PGIM Tightens Japan Real Estate Acquisition Strategy as Rising Rates Lift Costs

According to Jin10, PGIM Real Estate is taking a more selective approach to Japan property acquisitions because rising interest rates have increased transaction costs in the country. PGIM Asia-Pacific real estate head David Fassbender said the firm is also factoring in higher debt costs and is now more selective than it was two years ago. He added that the narrowing yield premium between Japanese government bonds and real estate has raised the investment hurdle, especially in competitive areas such as office buildings, and said historically large yield spreads have been eroded and in some cases have disappeared entirely.