Drapac shacks up in Japan residential market

MELBOURNE's Drapac has set sailed for Japan with the launch of the fund targeting the residential property market.

The wholesale investment vehicle will be launched on July 1, 2007 and is looking to raise $100 million – allowing it purchase up to $300 million in assets. Drapac has no plans to develop the properties.

The Japan fund will be purely a wholesale investment vehicle.

DRAPAC director Ashley Wain said that the Japanese residential market is one of the most affordable housing markets of any developed country.

“Japan’s 15-year economic correction – perhaps even over-correction – means much of Japan’s real estate is undervalued. This is a trend which should reverse.

“Currently, the cost of housing mortgages in Japan represents around 15% of total household income compared to almost 30% for Melbourne households. However, Japanese rents represent a significantly higher proportion of income than in Australia,” he added.

The fund will invest in properties outside of Tokyo in cities such as Osaka, Nagoya, Fukuoka, Sendai and Sapporo.

“The fund will generally compete against smaller local private investors for target assets with capital values between $3 million – $30 million. Properties will be located within 10 -12 minutes of train stations or key transport nodes and within areas with strong economic and demographic characteristics. They will be seismic compliant and hold a current Certificate of Occupancy.”

New Japan-based subsidiary Nihon Drapac will manage the assets.

Australian Property Journal