Japan Post Insurance has anchored a JPY 30 billion ($190 million) residential property fund rolled out by Star Asia Group to hold rental assets across Tokyo’s 23 wards.

Formally set up on 30 September as Star Asia Japan Property Fund No 1, the vehicle holds 17 recently built properties and establishes the investment manager’s first private channel targeting Japanese institutional equity.

Star Asia Asset Advisors serves as asset manager for the vehicle, which allows Japan Post Insurance, an anchor backer holding JPY 58.3 trillion in assets at the end of June, to deploy capital alongside other domestic institutional partners.

Japanese life insurers are redirecting capital back home. New economic value-based solvency rules introduced at the end of March make domestic assets far more capital-efficient for local life companies than unhedged foreign debt or overseas property.

Residential assets in Tokyo give institutional buyers a steady yield buffer. Star Asia is pricing the fund on the premise that Tokyo inner-ward rents can rise after decades of stagnation, supported by steady inward migration into central districts.

Competition for high-quality residential blocks remains fierce among both local institutions and foreign private equity managers. Rental housing made up 21 percent of the record JPY 5.73 trillion in commercial real estate transactions recorded in Japan during the first nine months of the year.

Japan Post Insurance is working under a three-year investment plan released in May that calls for shifting alternative investments away from foreign holdings and directly into Japanese physical assets. Toru Onishi, who took over as president in June, intends to double the insurer’s separate real estate joint venture with Mitsui & Co to JPY 400 billion from around JPY 200 billion.

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