05 July 2022

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Nuveen Real Estate, one of the world’s largest real estate investment managers, has completed the initial first close of its Japan Alternatives Living strategy attracting c. $100 million of investment from institutional real estate investor Bouwinvest, joined by Nuveen’s parent company, TIAA.

The strategy will primarily focus on stabilised senior housing, which has proven its relative resilience in the residential sector underpinned by limited new supply and favourable demographic momentum.

Whilst senior housing will make up majority of invested capital, the strategy may also pursue investments across alternative living sectors, such as student housing, single family and co-living assets across Greater Tokyo, Osaka and Nagoya.

In Japan, where the population enjoys one of the greatest life longevities in the world, the proportion of senior citizens is expected to reach 35% by 20401 when the second baby-boomer generation reaches the age of 65. As a result, demand for new senior housing in the region is projected to increase by about 770,000 units by 2025.

The Japanese government, which owns more than 50% of the current stock, is looking to boost supply from the private sector. This presents a huge opportunity for institutional investors who currently own only 5% of the total c.$80 billion senior housing market in Japan, more than half of which is in J-REITs. Strong occupier demand from an increasing elderly population has led to the emergence of senior living as a target asset class among institutional investors which has also been bolstered by, long-term master leases to high quality operators.

Louise Kavanagh, Chief Investment Officer & Head of Asia Pacific, Real Estate, at Nuveen, said: “The global shift towards an elderly demographic is a transformation that is already shaping government policy and affecting economies around the world. This demographic transition presents investment opportunities in industries which serve the needs of the growing ageing population.

This strategy provides investors with exposure to senior housing markets in the world’s largest metropolitan area by GDP and population, where the proportion of senior citizens relative to the population is bigger than any other country.”

Robert Koot, Director Asia-Pacific Investments at Bouwinvest adds: “We always aim for investments globally where financial and social returns go hand in hand. Real estate investments that provide solid and stable income, while also beneficial for society as a whole. We believe investing in senior housing fits perfectly in this strategy, as demand for qualitative housing will further strongly rise.”

Having invested in the residential sector for over six decades, Nuveen Real Estate has a proven track record in the housing sector with an AUM of over $25 billion globally. Nuveen Real Estate Japan manages in excess of $1 billion multifamily assets which comprised of 52 assets and over 3,183 units, predominantly in Tokyo as one of the leading multifamily platforms in Japan.