picture of technology: Japan's Property Price Decline Slows ? Real Estate Japan

Friday, October 12, 2012

Japan's Property Price Decline Slows ? Real Estate Japan | Tokyo ...

Property prices in Japan have been falling for years. However, according to the latest report from the Ministry of Land, Infrastructure, Transport and Tourism, this year?s drop is the lowest in 21 years.

The average price declined 2.7 percent as of July 1 compared to the 3.4 percent decline a year earlier. Still, analysts say that drop in land values may ease further because of the expected increase in demand before the planned consumption tax increase.

According to Masanobu Komoda, President of Mitsui Fudosan Co., as the government pushes through with its plan to increase consumption tax, they would like to see additional measures that would support and increase housing demand. Meanwhile, reports also show that the drop in commercial land prices fell to 3.1 percent from 4 percent a year earlier while residential values slid 2.5 percent from 3.2 percent.

A report fro Sumitomo Mitsui Trust Research Institute Co., states that property acquisitions by Japan?s real estate investment trusts (j-REITs) have supported prices. JREITs bought assets and these have expanded faster in a span of four years, rising to 8.8 percent to 8.7 trillion yen as of June 30 from a year earlier.

Meanwhile, Moody?s Japan K.K?s report said that JREITs, commercial mortgage backed securities deals and the credit-worthiness of real estate companies will stay weak in the medium term because of cash flows from office buildings will continue to decline. In addition to this, demand for office buildings in Tokyo will remain mellow as economic growth continues to drag on.

Major areas like Tokyo, Osaka and Nagoya will have slow declines in prices to 1 percent from 1.9 percent a year earlier according to Moody?s report. Still, Tokyo?s Ginza shopping district maintains its reputation of having the most expensive piece of commercial property, where land costs up to 19.7 million yen per square meter. Ginza is followed by Chiyoda ward in Tokyo, with 2.78 million yen per square meter of residential land.