Japanese Developer Invests in U.S. Rental Market

Japanese Developer Invests in U.S. Rental Market

Residential News » North America Residential News Edition | By Francys Vallecillo | March 3, 2014 12:13 PM ET

Daiwa House Industry Co., Japan's biggest homebuilder by market value, is planning to invest 150 billion yen ($1.48 billion) in the U.S. rental housing market, as the company looks to increase revenues.

Daiwa House will purchase and develop rental properties in Texas and allocate the money over the next three years, Bloomberg reports. The Osaka-based company is committing three times more than the 50 billion yen it announced last year for overseas investments.

The homebuilder anticipates 50 billion yen in revenue in the U.S. by March 2019.

"The investment amount is very aggressive and it seems risky," Masahiro Mochizuki, an analyst at Credit Suisse Group AG, told Bloomberg.

Daiwa plans to target "Generation Y," the population born between 1975 and 1989 known to fuel the rental market, the company said.

The company, along with other Japanese developers, are pushing for overseas investment as the country's population shrinks.

"Daiwa House has plenty of cash," Yoji Otani, an analyst at Tokyo's Deutsche Bank AG, told Bloomberg. "The management doesn't think Japan has much growth prospect so they are investing overseas. The healthy balance sheet that Daiwa has enables them to take on such risk."

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