News, Events and Media
Immediate hit from the March 11 earthquake on the economy greater than expected
According to Bloomberg the Japanese government reports that the immediate hit from the March 11 earthquake on the economy was greater than expected. Factory output fell 15.3% from February, and household spending was down 8.5% compared to March 2010. The Bank of Japan has cut its 2011 economic growth estimate to 0.6% and expects that growth will accelerate to 2.9% in 2012. The report come one day after Standard and Poor’s has put a negative outlook on the nation’s rating. The Tokyo stock market (Nikkei 225) closed at 9,849.74, up by 1.63% its highest since the earthquake. Also the JPY traded stronger at 81.68 to the US$ ad 121.3 to the Euro while the 10 year JGB yields at 1.21%.
Jones Lang LaSalle issued a report concerning the impacts of the March 11 earthquake on Tokyo office market
Jones Lang LaSalle issued a report concerning the impacts of the March 11 earthquake on Tokyo office market. They expect rent of Grade A office building in Tokyo to lead the recovery: after a 3-5% decrease in 2011 rents are set to increase 5-10% in 2012. The recovery of Grade B buildings is expected to lag. They also pointed out the following things:
- Not all but most foreign investors still express positive views towards investment in Japan as a mature real estate market from a mid- to long-term perspective.
- In terms of business continuity planning, many companies in Japan have started considering the option of splitting their headquarters functions between Tokyo and Western Japan such as Osaka and Fukuoka.
Nikkei Newspaper organized earnings forecast after the March 11 earthquake
Nikkei Newspaper organized the announcements on earnings forecast after the March 11 earthquake from retail companies and found out that impacts of the earthquake on their sales are generally limited. The total sales of the 68 listed retail companies, whose fiscal year will end at the end of February 2012, are expected to decrease only by 2% compared to the previous year as the sales of many major companies are recovering since the beginning of this April. The majority of Japanese retail companies end their fiscal years at the end of February and most of them had released their forecast by the time Nikkei compiled the figures.
Bank of Japan Governor says the nation’s economy could deteriorate in short term, but will gradually return to the recovery track
According to NHK the Bank of Japan Governor Masaaki Shirakawa says the nation’s economy could deteriorate in the short term due to the March 11th disaster, but will gradually return to the recovery track. Shirakawa made the comment during a speech in New York on Thursday. He is in the United States to attend a meeting of the Group of 20 Finance Ministers and Central Bank Governors in Washington. Shirakawa said the Japanese economy could deteriorate on a short-term basis due to the impact of severe electricity shortages on corporate activities, as a result of damage to nuclear and thermal power plants. He said the economy should get back on a recovery track once reconstruction of roads and houses begins, which will create a stimulus effect. He said most private economists believe that Japan’s GDP growth rate will turn positive again from the third quarter of 2011. He said: “As time passes, demand will emerge for restoring damaged capital stock such as roads, factories and houses. While it is difficult to accurately forecast the amount and time path of rebuilding demand, the amount of damage to capital stock due to the earthquake and tsunami will be about 3 to 5 percent of nominal GDP and 1 to 2 percent of total capital stock, according to government estimates.
The following link will bring you to the full speech as well as a presentation by the Bank of Japan ‘Resilence of Society and Determination to Rebuild’
In the same context BBC reported that the The International Monetary Fund (IMF) has downgraded its predictions for Japan’s economy.The IMF said it expected Japan’s economy to grow by 1.4% this year, compared with a previous forecast of 1.6%.However, it raised its forecast for Japan’s growth next year to 2.1%, saying it was confident Japan would recover from the disaster.
Aeon issued an report on the status of their stores in the area devastated by the earthquake
Aeon, a major nationwide retail company in Japan, issued an English report on the current status of their stores in the area devastated by the March 11 earthquake. Just 1 month after the earthquake, around 97% of their stores in the area became operational while only 35% could operate right after the earthquake. Following that, they also announced that they expect revenue to be up slightly despite the massive disaster on the 18th of April.
Standard & Poor’s issued a report regarding direct impacts of the March 11 earthquake
Standard & Poor’s issued a report regarding direct impacts of the March 11 earthquake on their CMBSs based on the reports mainly from the loan servicers, and found out there is no serious physical damage on the collaterals. They also explained that only 8 properties have wholly/ partially stopped operation among around 770 collaterals.
DTZ released their report about the impact of the earthquake
DTZ released their report about the impact of the earthquake on the Tokyo office market. There will be only a limited and short term impact on the Tokyo office market based on their preliminary analyses, even though their original estimates also showed downward trend this year.
Real Capital Analytics issued their annual report of global commercial property market
Real Capital Analytics, a US-based research firm, issued their annual report of global commercial property market, “Global Capital Trends in 2010”. Tokyo ranked second at EUR 14.2 billion of transaction volume (a YoY increase by 28%), following London Metro at EUR 18.3 billion.
TMAX announced that J-REIT’s P/NAV ratio exceeded 1.00
TMAX, a real estate research firm, announced that J-REIT’s P/NAV ratio (the ratio of share price to the market net asset value per unit) exceeded 1.00 for the first time since October 2007 or for more than 3 years based on their indices, TMAX Kawaguchi Indices, which is published monthly. The main contribution to this rebound is the recovery of the share prices.
Japan Real Estate Institute issued results of semi-annual survey
Japan Real Estate Institute, Japans largest appraisal firm, issued their latest results of semi-annual survey of Japanese Real Estate Investor. It confirms the downward trend of expected NOI yields nationwide in residential property sector.
CBRE released latest results of their quarterly survey
CBRE released latest results of their quarterly survey on Japanese Real Estate Investment as of October 2010. It shows that expected NOI yields of multi-family residences, retail, hotel and industrial properties in the major areas of Tokyo all declined.
The Association for Real Estate Securitization (ARES) announced result of their survey
The Association for Real Estate Securitization (ARES) announced that the result of their 7th “Questionnaire Survey on Fund Financing Environment for J-REITs” at the end of September 2010. It shows that the availability of financing to real estate continued to improve.
STB Research Institute announced the results of their survey
STB Research Institute announced the results of their Survey on Privately Placed Real Estate Funds in Japan July 2010. The market size, which had remained flat since 2008, seems to resume growing. It increased by 7.5% over 6 months to JPY 15.0 trillion under the upturn in the volume of transactions and the improvement in debt financing environment.
Accounting Standards Board of Japan issued a draft regarding start of consolidated accounting with Special Purpose Companies
Nikkei reported that Accounting Standards Board of Japan issued a draft regarding start of consolidated accounting with Special Purpose Companies for real-estate development in 2013. This may make a great impact on developers. Their assets and liabilities would become larger by adopting this accounting, though it’s still unclear how to estimate the assets. Nikkei estimated the assets of the top 4 Japanese developers would increase by JPY 3 trillion to JPY 15 trillion and their liabilities by JPY 2 trillion to JPY 11 trillion. (the top 4: Mitsubishi Estate, Mitsui Real Estate, Sumitomo Real Estate and Tokyu Land)
Some banks move to resume CMBS issuances
Nikkei RE reports that some banks like Barclays and Shinsei Bank move to resume CMBS issuances in Japan. They also report that the rush of downgrading of existing CMBS will likely settle down based on reports of Moody’s and Fitch Ratings.
CB Richard Ellis released latest survey
CB Richard Ellis released the latest results of their quarterly survey on real estate investors’ attitude in Japan as of July 2010. The research shows that expected NOI yields declined in all sectors (office, multi-family residential properties, retail, hotel and industrial) in major areas of Tokyo. They also found that increasing numbers of investors anticipate that real estate prices will rise over the next year.
Commercial real estate transactions in Japan are recovering
Nikkei RE reports the number of commercial real estate transactions in Japan is showing a continuing recovery. They found a total of 325 transactions in 2Q this year which rose of 44% on the same period last year, representing increases over the past three consecutive quarters. The number of apartment building transactions reached 113, exceeding the levels before the financial crisis.
Average price per unit of secondhand condominiums showed a 4.7% rise
According to Nikkei Newspaper, the average price per unit of secondhand condominiums in this June showed a 4.7% rise over the preceding month to JPY 30.8 million, which means the price recovered to the same level as 20 months before. Also, the number of new condominiums coming to market in H1 this year increased by 27% over the same period last year. This rise was the first time in recent 6 years. The average price of suburban lots for single-family houses also rose by 8% for H1 this year.
CB Richard Ellis latest results of CBRE Quarterly Survey released
CB Richard Ellis latest results of CBRE Quarterly Survey released on May 31, 2010 shows a compression of expected yields for all real estate sectors, especially multi-family residential buildings experience sharper declines.
“Multi-family residential buildings began to decline earlier than the other sectors, and the fall in the quarter under review was sharper than before. This is a reminder that a recovery in multi-family residential buildings leads the recovery process in the real estate investment market.”
Total unrealized capital gains prove to show JPY 10 trillion
According to Nikkei report on July 20, 2010, total unrealized capital gains in real estate of Japanese listed companies, prove to show JPY 10 trillion. The average return on those properties shows 3.2%. Japanese accounting system for real estate fixed assets changed at the end of this March. Listed companies have to disclose its fair value.
Office building vacancy rate rises to 6.9%
The vacancy rate for office buildings Tokyo 23 Wards in Q1 of 2010 rose by 0.4% to 6.9. This was the smallest quarterly increase since the ‘Lehman Shock’ according to CB Richard Ellis preliminary data on office market dated April 8, 2010. According to CBRE the outlook for economic and business activities has become clearer, allowing enterprices to take a mid to long term view in decision making.
The 22nd semi annual edition of the Japanese Real Estate Investor Survey was released
On May 20, 2010 the Japan Real Estate Institute Foundation released its 22nd semi annual edition of the Japanese Real Estate Investor Survey. It shows a continuing recovery in the investment interest trend and suggests that cap rate lift seems to have stopped for almost all regions and all types of property.
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