Wednesday, September 23, 2009

LAND-PRICE TUMBLE SLOWING IN JAPAN

       Land prices in Japan have fallen their most in five years as the recession has discouraged buyers and tighter credit markets have choked off funding to developers.
       Average prices declined 4.4 per cent in the 12 months to the end of June. It was the 18th consecutive annual decline, said the Land, Infrastructure, Transport and Tourism Ministry. Values fell in all but three of the 22,435 locations surveyed.
       Land value are now about half of what they were at the hight of Japan's bubble economy of the 1980s. However, the decline may slow as the nation emerges from its deepest postwar recession. An 18-month climb in Tokyo office vacancies ended last month and the number of unsold condominiums on the market is down 43 per cent since last December.
       "There are signs the deline in land prices in Tokyo and other big cities is coming to a halt," said Mizuho Financial Group real-estate analyst Takashi Ishizawa, in Tokyo.
       "It's possible Tokyo prices could even rise next year, but the regional districts will continue to see declimes."
       Price declines in Japan have been less severe than those in other markets that have rallied in recent years.
       The value of ocmmercial property in Japan dropped 5.9 per cent year on year in the 12 months to the end of June. In the United States, commercial real-estate values fell 27 per cent in the same period.
       Prices in residential and commercial districts fell in all of Japan's 47 prefectures for 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 per cent, breaking a three-year gaining streak. Prices in rural districts dropped 3.8 per cent.
       Property developers and managers accounted 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.
       KK daVinci Holdings, which manages property assets worth more than Yen1 trillion (Bt365 billion), said last week it might not be able to reach and agreement with creditors to extend a loan secured by its Pacific Century Place building in central Tokyo because of the market slump.
       The most expensive piece of commercial property remains Tokyo's Ginza shopping district, where land can cost as much as Yen25 million a square metre. The value has declined 17 per cent year on year.
       The capital's Chiyoda ward, where the Imperial Palace is located, has the most expensive residential land, even after values have fallen 11 per cent to about Yen3 million a square metre.
       Average prices in Tokyo's commercial districts dropped 8.9 per cent, reversing a4-per-cent gain the previous year, as companies relocated or negotiated lower rents.
       The ministry said in June that commercial property prices in the Tokyo metropolitan area were still at the same level they were 35 years ago, after the collapse of the real estate bubble of the 1980s erased what had been a four-fold increase.
       Office vacancy rates rose for 18 straight months to the end of July, said office-brokerage company Miki Shoji. The rate was unchanged at 7.57 per cent last month.

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