Japanese Real Estate Hit by Credit Squeeze

By: Darrel Whitten Tuesday, August 12, 2008 10:17 AM

Symbols: C, GE, MS

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Koyo was asked to force the tenants to leave by Suruga Corp., a real estate/construction company listed on the TSE 2. Suruga allegedly paid a princely sum of JPY15 billion for the service.

According to the chief executive of developer major Mori Trust, "The boom we've enjoyed for the past few years is over,'' "Investors were convinced that prices would keep rising, so in about six months, they'll probably rush to get out regardless of price.'' According to Colony Capital Japan's president Masui, "People who bought properties last year at a very high price, they're in trouble. "People with a bunch of stuff in their portfolio are now running around trying to get refinancing, and they won't get it.''

However, what looks like a train wreck for highly leveraged players smells like opportunity for well-capitalized foreign players. General Electric Co. and Morgan Stanley sense a buying opportunity. GE's real estate unit may buy as much as $10 billion of Japanese property this year, anticipating tighter credit and rising borrowing costs will prompt local trusts to accelerate asset sales and drive down prices. GE uses its own cash to invest in property, unlike REITs and private funds that borrow money. Morgan Stanley has invested more than 2 trillion yen in Japanese property, spending more than a 10th of that amount last April to acquire 13 hotels from All Nippon Airways Co. in Japan's largest real estate purchase. Morgan Stanley also bought office buildings from Citigroup Inc. and Shinsei Bank Ltd. .

FT.com Link:
http://www.ft.com/cms/s/0/7bc820f4-f9ce-11dc-9b7c-000077b07658.html?nclick_check=1
Economic Times Link:
http://economictimes.indiatimes.com/International_Business/Japan_bankruptcies_hit_5-year_high/articleshow/3343843.cms
Asahi Shimbun Link:
http://www.asahi.com/english/Herald-asahi/TKY200803110066.html

I have read many articles related to the credit crunch hitting the Japanese market and credit availability "drying up" in Japan but there is a sector of the market that is holding its own quite nicely: Niseko. Niseko is yet to get caught in the sticky web of global slowdown. Land near to the ski hill in Hirafu (Kutchan-4) saw the largest price rise in Hokkaido Prefecture at 37.5% last year. So far, enquiries this year are on par with those received here last year (source: Niseko Consulting) and credit has arrived in Niseko from the Australian Commonwealth Bank. In addition, other Australian financial institutes are coming in with competitive yen loans and one of Australian's largest real estate agents, L J Hooker, has recently announced an aggressive new business plan in Hokkaido. Backed by several large scale players here (PCCW, Hilton, Capella, etc.), this market still has a lot of growth potential and shouldn't be overlooked just yet. Michael Davenport Niseko Consulting

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12/30/2008 6:37:16 AM

brace yourselves! by Xavier Mackenzie

guess it would be in your best interests to keep the investment money coming in...but our (Aussie) tourism is in for a painful 2009 year...less foreign tourists to Australia, meaning...more domestic vacationing...equals: fewer people from Australia hitting the slopes in Niseko and instead either catching the surf at home or @ cheaper destinations around asia...2009 will be the most painful...brace yourselves expats!

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you're right about that...this year the family and friends are heading to thailand for some island hopping instead of hokkaido...much cheaper. i guess those hard core powder punks will still be trying to make their way up there though, if they can still afford it.

1/22/2009 3:22:00 PM

ASSET PRICES IN JAPAN = CHEAP by LeahVDG

The Nikkei 225 Index reached an all-time high on Dec 29th, 1989 of 38,957 points before plummeting to 8422 points in May 2003, some 13 years later. On 28th Oct 2008 the Nikkei-225 reached a new 26-year low of 6994.9 points, meaning that the collapse (from the 1989 peak) of the Japanese market has taken 20 years. We can be fairly confident that the Japanese economy, has bottomed, but we cannot ignore the ‘policy paralysis’ that has Japan stagnating for 2 decades. The Japanese government has done very little to reform the economy; instead relying on exports and government spending for stimulus. Now, in the wake of the global collapse, Japanese export markets will dried up.
The positive implication is that the global crisis will force the Japanese government to reform its economy. For this reason there can be few better places to invest than in Japanese property as long as the focus is on the major cities which are experiencing regional population growth.
Since Oct 2008, the Nikkei-225 has recovered to 9,319 points, and its soon to test its previous high around 9,500 points. The yields on Japanese property give similar confidence to the property market, but equities are always a leading indicator.

http://foreclosured.blogspot.com/search/label/Japan

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"The positive implication is that the global crisis will force the Japanese government to reform its economy." that is joke, right? i think you forgeting japanese kamikaze spirit! we do not change for those reason...like america. this west style logic doesn't work here..even if i think it is good.

"We can be fairly confident that the Japanese economy, has bottomed.." yeah right! like anybody can't make a statement like that in these turbulent times...even the people who are supposed to know about this...people in the financial services.. have no idea what's going on in the world economy...so this kind of statement makes me want to avoid your advice...nice way to promote your book, though, mr. expert.

1/29/2009 3:58:31 AM

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1/29/2009 4:04:41 AM

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1/29/2009 4:09:08 AM

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