The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Although Japans 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 Japans 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.
Click for Report details:Japan Real Estate Report Q2 2012