UBS in $400m Japanese investment drive

By James Buckley - Tuesday, September 12, 2017 10:31

UBS Asset Management’s Real Estate & Private Markets (REPM) business has launched a $400m initiative to invest in the Japanese hotel sector.

The strategy will focus on securing value-add and development opportunities in key metropolitan and regional areas such as Tokyo, Osaka, Nagoya, Fukuoka and Hokkaido, amongst others.

Mitsubishi Corp – UBS Realty (MC-UBS), UBS-AM's joint venture in Japan, will source and manage assets for the strategy through its private fund management arm MCUBS Japan Advisors. MC-UBS has a 16-year track record and is one of the largest real estate platforms in Japan.

The new strategy will target assets with potential for refurbishment, repositioning or conversion. This is in addition to investing in development projects where there is a third party operator in place. The primary focus will be on the limited service hotel sector.

Graham Mackie, Head of Real Estate Asia Pacific at UBS-AM, said: "Our investment thesis is underpinned by the clear gap between strong growth in demand for overnight accommodation and the lagging response in supply of new hotel rooms. We see a particular window of opportunity in limited service hotels, a sector that accounted for over 40% of all hotel stays in Japan last year."

Mackie added: “The evidence is there to demonstrate that tourist arrivals have experienced buoyant growth and that this momentum will continue. But what's less well-known is the high overnight lodging demand from domestic travellers – these account for six times that of international tourists. Supply is just playing catch up here in response to the demand.

"The strategy is underpinned by long-term structural drivers. This, coupled with the local market sourcing expertise and track record of MC-UBS, makes it a compelling investment proposition for investors."

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