TOKYO Global investment firm Blackstone Group is opening a real estate office in Tokyo to hunt for deals in Japan's booming property market, sources familiar with the matter said on Monday.
Blackstone is shifting property dealmakers from its other offices to Tokyo and has hired the head of private equity at Japanese lender Shinsei Bank Ltd., Daniel Fuji, to search for real estate deals in Japan, the world's second-largest real estate market, the sources said.
Tokyo's property market is growing at the fastest pace since Japan's bubble years while the average national land price rose for the first time in 14 years in 2006.
Blackstone is raising a $10 billion global real estate fund, one of the biggest ever. Part of this fund may be deployed in Japan.
The firm, which floated on the New York Stock Exchange in June, has been building a presence across Asia. Blackstone's first office in the region was established in Mumbai in 2005 to handle private equity and real estate investments.
That office was followed by a satellite office in Hong Kong in 2006 to support the firm's fund of hedge fund operations. In January of this year, Blackstone opened a private equity office in Hong Kong.
Blackstone is rumored to also be on the hunt for a person of stature to establish and front a private equity practice in Japan. In Hong Kong, the U.S.-headquartered firm hired Antony Leung, the former financial secretary of Hong Kong from 2001 to 2003.
Global property markets have been soaring of late, and dealmaking hit a record $382 billion in the first half of this year according to Jones Lang LaSalle. However, worries about a worldwide credit squeeze have investors worried about a slowdown.
On a global basis, Japanese real estate has looked attractive, according to analysts, given the relatively large difference between real estate yields and long-term interest rates.
Blackstone has shown interest in the Japanese real estate market before. It competed fiercely for the 13 hotels auctioned off by All Nippon Airways Co. earlier this year; but was outbid by a 281.3 billion yen ($2.4 billion) bid from Morgan Stanley, a record price for a Japanese real estate deal.
The firm is scheduled to release its quarterly earnings later on Monday.
A Blackstone spokesman in New York declined to comment and a Shinsei spokesperson was unavailable to comment immediately.