One of the world’s largest real estate companies is planning to expand into UK residential, with eyes on the build-to-rent, student accommodation and build-for-sale sectors.
Thanks to a London office and life sciences development pipeline that totals more than £2B and a debut logistics development, Mitsui Fudosan is planning further investment in London, UK CEO Takeshi Iwama told Bisnow.
Courtesy of Mitsui Fudosan and Secchi Smith/RSHP
A rendering of the new British Library extension and life sciences scheme being funded by Mitsui Fudosan, with Stanhope as development manager.
Despite uncertainty in financial and property markets, the Tokyo-listed investor and developer with a market capitalisation of £20B plans to continue on its path of global expansion, with both the UK and U.S. on its radar.
“Because there’s a chronic shortage of housing in this country, there’s a demand and supply gap as a result,” Iwama said. “And the new Labour government is very much strongly supporting residential development, and therefore, there is a tailwind for such a movement, and we are looking into that.”
Mitsui has built high-end residential for sale as part of its Television Centre project in White City, west London, which it built in conjunction with Stanhope. But it is also looking at the BTR and student sectors in the UK, Iwama said.
Mitsui can trace its company history back as far as 1673, to the opening of the Echigo-ya clothing store in Nihonbashi by Takatoshi Mitsui, founder of the House of Mitsui.
As a property company, its history goes back to 1913.
It first started investing in earnest in the UK in 2006 when it bought a 15% stake in developer Stanhope. It developed London office buildings, including 5 Hanover Square in the West End and 8-10 Moorgate in the City.
In 2012, it bought Television Centre from the BBC. With Stanhope as development manager, it turned the property into a 1.5M SF mixed-use scheme that includes offices, residential, retail and an outpost of Soho House.
More recent developments include One Angel Court, a 300K SF redevelopment of a City office tower.
It is on-site in a joint venture with Grosvenor for a £500M redevelopment of the South Molton Triangle, which will deliver 263K of offices across two buildings in Mayfair.
Courtesy of Mitsui Fudosan and Tyson Sadlo
Mitsui Fudosan UK CEO Takeshi Iwama
Earlier this year, Mitsui Fudosan committed to a £1.1B development that will include 600K SF of commercial space targeting life sciences and innovation occupiers. The development will be built next to the British Library in King’s Cross, alongside a 100K SF extension for the library itself. Stanhope is again the development manager.
The scheme is a highly complex development. Mitsui and Stanhope need to build what amounts to a giant concrete box under the project in case the Crossrail 2 rail scheme is ever given the go-ahead, though there is little likelihood of that soon, since the government has said it won’t fund it.
Despite the recent slowdown in life sciences leasing, Iwama said that proximity to research centres like the Francis Crick Institute, plus the growth of life sciences research more generally, will appeal to tenants.
“We look at high-growth countries in life science, and there are some with a very significant market scale, the same as in the UK,” he said. “However, compared to the scale of the market in the UK, the stock of the labs is relatively small, still in the early phase, which means that there is a very strong upside potential.”
Iwama said that selling standing assets is harder than building in the UK right now. Mitsui expects uncertainty in real estate capital markets to persist: Optimism at the start of the year that rates would fall and support price rises was tempered by the volatility created by U.S. tariffs.
On a longer time frame, however, he predicted the UK will see continued population and economic growth that will support real estate markets.
In addition to its move into residential, the firm teamed up with Panattoni last year to build its first UK logistics scheme, a £135M big-box project near Coventry. It plans to do more in the logistics sector.
An economic slowdown looming over the U.S. notwithstanding, Mitsui also plans to do more in America. The U.S. currently accounts for about 7% of its overall portfolio.
“Of all the developed nations, the economic metabolism of the U.S. is just so rapid,” he said. “In the short term, nobody knows, but the fact that the U.S. will continue to be a strong country will not change.”