GIC’s former Japan head sets sights on 25 billion yen fund to target residential properties in Japan
He believes that macro conditions will provide a conducive environment for Patience Capital
PATIENCE Capital Group, the real estate investment manager helmed by Ken Chan, former Japan head of Singapore sovereign wealth fund GIC, is raising a new 25 billion yen (S$225.5 million) fund focused on residential properties in Japan.
This comes off the back of Patience Capital’s first residential fund, the Japan Residential Opportunities Fund, which closed at 15 billion yen in 2020 with a shorter-than-usual fund life of five years. This fund is already divesting assets and returning capital to investors, with the portfolio peaking at about 45 billion yen.
Of the 21 buildings in the first residential fund, seven have been sold, with 10 more on the block in the next couple of months.
Chan said it was by design that the first residential fund had a short fund life – so he could build up a track record quickly to convince investors.
“I always get questioned by all my investors, ‘tell me your track record, I know you know how to do things in GIC, but now it’s a different entity. You have a different set of people, with your current team – show me your track record’,’’ the CEO told The Business Times.
A five-year period with a smaller fund size enabled Chan to be nimble. Another plus was a pipeline that he was certain could be snatched up and sold when the market boomed.
With investors in the first fund happy with the performance, there could be an uplift for the second fund to raise up to S$250 million to S$270 million. The fund life for the second one will also be a little longer at six years, with a potential extension to seven years.
Overall, Chan is still optimistic about the opportunities available in Japan, and believes that macro conditions will provide a conducive environment for Patience Capital.
Land of the rising sun
Patience Capital has a separate Japan Tourism Fund, which closed about S$370 million at its final raise. This fund has invested in a ski resort in Japan and recently invested – together with Gaw Capital – in Tokyu Plaza Ginza, a prime mall in central Tokyo.
Chan is a contrarian on retail, even as the global investor base started shifting away from the sector even before Covid-19.
He believes there could be a recovery for the sector, lifted by strength in high-end retail and a tourism rebound in Japan.
The country had about 37 million inbound tourists in 2024, up 47 per cent year on year – and one of the highest inbound visitors numbers recorded.
“These inbound visitors have actually started spending a lot of money, doing a lot of shopping, and all the high-end and expensive shopping are done in Ginza,” said Chan.
Brands operating in Ginza do well, and rental in the area has grown as landlords gain from sharing a percentage of the shop’s sales. Tenants, including big brands, are looking for space in Ginza.
Patience Capital is riding on a number of factors in the Japanese market, from overseas capital flowing due to US-China tensions to ongoing corporate opportunities from stock market reforms to the return of interest rates.
In particular, the rise in interest rates from negative to positive has kickstarted inflation in Japan. Wage growth after years of stagnation has begun, and with it an economic snowball effect is happening, according to Chan.
“So from an investment perspective, it is probably a very opportune time to position ourselves in Japan,” said Chan.
