Selasa, 01/09/2009

Global Investors Wait Until Japanese Property Prices Fall Further
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Global Investors Wait Until Japanese Property Prices Fall Further

JAPAN, AUSTRALIA, AND CHINA are the best countries for property investors, according to an annual survey that was conducted to determine the spread of investment destinations of world-class property investors. In fact, the achievement of those countries is not enough to attract large investors to enter the Japanese property market in the near future. Although the Japanese property market has been affected by the global crisis, which caused quite many developers get out of business or find it so hard to sell their projects, Japan still takes the lead in the commercial real estate market in East Asia. Its property sales and investments form 42 percent of Asia Pacific’s total.

Additionally, based on the survey, around half of the investors that became respondents in that research said that Australia and Japan are the “most prospective investment destinations in Asia.” Around 14 percent of the respondents picked Australia’s and Japan’s office sector as their investment choice. The achievements of the Japanese property market during these times of crisis that has caused a decline in property asset prices have not prompted large investors to make investment in Japan in the near future. Investors with big funding prefer delaying their intention to buy property in Japan until the first semester of next year.

At that time, in their view, Japanese property prices will reach their lowest ebb. Ben Duncan, managing director of CB Richard Ellis Japan, said that world-class investors like Carlyle Group, Blackstone Group and Lone Star Funds still wait until Japanese property prices fall further. “The market is steering toward big, opportunistic funds. They’re waiting for prices to fall further. At the moment they are not seeking as much distress as they hope for. But as the market starts to bottom out they’ll probably start to buy,” Duncan said.

Commercial land prices in Japan dropped 4.7 percent from their 2008 levels. According to government officials, even prices in metropolitan cities like Tokyo, Osaka and Nagoya have fallen by up to 5.4 percent. But, occupancy rates of office space in Tokyo, Japan’s major business district, rose to 7.25 percent in June. Blackstone has expressed interest to invest in Japanese property firms, which indeed need financial support. Duncan said, “One factor that is hampering a move toward is that Japan’s banks have been lenient in allowing companies to refinance borrowing rather than forcing them to liquidate assets.”

Other factors that keep the Japanese property market under pressure include the decline in the capability of large property players and real estate owners due to difficulties to negotiate for bank loans, and the weakening of the Japanese economy. Small numbers of transactions have caused a decline in property prices in the commercial, retail, industrial and residential sectors. “That’s held back recovery in that the market hasn’t corrected. If there had been more pressure we’d see more transactions and investment from all sectors,” Duncan added.

Companies like Barclays Capital also indicate that the recovery of the Japanese property market is imminent. “Pessimism has been treating recently with the re-emergence of office contract and condominium sales transactions,” said a spokesperson of Barclays Capital. Attention also has to be given to other factors. Example, Tokyo has succeeded to take over the position of Shanghai as Asia’s most attractive city in terms of real estate investment, a position granted by Urban Land Institute and PricewaterhouseCoopers LLP. “What we’ve seen in the last three quarters is a lot of upgrading. Companies in good shape are taking advantage of the market to move into more attractive quarters at no increase in cost,” Duncan noted. (JR)