Japan鈥檚 楼145trn (鈧�1.24trn) Government Pension Investment Fund (GPIF) has issued a call to real estate and infrastructure fund-of-funds managers to apply for investment mandates.
The world鈥檚 largest pension fund, which has been a 5% allocation to alternative asset classes, has confirmed it is looking to invest in core real estate and infrastructure funds on a global basis.
GPIF said it is looking for 鈥渇und of funds products鈥� to be established as separate accounts for both asset classes.
It is looking to invest in 鈥渕ainly core-type real estate funds in primarily developed countries鈥�, excluding Japan. The pension fund is looking to appoint a separate domestic property fund-of-funds mandate.
Similarly, it is looking to appoint an infrastructure fund-of-funds manager to manage 鈥渄iversified investments in mainly core/brownfield infratructure funds primarily in developed countries鈥�.
GPIF has defined core as 鈥済enerating a stable income鈥� and excludes 鈥減roducts invested in listed funds鈥�.
Registration has opened and a review process will start on 1 June.
The announcement has been eagerly anticipated by the alternative fund management industry.
, GPIF hired former Mitsui Fudosan managing director Hideto Yamada as head of real estate.
Yukihiko Ito, managing director of Tokyo-based placement agency Asterisk, said the long awaited announcement 鈥渟erves as a green light for all Japanese institutional investors to start global real estate investment, after the long time hiatus for overseas real estate after the Japanese bubble burst鈥�.
Ito, who has been tracking GPIF鈥檚 gradual move into alternatives, in 2016: 鈥淎n investment from the largest pension fund, GPIF, presents a significant sum to the global real estate market; but more importantly, as a trustworthy government entity it also provides other Japanese investors with a compelling reason to follow in the same direction.鈥�
The announcement follows a statement last month from Japan Post Bank announcing plans to shift to international diversified investment. The 楼204trn investor, the world鈥檚 largest deposit holder, a new division for real estate as part of its plan to reduce its exposure to Japanese government bonds and increase investment overseas.
Investors from Japan are primed to play a key funding role for global infrastructure and real estate, according to analysis from AMP Capital.
With assets under management approaching 楼500trn, the Japanese institutional investment environment is undergoing a transformation and represents a substantial source of capital for investment into real assets across the globe, AMP said.
Toshiaki Yamashita, managing director for Japan at AMP Capital, said: 鈥淭he unique characteristics of the market in Japan have impacted investor sentiment and behaviour as few other economies have experienced as long a period of low growth and low yield.鈥�
Japanese investors are broadly seen as conservative, Yamashita said, with more than 50% of financial assets in deposits and around 5% in investment trusts.
He said: 鈥淭his allocation may change, however, as government policies encourage investors to shift from deposits to investments, investors begin seeking higher-yielding assets after a prolonged period of low growth, and an easing of institutional investors鈥� aversion to risk.鈥�
AMP Capital said infrastructure debt is expected to be one of the beneficiaries of a growing thirst for alternatives with the asset class rising to prominence in a relatively short period of time.
鈥淗aving experienced decades of low growth and limited domestic opportunities, these investors are hungry for investment alternatives, Yamashita said.
鈥淚t鈥檚 a natural step for Japanese institutions to begin deploying capital to global infrastructure projects, which is a positive development for liquidity and will continue to support the globalisation and maturation of this market.鈥�
