Japan Real Estate: Nowhere To Go But Up

It may be that the Japanese real estate market has nowhere to go but up, after reporting another sharp drop nationwide in land prices. This marks a string …

It may be that the Japanese real estate market has nowhere to go but up, after reporting another sharp drop nationwide in land prices. This marks a string of 18 years of declines, although, Japan is faring better than the the U.S. commercial property market. Japan’s real estate market has been plagued by lack of access to credit, investor pessimism and property industry failures, but market experts are nevertheless optimistic that the worst of the plunge could be over — or at least slowing down. For more on this, see the following article from Property Wire.

The price of land in Japan had dropped considerably as the recession discouraged investors and developers found funding cut off by a tighter credit regime.

It is the biggest decline in five years with average priced falling 4.4% in the 12 months to the end of June and also marks the 18th consecutive annual decline, according to figures from the Ministry of Land, Infrastructure, Transport and Tourism.

The report looked at prices in 22,435 locations and all but three experienced a decline.

But there is hope that the worst is over as Japan emerges from its deepest postwar recession.

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Property experts point to the fact that an 18 month climb in Tokyo office vacancies ended last month and the number of unsold condominiums on the market are down 43% since December.

‘There are signs the decline in land prices in Tokyo and other big cities is coming to a halt.

It is possible Tokyo prices could even rise next year but the regional districts will continue to see decline,’ said Takashi Ishizawa, a Tokyo based real estate analyst at Mizuho Financial Group.

He also pointed out that price declines in Japan have been less severe than in other markets that had rallied in recent years.

Overall the official figures show that the value of commercial property in Japan dropped 5.9% from a year earlier.

This is good in comparison with the US, for example, where commercial real estate fell 27% in the same period.

Although prices in residential and commercial districts fell in all of Japan’s 47 prefectures, the first time since the ministry began compiling the data in 1975, values in Tokyo, Osaka and Nagoya, the three major metropolitan areas, declined 6.1% while prices in rural districts dropped 3.8%.

But the property industry has been badly bruised with developers and managers accounting for eight of the 10 biggest bankruptcies of listed Japanese companies this year, stoking consumer concern about job security and deterring banks from refinancing loans to the industry.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.


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