Gaw Capital eyes more Japan property deals amid high expectations for TSMC’s chip factories
- Gaw already manages US$3.8 billion of property assets in Japan and has begun a search on the western island of Kyushu
- TSMC is building an US$8 billion fabrication plant in Kumamoto prefecture in collaboration with Sony, to be completed later this decade
“We are looking in that area, obviously we believe that with TSMC, it would change the market a lot,” Isabella Lo, Gaw’s managing director and head of Japan investments, said in an interview Wednesday. Gaw, which already manages US$3.8 billion of property assets in Japan, has just begun its search in Kyushu – a region where it hasn’t made acquisitions before, Lo said, adding that she would be interested in developing a logistics property and buying residential real estate in the area.
Kyushu is more known in Japan for its mountains, beaches and hot springs than the commercial activity that’s typically drawn real estate investors to areas around Tokyo and Osaka. The opening of an advanced chip factory could bring investment to the region, and the Japanese government is providing subsidies for the project.
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Active in Japan
Gaw, which manages about US$35.7 billion of real estate assets globally, has been particularly active in Japan in the past year, attracted by the country’s weak currency and low interest rates. Lo said in August the fund planned to invest about US$3.5 billion to US$4 billion in Japan by mid-2024.
In the past six months, Gaw has purchased a portfolio of logistics properties, and bought the Hyatt Regency hotel in Tokyo in a joint deal with KKR & Co. Lo said Wednesday that the fund wasn’t near its US$4 billion plan in terms of acquisitions, and hoped to do more deals in logistics, data centres and hospitality in the near term.
Gaw’s favourite Japan investment right now is hotels, as the weak yen can attract foreign tourists and keep domestic tourists home, generating strong demand. Still, there’s a lack of good deals on the market and some properties for sale are too expensive, Lo added.
“In an inflationary environment, hotels is probably the best sector where you can increase your rates on a daily basis and not be locked into a long-term lease,” like with offices, she said. “You can actually increase your price.”
