UK draws Japan property investors seeking US hedge amid turmoil
Mitsubishi Estate allocates 51% of its capital to the US, 22% to Europe and 27% to Asia
[LONDON] Mitsubishi Estate is planning to plough more money into the UK as economic uncertainty and trade turmoil prompt the property investor to diversify beyond the US.
The Tokyo-based developer is rethinking its allocations to the US, meaning Britain and continental Europe could see more investment from the firm, according to Masa Iwase, the company’s senior executive officer and head of the international business group.
While many Japanese investors had been “very aggressive” in investing in the US over the last five years, the market there is a “little bit confusing right now”, Iwase said this week in an interview during the breaking-ground event of his firm’s £800 million (S$1.4 billion) commercial project in London’s South Bank.
So many have shifted some of their money to invest in Europe, “like here in London”, he added. Mitsubishi Estate allocates 51 per cent of its capital to the US, 22 per cent to Europe and 27 per cent to Asia.
Japanese investors have been pouring more capital into the UK over the last couple of years, data from MSCI Real Capital Analytics show. They have deployed over £1.6 billion into the country’s real estate market between 2023 and the first half of 2025, which is 50 per cent higher than the same period between 2015 and 2019. However, this is still dwarfed by the almost £7 billion that came from the US in the first half of this year.
“Some uncertainty in other parts of the world” may push “some of the Japanese investors to look at different geographies in terms of where to invest”, said Shinichi Kagitomi, chief executive at Mitsubishi Estate London.
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Part of London’s appeal lies in the limited supply of new office buildings, unlike New York, where space continued to grow even after the pandemic, Iwase said. Another attraction is London’s ability to lure global talent, said Kagitomi.
UK office development has stalled in recent years due to a combination of political uncertainty, higher interest rates and inflation in construction costs. This is at odds with strong demand for high-quality offices in prime locations. Top executives such as BlackRock’s Larry Fink have complained about the lack of office space in the British capital.
For decades, Japanese investors have pursued overseas markets because of a prolonged economic slump back home, but a weakened yen could dampen the pace of the current wave of investments into the UK, said Stephen Down, chairman of central London and international investment at broker Savills.
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Mitsubishi Estate is developing 72 Upper Ground in South Bank, in conjunction with London-based property developer CO-RE. They bought the site in November 2019, and construction just started after a long delay linked to planning issues, which Kagitomi described as a “frustrating process”.
UK Investment Minister Jason Stockwood, who attended the groundbreaking event, said that the investment by Mitsubishi Estate was a “massive shot in the arm and an endorsement that the UK is one of the best places to invest and build”. He also assured that the Labour government is firmly committed to cutting bureaucracy.
72 Upper Ground is not the only UK project on Japanese investors’ books. Mitsui Fudosan is investing £1.1 billion in the British Library extension project. BLOOMBERG
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