U.S. alternate asset manager Fortress Investment Group, which has already invested an estimated $180 million from a new fund into Japanese hotel assets, is considering further investments in the sector despite increases in prices.
According to the South China Morning Post, Fortress completed fund-raising for a $1.1 billion Japan-dedicated reserve in October. Of this, Thomas Pulley, CIO at Fortress Investment Group (Japan), estimates that $180 million has been invested in hotels.
Fortress sees "long-term growth potential" and more opportunities in hotel investments in the future, given a push by the government to boost tourism. Thanks to relaxed visa regulations and a weak yen, Japan has attracted a record 16 million international visitors so far this year, already beating the previous full-year record of 13.4 million visitors set last year, according to the Japan National Tourism Organization.
Growing demand for hotel rooms has pushed hotel prices higher, intensifying competition. But Pulley said that Fortress still sees opportunities in Japan's hotel sectors, with many properties "in need of both renovation and capital improvements as well as professional management."
Fortress purchased several troubled hotels after the 2008 financial crisis. It now owns include Sheraton Grande Tokyo Bay Hotel near the Tokyo Disney Resort as well as Rihga Royal Hotel in Kyoto.