SINGAPORE, Sept 17 Aviva Investors, the asset management arm of British insurer Aviva (AV.L), plans to launch a Tokyo office property fund by the end of this year and hopes to raise $250 million, a senior official said on Friday.
"The initiative which we're working on is a Tokyo office fund. We're targeting an equity capital raised of $250 million," said Ian Hally, CEO of Aviva Investors' Asia-Pacific real estate business.
Although Japanese office rents can only grow slowly due to the country's lacklustre economic growth, the market remains lucrative because office assets are relatively cheap, Hally said.
"The prices we're paying for very good quality assets in Tokyo are so attractive and we think we can improve (net operating income) a little through good asset management, cost savings etc.," he added.
"We can deliver very compelling asset returns from that sector."
Investors from the United States to Singapore have been on the hunt for real estate in Japan, with over $2 billion in deals already sealed since late last year, as its real estate sector, now the world's second largest, recovers. [ID:nTOE68207P]
U.S. fund manager Franklin Templeton said on Thursday it plans to launch a new Asian property fund of funds to raise about $300 million. [ID:nSGE68F0DB]
Hally added that capital available in the Japanese market to acquire assets was "very constrained" as few banks were willing to make loans. Aviva Investors manages 20 billion sterling ($31.25 billion) worth of real estate assets globally, out of which about 600 million sterling is in Asia.
The asset management arm was set up in September 2008 through the combination of several asset management businesses owned by Aviva. It has a relatively small presence in Asia outside of Australia, but it is currently building up staffing at its Singapore unit which is responsible for the region. (Reporting by Charmian Kok, editing by Raju Gopalakrishnan)