Japan Real Estate Report Q2 2012
Business Monitor International, March 2012, Pages: 59
Although Japan’s commercial real estate market was surprisingly resilient in the wake of the earthquake and tsunami in March, our Q212 update is showing that there has been a drop in rents, particularly for the office sub-sector. Between early and late 2011, rents largely dropped back slightly as a result of reduced demand from the US and eurozone, where debt fears have led to caution among international financial investors.
However, demand for modern and earthquake-proof housing and logistics facilities is increasing steadily, providing opportunities for developers to begin new projects and complete existing ones. Similarly, we have recorded instances of manufacturers looking to emerging markets for their new locations, which may well increase demand and activity in the industrial sub-sector.
Another downside risk for Japan that has come out of the US and eurozone crises regards Japanese banks, which are looking to improve their balance sheets by cutting back on real estate loans. This could lead to a number of smaller real estate companies experiencing difficulties as they struggle to gain access to funding for their projects. In light of this, survey firm Tokyo Shoko Research Ltd has predicted that the number of bankruptcies in Japanese real estate will increase in 2012.
Japanese economic recovery is expected to rebound in 2012, but it may not feel that way to consumers. Capital channelled into rebuilding efforts may come at the expense of other areas of the economy, while power shortages will continue to place a drag on industrial production. That said, BMI does expect the economy to return to growth, reaching 1.4% in 2012 from an estimated drop of 1.0% in 2011.
Key Opportunities In The Real Estate Market:
- An increase in demand for industrial supply in the wake of the earthquake has caused rents in that subsector to remain buoyant at the end of 2011, particularly in Tokyo.
- While office rents have dropped slightly, a dearth of new supply is expected online in 2012, which if demand can rebound in kind, should contribute to heightened competition for space in the market.
Key Risks To The Real Estate Market:
- The difficulty faced by smaller firms that wish to refinance their loans or gain access to funding may cause bankruptcies. This will also decrease competition in the market, at least for a time, as the larger companies are likely to soak up this extra market share.
- As a result of delays in project completion and changes in marketing activity, three of Japan’s five largest real estate companies have recorded declining sales for the nine months ending December 2011, compared to the same period of the previous year. This leaves them at a lower base to begin what is expected to be a cautious 2012.
Business Monitor International's Japan Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's Real Estate industry.
Executive Summary
SWOT Analysis
Japan Real Estate/Construction SWOT
Japan Political SWOT
Japan Economic SWOT
Japan Business Environment SWOT
Real Estate Market Overview
Market Analysis – Office
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (USD per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases - Mid 2011
Industry Forecast Scenario
Table: Forecast Rents - (USD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Retail
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (USD per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases - Mid 2011
Industry Forecast Scenario
Table: Forecast Rents - (USD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Industrial
Supply And Demand
Rents And Yields
Table: Historic Rents – 2010-2011 (USD per m2/month)
Table: Net Yield, 2011-2012 (%)
Table: Terms of Rental Contract/ Leases - Mid 2011
Industry Forecast Scenario
Table: Forecast Rents - (USD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Construction And Infrastructure Industry Outlook
Table: Japan Construction And Infrastructure Industry Data
Table: Japan Construction And Infrastructure Industry Data
Construction And Infrastructure Forecast Scenario
Table : Value of Construction Orders Received (Infrastructure), JPY100mn
Macroeconomic Outlook
Table: Japan - GDP By Expenditure, Us$ Terms Breakdown
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Asia Real Estate/Construction Environment Ratings
Japan’s Business Environment
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Asia, Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations
Operational Risk
Competitive Landscape
Company Profiles
Kajima Corporation
Kumagai Gumi
Obayashi Corporation
Shimizu Corporation
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources
- Kajima Corporation
- Kumagai Gumi
- Obayashi Corporation
- Shimizu Corporation
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