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Giant Japanese Capital Pool Is Flowing Into Europe

Giant Japanese Capital Pool Is Flowing Into Europe
Tokyo

The huge pool of capital from Japanese institutional investors is increasingly being tapped by European fund managers.

LaSalle Investment Management said this week that it had seen increasing inflows of capital from investors from Japan and Australia into its €2.5B (£2.1B) Encore+ fund, according to IPE Real Assets.

Fund manager David Ironside said that while 90% of the fund’s investors are European, Japanese investors were the fastest-growing group.

“Japanese investors have very much woken up to Europe, and they understand the market quite well,” he said. “There are a lot of similarities between Europe and Japan.”

LaSalle's Encore+ fund is open-ended, and has grown by 50% in the past 12 months.

Compared to peers from other Asian countries like China, Malaysia and Singapore, Japanese institutions have been much more reticent to invest in overseas real estate this cycle, but there are signs that this is changing. And the pool of capital in Japan is huge.

In 2018, Japan’s $1.4 trillion Government Pension Investment Fund made its first overseas real estate allocation, handing a mandate to CBRE Global Investors to invest in global property funds. According to GPIF’s 2018 annual report, the first stage of this allocation amounted to slightly less than £400M.

Japan Post Holdings, a $2.8 trillion pension fund, took a stake in the Royal London UK Real Estate Fund, a £2.8B property fund.