Singapore's sovereign wealth fund GIC could be moving closer to a major Tokyo real estate exit, after giving Japanese developer Kenedix first negotiation rights to buy office space in Pacific Century Place Marunouchi. The building sits next to Tokyo Station, putting the potential deal in one of the capital's most closely watched commercial property locations.

Kenedix has submitted a bid of around 230 billion, or $1.4 billion, for GIC-owned office floors in the building, according to people familiar with the matter. The space includes floors 8 through 31, though talks are still ongoing and an agreement may not be reached.

The possible transaction points to growing interest from domestic developers in Tokyo's largest property deals, following recent activity by foreign firms including KKR NYSE:KKR, PAG and Brookfield Asset Management NYSE:BAM. Rising interest rates may be pushing some investors to sell assets rather than carry more expensive floating-rate loans, while Tokyo's office market continues to draw attention from higher rents, inflation-linked gains and corporate pressure to use capital more efficiently.