M&G Real Estate has acquired 12 residential properties in Japan for its core Asia-Pacific strategy.

It is the second Japanese residential made by M&G in two months and is one of the largest portfolios of residential properties the company has acquired.

It increases M&G’s Japanese exposure to 22% and its total residential exposure to 10%.

The properties are located in prime districts of Tokyo, Osaka, Kyoto and Fukuoka with convenient access to public transport, employment and local amenities.

The portfolio is almost fully occupied.

“Japan is one of the largest developed, stable and transparent real estate markets in Asia-Pacific, with relatively attractive yields and returns,” said Richard van den Berg, manager of the core strategy, told IPE Real Assets.

“For core real estate investors, the predictable and resilient income streams from real estate assets coupled with low borrowing costs present an attractive investment opportunity.”

Van den Berg added that key regional cities like Tokyo, Osaka, Kobe, Nagoya and Fukuoka had been experiencing strong migration intake from the younger workforce in lower-tier cities and inner areas seeking areas of economic growth and employment opportunities.

“The residential portfolio we target caters to this demand by being located in residential areas that are close to public transport and amenities, with affordable rentals,” he said.

“Coupled with high capital barriers for purchase and the high level of construction costs, we anticipate a moderate supply for new homes in the market, which will sustain the high demand for rental homes.”

M&G now owns 35 residential towers throughout Japan, having made its first residential acquisition there five years ago. Since then it has made five transactions, the most recent in October, when it bought three residential blocks for just over ¥6bn (€49.2m).

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