A real estate management unit of KKR & Co is planning a major expansion in Japan’s property market, targeting assets being divested by corporations in a sector it estimates to be worth around 450 trillion yen (US$2.8 trillion).
KJRM Holdings, KKR’s Japan-based property arm, sees strong opportunities as companies increasingly sell non-core assets, including real estate, amid growing pressure from regulators and shareholders to improve capital efficiency.
President Naoki Suzuki said demand for such disposals is expected to remain robust over the next three to five years, driven in part by shareholder activism and ongoing corporate reforms.
The unit’s real estate portfolio grew 20% in 2025 to about 2.53 trillion yen, placing it among the largest players in Japan’s property market.
Suzuki noted that KJRM intends to step up acquisitions of corporate-owned properties, although he did not disclose specific targets.
The push to unlock value from underutilised assets has been supported by initiatives from the Tokyo Stock Exchange, which has encouraged companies to enhance shareholder returns. Many Japanese firms still hold substantial real estate assets, a legacy of heavy investment during the late-1980s asset bubble, as well as lending practices that historically favoured property-backed financing.
According to KJRM data, real estate accounts for about 12.6% of total assets among Japanese companies, compared with around 10% in the United States and 4.4% in the United Kingdom.
Suzuki also pointed out that Japan’s property market is attracting global investors, particularly as geopolitical concerns dampen interest in Chinese assets. With its scale and liquidity, Japan remains a key destination for relatively lower-risk investments in the Asia-Pacific region.
He added that the sector is unlikely to face significant pressure from rising borrowing costs unless Japanese government bond yields climb to between 3.5% and 4%. As of last Friday, the 10-year yield stood at around 2.43%.
More than half of the properties acquired by KJRM-managed real estate investment trusts (REITs) and private funds in recent years have come from corporate divestments.
Notable transactions include the acquisition of 14 office buildings from Fuji Soft Inc for approximately 68.7 billion yen, as part of KKR’s takeover of the company. In another deal, linked to KKR’s acquisition of Logisteed Ltd in 2023, KJRM’s funds took over real estate assets worth more than 200 billion yen.
While such investments carry risks — including rising interest rates and fluctuations in property values — Suzuki said rental growth can help offset higher costs in the current environment.
Looking ahead, KJRM plans to focus on acquiring assets with strong inflation resilience and stable cash flow potential, particularly in major cities such as Tokyo, Osaka and Nagoya.
