Japan's real estate stocks have rallied strongly as investor money returns to Japan real estate on the view it is now undervalued vis-a-vis other countries in Asia.
The government's land price survey, a lagging indicator, shows property prices are bottoming-out in urban areas. As of January, average prices in Tokyo, Osaka and Nagoya were down 1.6% versus a 2.5% YoY drop in Jan. 2011. J-REITs are active, acquiring JPY714.4 billion of properties in 2011, including the purchase of Mitsubishi Heavy's headquarters building in 2011 by a consortium lead by Nippon Building Fund (8951). This is roughly triple the bottom in 2009. Property prices in the Tohoku region, hit hard by the March 11, 2011 disaster, are bouncing back as companies return to the region and begin rebuilding.
British real estate firm Grosvenor resumed investing last autumn, buying upscale rental condominiums in Tokyo's Roppongi and Minami-Azabu districts, while Singapore and China sovereign wealth funds were buying 15 logistics facilities, as the spread between investment returns and long-term rates in Japan has widened to 5.12%, versus a mere 1.77% in Hong Kong and 2.07% in Singapore.
Japan Real Estate Institute publicized their research result on “Real Estate Market Index (Late 2011: July through December 2011) that investigated the market trend of apartments within the Tokyo 23-wards area.
The research collected and analyzed the data of the rents of rental and condominium apartments and sales price of apartments as well as their yield rate within the Tokyo 23-wards area that are sorted by new or existing (10 years old), by sizes of large, average or small and by area of all 23-ward, the Central 5-wards(Chiyoda, Minato, Chuo, Shinjuku, Shibuya).
●Price of Apartments (new/existing)
- The sales prices of large and average size, new and existing apartments in the Central Tokyo 5-wards and the Tokyo 23-wards areas remained the same or raised slightly compared to the preceding term as a reaction to the sales price drop after the earthquake disaster in the first half of 2011 as well as continuation of tax benefits and low interests. However, the sales prices of small apartments that were affected less by such conditions have declined slightly.
- The number of both new and existing apartment sales increased in the Central Tokyo 5-wards and Tokyo 23-wards areas in the latter half of 2011 compared to the first half of 2011 as well as to the latter half of 2010. The market condition seems to be recovering from the flagging condition caused after the earthquake disaster.
- Generally, the rents of large apartments in the Central Tokyo 5-wards area has slowed down to decline and the rents of average size apartments shifted from decline to remaining the same. The trend of the decline in rents seems to show a sign of its end. Contrarily, the rent of small apartments has shifted from increase to decline.
- The rents of all sizes of both new and existing apartments in the Tokyo 23-wards area continued to decline and there is no sigh of its end.
- The number of newly-signed lease agreements of both new and existing apartments increased in the latter half of 2011 compared to the first half of 2011 and the latter half of 2010 in the Central Tokyo 5-wards and the Tokyo 23-wards areas. The market condition seems to recover from the flagging condition caused after the earthquake disaster.
●Average yield (annual rents of rental apartments / sales price of condominium apartments)
- The average yield declined slightly because the sales prices of large and average size, new apartments as well as average size, existing apartments rose slightly in the Central Tokyo 5-wards area. Otherwise, the average yield of other types of apartments remained the same overall.
The same tendencies applied to the Tokyo 23-wards area. The average yield declined slightly because the sales prices of large and average size, new and existing apartments increased slightly. Otherwise, the average yield of other types of apartments remained the same overall or increased slightly.