The Government Pension Investment Fund of Japan, the world’s largest public pension fund with total assets under management of ¥249.78 trillion ($1.67 trillion; €1.54 trillion), has furthered its strategy to grow its domestic real estate portfolio by committing to a Japan-focused vehicle managed by New York-based BGO.

GPIF has allocated ¥15 billion to the BentallGreenOak Asia IV Japan Investment Feeder, a Japan investment sleeve of the $4.6 billion BentallGreenOak Asia IV fund, according to an update from GPIF on October 31. According to PERE data, this is the first known commitment from GPIF into a BGO-managed fund. BentallGreenOak Asia IV, which was closed in May 2025, is expected to reach $5.1 billion with co-investment capital, making it BGO’s largest global fundraise to date, PERE reported previously.

Fund IV will focus primarily on Japan, which is expected to receive 65-75 percent of its capital. The fund’s sector allocation aligns with market demand in Japan, with over half of the capital earmarked for office assets and around 20 percent allocated to hospitality. To date, the fund has already invested in office and hospitality assets in Japan and Australia. Details of the Japan-specific sleeve have not been disclosed.

This latest investment underscores GPIF’s commitment to enhancing its domestic real estate exposure, and marks the second time the pension giant has partnered with a foreign manager to invest in Japan’s real estate market. Earlier this year, GPIF disclosed a ¥10 billion commitment to North Haven Real Estate Japan Strategy Fund, managed by Morgan Stanley Investment Management, which employs a core strategy targeting multiple real estate sectors in Japan.

Yoshitaka Todoroki, managing director of GPIF’s private market investment department, emphasized the stability of Japan’s real estate market amid global uncertainty during the PERE Tokyo Forum in June. “Japan’s real estate market has been progressing steadily compared to the volatility of overseas mandates,” he noted during a keynote speech.

Performance data from GPIF’s fiscal year 2024-25 annual report, released in July, highlights the resilience of its domestic real estate portfolio. Since launching private real estate investments in December 2017, domestic holdings have delivered an IRR of 7.17 percent in yen as of March 2025. In comparison, overseas real estate investments, initiated in September 2018, recorded an IRR of 2.32 percent in US dollars – or 8.37 percent in yen terms – by the same date.

Notably, the fund’s domestic real estate IRR has been less volatile, climbing from 2.3 percent in fiscal 2019 to a level consistently around 7 percent in fiscal years 2022 through 2024. Meanwhile, the overseas IRR peaked at 16.17 percent in fiscal 2022 before declining to 8.37 percent as of March 2025.

Despite variations in returns, diversification remains a cornerstone of GPIF’s strategy. According to its latest annual report, the real estate portfolio has a global reach, with investments in the US accounting for 42 percent, Japan 21 percent, the UK 10 percent and Australia 7 percent. Sector-wise, logistics dominates at 46 percent, followed by rental housing at 25 percent and office assets.