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Nikkei: Western firms buying overpriced property in Japan

On Monday, the Nikkei published an article asserting that Western firms “are returning to the Japanese real estate market, taking proactive steps in the hope of big gains once the market improves.”

This, of course, means that they are paying too much for real estate investments that will turn sour. The Nikkei article has a picture of an office building that Deutsche Bank Group recently overpaid about 4.1 billion yen for. The building itself is aggressively unimpressive, not to mention that it’s located in Shibuya ward. Read more

Book Review - Landed: The Guide to Buying Property in Japan

Christopher Dillon, the author of Landed: The expatriate’s guide to buying and renovating property in Hong Kong, has now published a similar guide on buying property in Japan. Landed: The Guide to Buying Property in Japan is now available and will be supported by a series of public events next week (schedule at the end of this post). Read more

Government sponsored mortgage discounts coming in 2010

It has been projected that in 2009, Japan’s housing starts will fall below the one million mark for the first time in 42 years. In response to this, and in a seeming attempt to spur economic recovery, the government has revealed plans to roll out a mortgage-reduction program for 2010.

From a report in today’s Nikkei:

Under the program, homeowners taking out 35-year loans from an affiliated lender will have the mortgage rate reduced by 1 percentage point for the first 10 years.

The offer will be available only for homeowners taking out such loans next year. Also, homes purchased with the loan must be one of the following: energy-efficient, handicapped-accessible or quake-resistant.

The government intends to put 260 billion yen into the lending program, which will use the Japan Housing Finance Agency to issue mortgages. Currently, rates on mortgages taken out from the Japan Housing Finance Agency stand at 2.6%, which means those taking out new mortgages under the plan in 2010 will pay 1.6% interest for the first ten years of the loan.

May new condo offerings in Tokyo area down 19.4%

The Real Estate Economic Institute released its report on May condo sales in the Tokyo area on June 16, but it’s been a bit busy to get a post up. At any rate, the number of new condo units put on sale in May stood at 3,538, down 19.4% from a year ago. New condo offerings have now declined for 21 consecutive months. Read more

Central tokyo office vacancies up for 16th straight month in May

According to data released Thursday by consultancy Miki Shoji, vacancies at office spaces in downtown Tokyo rose 0.17% in May against a month ago, to 6.96%. Office vacancies in downtown Tokyo have now increased for 16 consecutive months.

After having dipped below the 30% mark in April, vacanices at newly built large office buildings in Tokyo shot up to 30.83% in May. This is still somewhat down from the peak of 34.33% seen in March, but the increase is worrisome news for developers.

In terms of individual areas, Shinjuku Ward took the lead in terms of vacancies in May, with its rate coming in at 8.49%. Chuo Ward had the lowest vacancy rate, at 5.11%.

The average asking rent in the five wards surveyed (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) stood at 20,660 yen per tsubo, or about 3.3 square meters in May. That price was down 305 yen (1.45%) from April, and 2,166 yen (9.49%) from a year ago. Average office rents have now fallen for nine consecutive months.

Rents at newly opened large offices, however, increased by 1,968 yen per 3.3 square meters, or just about 6.00%, to hit 30,859 yen.

Japan housing starts down 20.7% in March, up 0.3% in FY2008

According to data released earlier today by the Ministry of Land, Infrastructure, Transport and Tourism, new housing starts in Japan fell 20.7% in March compared to a year ago. This was the fourth consecutive month of decline on a year-on-year basis, and the total amount of new floorspace declined by 22.9% against a year ago. By category, owner-occupied home starts declined 13.1%, falling for the sixth straight month. Rental home starts fell 11.2% for the fourth consecutive month of decline, and new condominium starts dropped a whopping 42.1%, also for the fourth consecutive month.

In a separate report, the ministry also announced that new home starts in fiscal 2008 stood at 1,039,180, up 0.3% from FY2007. This was the first increase seen in two years. The number of homes built for owners increased by 0.4% to 310,664, while the number of rental homes started increased 3.2% to 444,747. The number of condominium units started increased 3.5% to 272,680 - though the strongest part of this increase was amongst units of cheaper construction.

The total amount of floorspace created in FY2008 was up 2.3% against the previous year, showing the first increase in two years.

New condo offerings in Tokyo and Osaka down in February

According to data released Monday by the Real Estate Economic Institute, the number of new condominiums put on the market in the Tokyo area in February fell 27.5% against a year ago, to 2,509. February was the 18th consecutive month in which the number of new units put on the market has fallen.

While the number of new units put up for sale declined, the average price of a new condo in the Tokyo area rose 1.2% to 48.23 million yen. At the same time, 1,548 of the new units put up for sale in February were sold that month, for a closing rate of 61.7%.

Meanwhile, in the Osaka area, 1,548 new condos were put on the market in February, for a decline of 30.5% against a year ago. The average price of a new condo in the Osaka area stood at 34.21 million yen in February, down 3.4% from a year ago, and showing a decline for the second consecutive month. 853 new units in the Osaka area sold in February, for a closing rate of 55.1%.

(I’m not linking directly to the Osaka pdf file, as it has crashed two different browsers (Flock and Chrome) three times. However, it is currently the second link under the section マンション・建売市場動向 on the Real Estate Economic Institute’s top page.)

Tokyo vacancy rates up for seventh straight month in February

Earlier today, the Nikkei reported that vacancy rates at office buildings in central Tokyo inched up 0.1% to 3.5% in February, according to data from CB Richard Ellis. This is the seventh consecutive month in which vacancy rates have increased. At the same time, average rent per tsubo (about 3.3 square meters) decreased 1.0% to 15,160 yen.

Notes on real estate: Office vacancies up, rents down, fewer new condos on the market

In an article published last week, the Nikkei tells us that vacancy rates at office buildings in central Tokyo inched up 0.2% to 3.4% in January, according to data from CB Richard Ellis. This is the sixth consecutive month in which vacancy rates have increased. At the same time, average rent per tsubo, about 3.3 square meters, decreased 0.3% (about 40 yen) to 15,310 yen.

On Monday, the Real Estate Economic Institute announced that the number of new condo units put up for sale in January in Tokyo decreased 24.1% against a year ago, to 1,760 units. This was the 17th consecutive month in which the supply of new condo units has slipped. 64.2% of new units were sold within a month of being put on the market, which is up from the 61.9% seen in December but still less than the 70% sales ratio considered as healthy by the industry.

The average price of a new condo in Tokyo was about 41.72 million yen, down 0.9% from a year ago. Adjusting for the average size of a new condo, this is about 590,000 yen per square meter.

Tokyo office vacancies up, rents up in December

According to data released today by consultancy Miki Shoji, vacancies at office spaces in downtown Tokyo rose 0.16% in December against a month ago, to 4.72%. Vacancies in downtown Tokyo have now increased for 11 consecutive months.

Compared to December 2007, downtown Tokyo vacancy rates are now up by 2.07%.

While vacancies continued to rise, average office rents rose 0.85% year-on-year, to 22,186 yen per tsubo (about 3.3 square meters). However, December rents were 0.72% lower than November, and average rents have fallen for four consecutive months.

In downtown Osaka, office vacancies rose 2.11% year-on-year to 6.82%. In downtown Nagoya, office vacancies rose 1.98% to 8.48%.

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