trigger for other Japanese investors, especially for other pensions, regional banks and credit unions that remain relatively conservative in overseas real estate.”
He said Chikyoren, which has $185bn (€167bn) in assets under management, had chosen managers with established business platforms in Japan.
“We assume Chikyoren may select a few more fund managers for each alternative asset class, including private equity,” said Ito.
“Even though a low profitability in the domestic market pressured Japanese institutional investors to invest in overseas markets, negative public consensus for overseas real estate still remained due to a big loss from the 1990s bubble.”
Writing in IPE Real Estate this year, he said that, “considering Japan’s real estate market makes up roughly 10% of the global market, the four pension whales would be hard pushed to invest 2% of their portfolios, or JPY3.4trn (€30bn), into the domestic core market.
“They will, no doubt, have to invest overseas.”
Ito believes large global investors such as Norway’s Government Pension Fund Global and the Canada Pension Plan Investment Board “play a role in influencing” the Japanese funds.
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