GPIF’s strong commitment on ESG initiate Japanese institutional investors interest in ESG global real estate investment


Monday, October 16th 2017

GPIF, the Japanese largest pension fund in the world (AUM: 149.2 Trillion JPY / 1.33 Trillion USD) and World Bank Group announced on October 11th, 2017 they have formed a partnership to conduct joint research on the integration of ESG into fixed income portfolios. This is with the ultimate goal of aiming to direct more capital towards sustainable investments, and promote strategies that include environmental, social, and governance criteria in different asset class investment decisions.

ESG is a key for GPIF`s real estate investment too.

GPIF has been emphasising the importance of ESG conscious investments. GPIF has also strongly mentioned importance of ESG in their alternative investments, when they announced the start of RFP for alternative assets including real estate in April 2017.   

ESG and Core are the only clear concept GPIF has mentioned for their real estate investment so far.

Many Japanese investors are just starting global real estate investments for the first time, or for the first time after a long hiatus since the Japanese bubble era.

GPIF is one of the strongest market leaders in Japan, and many Japanese investors look to its movements for guidance. There is a strong focus on core strategy GPIF’s investments. With that said, we are observing that they are branching out and testing the waters for different approaches as well. Other than core real estate, ESG is the only other focus GPIF has publicly made clear as a focal point of their investments. It is still uncertain where exactly they will be investing overseas, and how.

ESG : a new concept, but rationale with potential for Japanese investors

In comparison to other global core markets, ESG is behind in the Japanese real estate investment industry. Although Japanese real estate has very high quality standards for “E” (Environment in ESG), ESG concept has not been linked with real estate investment.

This is in large due to the fact that real estate has not been a transparent asset for Japanese investors as many experienced large losses after the burst of the Japanese bubble, and real estate had been recognized as a fishy game for a long time. New concepts and angles have not been introduced as investors were not examining general overseas investment concepts.

Now the tide changes, and ESG is becoming a clear direction for GPIF’s and Japanese investors’ new voyage

GPIF is expected to lead and make a standard for Japanese investors global real estate investment. This announcement is clear indication of their strong interest in ESG investments, and Japanese investors are expected to suit.

Therefore the link between investment performance and sustainability considerations need to be better understood for real estate.

As a next step for Japanese investors, Asterisk believes introducing the ESG concept with actual asset management and investment performance is essential. Asterisk is aiming to visualize ESG in real estate investment & asset management levels for Japanese investors with global leaders in this concept.

Our upcoming seminar on Nov 17, 2017 addresses the current market positions and forecasts in the U.S real estate market covering both expected trends like ESG, as well as tax structuring for Japanese investors looking to invest into the U.S market. We believe it will be profitable for decision making Japanese investors that are keen to explore overseas opportunities.  

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About Asterisk Realty & Placement Agency

Asterisk is a private fund placement agency for global alternative in Japan. Through our unique and extensive network of Japanese investors, we support global fund managers in accessing Japanese and Asian institutional investors (pensions, financial institutions, real estate developers, other business companies, etc.).

We provide access and strategies for overseas fund managers to bridge the gap between them and Japanese investors.

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