Mr Lee observed that cities like Tokyo, Osaka and Kyoto are becoming too expensive to secure high profit margins, and expects to shift his focus to regions like Fukuoka and Kumamoto. He also intends to focus on Hakuba, a mountainous ski resort in Nagano and site of the 1998 Winter Olympics.
Early bird catches the worm
With interest rates still at zero per cent to 0.1 per cent, Mr Lee expects the flood of global investment capital to continue.
“We are performance-based asset managers, and we need to make money for our clients,” he said.
“So yes, I’m in a hurry. The early bird catches the worm – we’re hunting, we’re deploying, but now that we have a track record, we can move faster.”
They join other long-time investors like SC Capital Partners, a private equity real estate firm founded in Singapore in 2004 that bought its first Japan property in May 2010 – the since-sold Comfort Hotel Nihonbashi in Tokyo.
In a rare media interview, the firm’s founder Suchad Chiaranussati told ST that Japan accounts for a third of its overall investments through its private real estate funds across the Asia-Pacific.
Its Japan portfolio now includes hospitality, student accommodation, offices, logistics, residential, corporate housing, retail and, since November 2023, a data centre in Osaka.
In 2023, it was part of a consortium that snapped up 27 resort hotels across Japan from Daiwa House Industry in a deal worth about US$900 million (S$1.2 billion). Of these, 23 are being rebranded and refurbished and will open in April 2024 under the brands Mercure and Grand Mercure.
In all, SC Capital Partners Group owns 79 hotels in Japan, and has sold another 13.
Back in 2010 when the company first entered the Japanese market, there were just 8.6 million visitors to Japan. But Mr Chiaranussati was confident that Japan would come to adopt tourism as a key economic strategy, and visitor numbers have since surged nearly four times to a pre-pandemic high of 31.9 million in 2019.
“Our gut feeling alone is not enough to sustain this in the long term. All our decisions are based on very strong fundamental analyses,” he said.
Meanwhile, GIC, which has been investing in Japan since the 1990s, also has a diversified portfolio.
GIC bought nine logistics facilities in Japan in 2023, while its most recent reported big-ticket hospitality purchase was in 2022 when it snapped up 31 properties from Seibu Holdings. They included The Prince Park Tower Tokyo, located beside the Tokyo Tower, and Naeba Ski Resort in Niigata, which hosts the popular Fuji Rock Festival in the summer.
GIC is now reportedly considering the sale of the 1,053-room Hilton Fukuoka Sea Hawk Hotel, which it bought in 2007, for over 85 billion yen (S$756 million).
Mr Chan left GIC to found PCG. To raise new capital, PCG has reopened a tourism investment fund that it closed in October 2023 after procuring 35 billion yen, amid fervent interest from investors. The fund will close again in September, and the goal is to grow its equity to 60 billion yen by then, Mr Chan said.