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DaVinci in $1.76bn Tokyo office deal

Japanese property company DaVinci has acquired 40,000 square meters of office space in central Tokyo from Hong Kong businessman Richard Li. It is considered by some to be Asia’s largest single-asset real estate transaction.

Japanese real estate firm K.K. DaVinci Advisors, which runs Japan’s largest private real estate investment fund, has purchased the office portion of the Pacific Century Place Marunouchi building in Tokyo for $1.7 billion (€1.3 billion) from Richard Li, a Hong Kong-based communications tycoon.

The purchase of 39,102 square meters of office space in the centrally located, 39-story building seems to confirm that the real estate market in the Japanese capital is on the road to recovery.

The DaVinci acquisition was reportedly encouraged by the improving real estate market in Japan. The ¥200 billion paid for the building represents the largest single-asset transaction in Asia, according to Merrill Lynch, which advised the seller. 

Hong Kong telecom and internet magnate Li also sold his controlling stake in Hong Kong largest telephone company, PCCW, last July. The buyer in that transaction was investment banker Francis Leung, who reportedly paid HK$9.2 billion ($1.18 billion; €921 million) for the company. Li’s Pacific Century will retain ownership of the Four Seasons Hotel Tokyo in the building.

DaVinci has more than ¥1 trillion in property assets and said it plans to continue acquiring assets in Tokyo.

The sale of the Pacific Century building comes shortly after the announcement by Morgan Stanley that it was acquiring an office building in central Tokyo. Last week, the investment bank said it paid $523 million for the Akasaka Garden City building. It plans to increase cash flow by raising rents over the next five years. 

That building is located near the popular entertainment and shopping district of Aoyama, as well as Route 246—a road running from the Imperial Palace, through the Akasaka, Aoyama and Shibuya districts, to the Tokyo suburbs. It is also close to three subway stations.

A Morgan Stanley managing director told PERE that the firm would most likely pursue more office assets in Japan. The country, coming out of eight years of recession, stagflation and bank failures, has seen market fundamentals improving, evidenced by increasing rents, occupancy and land prices.

DaVinci was founded in 1998 by Osamu Kaneko, who remains the company’s president.