Mizuho 1038 real_estate_housing

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Mizuho 1038 real_estate_housing

  1. 1. Japan Industry Outlook / 38 2012 No.1 Table of Contents1, Comprehensive Industry - Japan 15, Broadcasting (Japanese only)2, Iron and Steel - Japan 16, Marine Shipping (Japanese only)3, Non-ferrous Metals - Japan 17, Logistics - Japan4, Paper and Pulp (Japanese only) 18, Electric Power - Japan5, Cement - Japan 19, City Gas (Japanese only)6, Chemicals - Japan 20, Retail - Japan7, Pharmaceuticals - Japan 21, Food and Beverage - Japan8, Petroleum - Japan 22, Food Service Industry - Japan9, Automobiles - Japan 23, Construction (Japanese only)10, Shipbuilding (Japanese only) 24, Real Estate and Housing - Japan11, General Machinery (Japanese only) 25, Travel and Tourism - Japan12, Electronics - Japan 26, Nonbank (Credit Cards & Credit) (Japanese13, IT Services - Japan only)14, Telecommunications - Japan 27, HR Service Industry (Japanese only) Contact: Industry Research Division Mizuho Corporate Bank, Ltd. mizuho.ird@mizuho-cb.co.jp
  2. 2. FY2012 Japan Industry Outlook (Real Estate & Housing) Real Estate & Housing [Summary](Tokyo Area Land Price Trends)■ As of July 1, 2011, average land prices in the Tokyo metropolitan area remained on a downwards trajectory in both the residential and commercial sectors, though the pace of the decline slowed. There is a sense that house prices will bottom out soon after falling from 2008 onwards.(The Office Building Market in Tokyo’s 23 Wards)■ The office building market in Tokyo’s 23 wards was buoyed by demand for recently-built high-grade properties on the back of a sense they were attractively priced. The rising trend of vacancy rates has slowed, with the figures moving flatly throughout the year. However, rents are still on a downwards trajectory and the environment remains tough.(The Housing Market [Nationwide])■ In FY2011, land purchases by developers actually slowed for a time as the earthquake dampened consumer sentiments and sales of completed housing were postponed. However, an early upswing in consumer sentiments and a rush of housing starts before the end of the eco-point program are expected to see housing starts rising by 2.4% year-on-year in FY2011 (838,000 units). Certain regions are expected to see housing starts increasing in FY2012 due to support for house building in areas hit by the earthquake. Conditions on the whole though will be bearish due to economic stagnation as reconstruction-related demand peaks out and the global economy faces S uncertainty. In FY2012, housing starts are only expected to increase slightly on the previous year.(The Condominium Market in the Metropolitan Area)■ The first half of 2011 saw sales being halted or postponed due to impact of the Great East Japan Earthquake, with the supply of new condominiums dropping temporarily. The second half of the year saw sales picking up at a faster pace than the previous year, with the recovery boosted by a flurry of activity before the end of the eco-point program for houses and the Flat 35S housing loan program (which was subsequently extended). As a result, supply is expected to move flatly for the year on the whole. In 2012, because sales were delayed the previous year due to the earthquake, the supply of new houses is expected to increase by 13.1% y-o-y, while developers are also expected to start purchasing land for building again after a round of inventory disposals.(Corporate earnings)■ Despite the limited impact of the Great East Japan Earthquake, the combined FY2011 financial results of the five major real estate companies saw leasing sales continuing to struggle, with rent levels remaining on a downwards trajectory, so earnings and profits are both expected to decline. Though the condominium sector is expected to recovery in FY2012, the domestic economic slowdown means rent levels are unlikely to rise, so results are expected to move flatly on the whole.■ The FY2011 financial results of the five major homebuilders reveal that each company remains bullish, with the condominium and built-to-order housing sectors expected to see healthy results. However, a sense of uncertainty has started to assail the housing markets in the wake of the earthquake, so only small rises in earnings and profits are expected. FY2012 will see rising demand related to the reconstruction efforts, particularly in the Tohoku region, while the detached home sector is also expected to move firmly, so rising earnings and profits are expected. 1 Mizuho Corporate Bank, Industry Research Division
  3. 3. FY2012 Japan Industry Outlook (Real Estate & Housing) I. INDUSTRY TRENDS 1. Tokyo Area Land Price Trends The downtrend in The benchmark land price for the Tokyo area (Tokyo, Kanagawa, Chiba, Tokyo area land Saitama and Ibaraki prefectures) on July 1, 2011 indicated that land prices are prices seems to have continuing to fall, though the margin of decline for both commercial and ended. residential land prices is narrowing (Figure 24-1, 2) Figure 24-2: Year-on-year changes in benchmark landFigure 24-1: Year-on-year changes in Tokyo area benchmark prices in Tokyo’s 23 Wards land prices (%) [Residential Land] [Commercial Land] 15 12.1 Ward 2010 2011 Ward 2010 2011 10 Chiyoda -6.2 -0.8 Chiyoda -8.7 -3.2 Chuo -0.7 -0.9 Chuo -10.8 -3.0 3.9 4.8 4.0 Minato -4.9 -2.1 Minato -7.3 -4.5 5 Shinjuku -4.0 -1.3 Shinjuku -6.5 -3.0 0.7 1.6 Bunkyo -4.6 -2.9 Bunkyo -4.6 -3.6 -1.9 0 -1.6 -3.0 Taito -5.2 -2.7 Taito -5.9 -3.8 -3.3 -2.9 -4.4 -5.0 -5.0 -3.9 -5.6 Sumida -3.0 -2.4 Sumida -3.8 -1.7 -6.1 -2.5 -6.5 -2.3 -5 -7.3 -6.7-5.8 Koto -2.4 -1.6 Koto -3.8 -2.3 -4.3 -4.1 -5.8 Shinagawa -4.6 -0.6 Shinagawa -5.9 -1.4-10 -7.6 -6.9 Meguro -4.7 -0.9 Meguro -6.4 -1.8 -8.4 -9.0 -8.9 -10.6 -10.3 Ota -3.6 -0.9 Ota -4.0 -1.8-15 Residential Land Setagaya -3.2 -1.4 Setagaya -3.9 -1.5 Commertial Land Shibuya -2.7 -1.6 Shibuya -7.6 -5.8 -16.3 Nakano -4.4 -0.9 Nakano -4.6 -2.1-20 -18.0 -16.9 Suginami -1.9 -0.6 Suginami -3.2 -0.8 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ( FY) Toshima -2.5 -2.3 Toshima -2.7 -3.1 Kita -2.0 -1.0 Kita -3.0 -1.6 Arakawa -3.1 -1.3 Arakawa -2.8 -2.3 Source: Figure 24-1 and 24-2, Compiled by Itabashi -3.0 -1.6 Itabashi -3.3 -2.2 MHCB Industry Research Division based on the Nerima -2.3 -0.8 Nerima -2.6 -1.4 Adachi -3.7 -1.5 Adachi -3.5 -1.0 “Benchmark Land Price” released by the Ministry of Katsushika -2.3 -0.9 Katsushika -3.0 -0.8 Land, Infrastructure, Transport and Tourism Edogawa -2.9 -1.8 Edogawa -3.0 -1.4 A survey report by the Ministry of Land, Infrastructure, Transport and Tourism on quarterly land price trends revealed that the downwards trend had intensified in the first quarter of 2011 due to the impact of the earthquake, though the subsequent increase in the number of locations seeing rises or no change in prices reveals that the downturn is slowing (Figure 24-3). Figure 24-3: Changes in the number of land price districts (rate of increase/decrease) in the Tokyo area) 100% 1 1 2 2 1 3 1 3 0 0 3 3 1 9 90% 12 11 12 15 80% 21 10 24 14 31 Source: Compiled by MHCB Industry 33 38 70% 20 Research Division based on the “Land 25 39 45 42 Price Report” released by the Ministry of 60% 36 50% Land, Infrastructure, Transport and 45 40 47 Tourism 40% 25 38 24 38 28 30% 15 30 29 20 25 20% 16 19 18 10% 10 5 4 8 4 1 2 6 4 1 1 1 2 0% 1 0 1 0 1 0 1 0 0 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 6%~ 3%~6% 0%~3% 0% -3%~0% -6%~-3% ~-6% 2 Mizuho Corporate Bank, Industry Research Division
  4. 4. FY2012 Japan Industry Outlook (Real Estate & Housing) The key for Land prices had been falling since the subprime crisis and the Japanese recovery of real economic slump from autumn 2008 onwards, but the downturn seems to have estate market stopped for a time. The impetus for rising land prices is the return of real estate conditions is domestic buyers and a resumption of land purchases for development by developers, with economy both of these players impacted significantly by the domestic economic situation. Some growth in public demand is expected for FY2012 on the back of reconstruction-related demand and so on, but Europe’s stagnating economy and the persistently strong yen point to uncertainty about the direction of the Japanese economy. Though it seems that land prices are undergoing a gentle recovery, optimism will remain in short supply from hereon. Land prices will continue to tread water in FY2012.2. The Office Building Market in Tokyo’s 23 Wards Vacancy rate at The office building vacancy rate for Tokyo’s 23 wards moved flatly throughout 7.6% as the the year to stand at 7.6% in December 2011. The recent deterioration in office downwards market conditions has been halted, though the pace of recovery is muted trend is halted (Figure 24-4). Figure 24-4: Trends in office building rents and vacancy ratios in Tokyo’s 23 wards (Yen/tsubo) (%) 30,000 10 9.29.6 28,000 Average Offered Rate 28,580 8.0 Vacancy Ratio(RHA) 7.7 7.6 8 26,000 7.5 6.9 6.0 6.1 6.0 24,000 5.9 5.6 24,230 5.9 5.4 6 22,000 4.7 4.3 3.8 4.0 20,000 4 20,270 3.3 2.8 18,000 1.9 2.0 17,350 16,000 2 16,120 15,410 15,190 14,670 14,590 14,000 14,180 14,160 14,110 13,860 13,800 13,480 0 13,220 13,110 12,980 12,760 12,680 12,000 12,530 12,300 10,000 8,000 6,000 92/12 95/12 97/03 97/12 98/09 99/06 00/03 00/12 01/09 02/06 03/03 03/12 04/09 05/06 06/03 06/12 07/09 08/06 09/03 09/12 10/09 11/06 11/12 Source: Compiled by MHCB Industry Research Division based on CBRE, “OFFICE MARKET FLASH” Vacancy rates peaked out in The data for building size and area shows signs that the vacancy rate for office 2011 buildings (which had been rising (deteriorating) for all building sizes and areas) has peaked out (Figures 24-5, 6). 3 Mizuho Corporate Bank, Industry Research Division
  5. 5. FY2012 Japan Industry Outlook (Real Estate & Housing) Figure 24-5: Changes in office building vacancy ratios in Figure 24-6: Changes in office building vacancy ratios Tokyo’s 5 central wards by size in Tokyo’s 5 central wards14.0% Huge-sized building (%) Large-sized building 912.0% M edium-sized building 8 Small-sized building10.0% 7 68.0% 56.0% 44.0% 3 22.0% 1 Vacancy rate (5 central wards) (RHA)0.0% 0 01/01 01/05 01/09 02/01 02/05 02/09 03/01 03/05 03/09 04/01 04/05 04/09 05/01 05/05 05/09 06/01 06/05 06/09 07/01 07/05 07/09 08/01 08/05 08/09 09/01 09/05 09/09 10/01 10/05 10/09 11/01 11/05 11/09 07/01 07/05 07/09 08/01 08/05 08/09 09/01 09/05 09/09 10/01 10/05 10/09 11/01 11/05 11/09 Source: Compiled by MHCB Industry Research Division based on Sanko Estate Co., Ltd. “Office Market” Source Compiled by MHCB Industry Research Division based Note: 5 central wards: Chiyoda, Chuo, Minato, Shinjuku and Shibuya on CBRE, “OFFICE MARKET FLASH” The vacancy rate for medium-sized office buildings in particular has shown The vacancy rate signs of peaking out at last after having faced relatively tough conditions for a for medium-sized office buildings time (Figure 24-5). The persistent deterioration of vacancy rates was down to has also peaked the ambiguous position occupied by medium-sized office buildings - they do out not meet the demands of tenants who select office space based on the office environment and their own business performance (which determines their ability to pay the rent). However, there are signs that vacancy rates are finally peaking out for these medium-sized office buildings too and, as mentioned above, the vacancy rate of office buildings in Tokyo’s 23 wards appears to be improving for all areas or sizes. At the same time, office building rents continue to fall in Tokyo’s 23 wards Rents remain on (Figure 24-4). a downwards trajectory However, signs of an end to this long-standing downturn can be observed in the data for average office building rent in the five main wards (Figure 24-7). The downward revision of rents has dredged up tenant demand and, as indicated above, the vacancy rate has shown improvements. In the wake of this improvement in vacancy rates, signs pointed to a gradual improvement in rent levels, focused mainly on buildings that fulfil tenant requirements. Quake-resistant/stable buildings in particular have seen demand rising after the earthquake, while rising demand for prime high-rent real estate in Tokyo’s five main wards has also supported this improvement. 4 Mizuho Corporate Bank, Industry Research Division
  6. 6. FY2012 Japan Industry Outlook (Real Estate & Housing) Figure 24-7: Year-on-year changes in average office building rent in the five main wards. (%) 14 12 Avarage Offered Rate (5 central wards) 10 8 Source: Compiled by MHCB 6 Industry Research Division based on 4 CBRE, “OFFICE MARKET 2 FLASH” 0 -2 -4 -6 -8 -10 07/01 07/05 07/09 08/01 08/05 08/09 09/01 09/05 09/09 10/01 10/05 10/09 11/01 11/05 11/09 Tokyo’s labor force increased sharply until around 2007 as people returned to The supply and demand balance the city center. Though the brakes have been applied to this trend, labor force deteriorated in numbers remain at high levels (Figure 24-9). The ratio of job offers to job 2012 due to the seekers also continues to improve after hitting bottom in the latter half of 2009 large-scale supply (Figure 24-10). However, global economic uncertainty and the persistently of office space strong yen mean that a Japanese economic recovery is not on the cards, while an upswing in corporate performance is also unlikely. Furthermore, the supply of large-sized office buildings is set to rise to 1.96 million square meters in 2012, the third highest figure for the past ten years (Figures 24-8, 11), so there are concerns for a supply-led deterioration in the supply and demand environment.Vacancy rates Given the uncertainty hovering over the Japanese economy, as mentionedcontinue to above, the office building market in Tokyo’s 23 wards will probably see adeteriorate and commensurate supply of office space, so vacancy rates are set to worsen to hitaverage rentscontinue to fall 7.7% for the full year in 2012. Large-scale supply and a slow recovery inacross Tokyo’s 23 corporate ability to pay rents suggest that more time will be needed beforewards average rents across Tokyo’s 23 wards start to recover. Figure 24-8: Changes in the supply of major large-sized office buildings in Tokyo’s 23 wards (10,000 ㎡) 300 Source: Compiled by MHCB 255 Industry Research Division Forecast as of 250 based on Mori Building Co., January 2012 205 196 “Urban Renewal and 200 183 Environmental Infrastructure,” 165 143 Mizuho Securities Co, 150 122 127 125 “Mizuho Securities Real Estate 118 119 113 99 101 Market Report,” etc. (Figures 100 92 90 88 74 74 for FY2012 and after are based 61 56 54 50 36 on MHCB Industry Research Division forecasts) 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (FY) 5 Mizuho Corporate Bank, Industry Research Division
  7. 7. FY2012 Japan Industry Outlook (Real Estate & Housing) Figure 24-9: Changes in Tokyo’s labor force Figure 24-10: Changes in the vacancy rate and the job offers-to-job seekers ratio in Tokyo’s 5 central wards(T housand) (T imes) (%) 7400 1.8 10.0 1.6 9.0 7200 1.4 8.0 7000 7.0 1.2 6800 6.0 1 6600 5.0 0.8 4.0 6400 0.6 3.0 6200 0.4 2.0 Job offers-to-job seekers ratio (nationwides) 6000 Job offers-to-jobs ratio (Tokyo) 0.2 1.0 Vacancy ratio (RHA) 2012 (Jul-Sep) 2012 (Apr-Jun) 2012 (Jan-Mar) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 0.0 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010 Apr-2011 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009 Oct-2010 Oct-2011 (FY)Source: Compiled by MHCB Industry Research Division Source: Compiled by MHCB Industry Research Divisionbased on the Bureau of General Affairs, Tokyo based on the Ministry of Health, Labour and Welfare forMetropolitan Government the job offers-to-job seekers ratio and Miki Shoji Co., Ltd. for the vacancy rate Figure 24-11: Major office buildings to be completed in 2012 (20,000 m2 or larger) Total Floor Scheduled Building Name Location Area Completion Developer (㎡) Date Marunouchi, Chiyoda PF Project Office Building (Palace Hotel Rebuild Project) 68,000 Jan-12 Palace Hotel Ward Marunouchi, Chiyoda Marunouchi Eiraku Building (Marunouchi 1-4 project) 139,728 Jan-12 Mitsubishi Estate, Mitsubishi Tokyo UFJ Bank, Sumitomo Trust, Mitsubishi UFJ Trust) Ward Motoakasaka, Minato Akasaka K TOWER (Motoakasaka K Project) 53,702 Jan-12 Kajima Corporation Ward Kandasurugadai, Mitsui Sumitomo Insurance New Building 64,800 Feb-12 Mitsui Sumitomo Insurance Company, Limited Chiyoda Ward TEPCO Toyosu District Planning (A1 Block) Toyosu, Koto Ward 72,000 Mar-12 Harumi 2-chome Development Specific Purpose Company (Mitsubishi Estate, Kajima Harumi Front Tower (Harumi 2-chome City Planning for 2nd-4th Blocks) Harumi, Chuo Ward 43,493 Mar-12 Corporation) Aomi Q Specific Purpose Company (Mitsui Fudosan, Daiwa House, The Sankei Building, DiverCity Tokyo Aomi, Koto Ward 64,880 Mar-12 Fuji Television Network) Shibuya, Shibuya Council for Promotion of the Shibuya New Cultural District Development Project (Tokyu Shibuya Hikarie 50,000 Apr-12 Ward Corporation, Tokyo Metro, Toho Real Estate, etc.) Sumitomo Real Estate Shibuya Garden Tower (Nanpeidaicho project/Former Nanpeidaicho, 59,375 Apr-12 Sumitomo Realty & Development Site of NCR Japan Head Office Building, etc.) Shibuya Ward Shinjuku, Shinjuku Shinjuku 6-chome Specific Purpose Company (Mitsubishi Estate, Nippon Tochi-Tatemono, Shinjuku East Side Square 148,700 Apr-12 Ward Daiwa House, Heiwa Real Estate, etc.) Marunouchi, Chiyoda JP Tower (Tokyo Central Post Office Rebuilding) 212,131 Apr-12 Japan Post Holdings Ward NAKANO CENTRAL PARK EAST Nakano, Nakano Ward 39,025 Apr-12 Nakano Station Area Development Specific Purpose Company (Tokyo Tatemono) NAKANO CENTRAL PARK SOUTH Nakano, Nakano Ward 151,577 Apr-12 Nakano Station Area Development Specific Purpose Company (Tokyo Tatemono) Oshiage, Sumida Tokyo Skytree East Tower 25,300 May-12 Tobu Railway, etc. Ward Kyobashi 2-chome 16 District, A Building (Shimizu Corporation New Office Kyobashi, Chiyoda 51,800 May-12 Shimizu Corporation Building) Ward Mita Bellju Building Mita, Minato Ward 55,811 May-12 Bellju Yoyogi, Shibuya JR Minami Shinjuku Building 36,000 Jun-12 East Japan Railway Company Ward Kyobashi, Chiyoda Rebuild of Dai-ichi Life Insurance Sogo-building 23,811 Jun-12 The Dai-ichi Life Insurance Company Ward Roppongi and Redevelopment of Toranomon/Roppongi District, Complex Building Toranomon, Minato 143,720 Jun-12 Redevelopment Association (Mori building, etc.) Ward Otemachi, Chiyoda Urban Renaissance Agency, NTT Urban Development, Mitsubishi Estate, The Sankei Otemachi District Second Redevelopment, A Building 110,000 Sep-12 Ward Building, etc. Otemachi, Chiyoda Otemachi District Second Redevelopment, B Building 132,500 Sep-12 Urban Renaissance Agency, Mitsubishi Estate Ward Motoakasaka, Minato Shinakasaka Center Building 39,803 Sep-12 Kanden-fudosan Ward Meguro, Meguro Meguro 1-chome Project 22,800 Sep-12 Shimizu Corporation Ward Meiji-Yasuda Life Insurance New Toyo Building Toyo, Koto Ward 96,000 Nov-12 Meiji Yasuda Life Insurance Company Shibaura, Minato Rebuilding of Yanase Head Office 23,979 Nov-12 Ward Kanda Manseibashi Building Project (Former Site of Transportation Museum, Kandasudacho, 28,499 Dec-12 East Japan Railway Company etc.) Chiyoda Ward Source: Compiled by MHCB Industry Research Division based on Mori Building Co., “Urban Renewal and Environmental Infrastructure,” Mizuho Securities Co, “Mizuho Securities Real Estate Market Report,” etc. 6 Mizuho Corporate Bank, Industry Research Division

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