Albert Mangelsdorff, Alphonse Mouzon, Jaco Pastorius
Sunday, October 17, 2010
MPS Jazzin' The Black Forest
In the film's ninety minutes there are many memorable passages, but one of the most enlightening is archival footage of Oscar Peterson and his trio arriving at Brunner-Schwer's house after a concert performance. What started as a brief bit of fun turned into a lengthy house concert, and while it's not all captured on film, one can sense Peterson's comfort in the environment and appreciate just how much that sense of comfort contributed to the creative process. There's also some exciting, albeit brief, concert footage of Mangelsdorff with Jaco Pastorius and Alphonse Mouzon that would ultimately result in the album Trilogue - Live! (MPS, 1976).
Friday, October 15, 2010
Investors Eye Tokyo Property Sale
- Bloomberg News
- Tokyo in view: A forthcoming commercial property sale is attracting interest from elsewhere in Asia.
Japan Tobacco Inc., the world’s third-largest tobacco maker, is in process of selling three mixed-use buildings in Tokyo, which could fetch up to 100 billion yen, according to market observers. The site is called Shinagawa Seaside Forest and was once home to a JT plant. JT is selling three of its office buildings in the site, and the tobacco maker will sell all three as a package or each building separately, depending on demand.
This is the first big commercial real estate deal Tokyo has seen since the collapse of Lehman Brothers. It is being closely watched by industry observers and bankers, to see if the property market is showing a sign of the recovery.
Japanese real estate’s supply-demand balance has eroded since the financial crisis, and the nation’s land prices have plummeted for nearly a decade.
But what makes this deal really different is that Asian investors are showing a keen interest in the sale. In the past, most foreign real estate investment flowing into Japan came from Western private equity funds or investment banks.
“There is a possibility that money from a pension fund or a sovereign fund from Asia, such as Taiwan, Korea, Hong Kong, Singapore or mainland China, will be poured into the Japanese market,” said Takashi Hashimoto, an analyst at Barclays Capital analyst, citing Asian appetite for the JT deal.
A JT spokesman said bidding is scheduled to take place on November 25, and the company expects an agreement will be reached in January
Distress is a Global Phenomenon with Few Solutions
Distress is a Global Phenomenon with Few Solutions
Oct 14, 2010 2:44 PM, By David Bodamer
Ever since the commercial real estate market turned south in early 2007, investors have speculated about when this cycle’s distressed real estate opportunities would materialize. That conversation has not been limited to the United States. And it turns out that investors in Europe and Asia have largely seen the same process play out there as has happened here; distressed real estate exists, but banks are working at a glacial pace in resolving problems.A panel at the ULI Fall Meeting took up this discussion. The session, “Global Deals on Distressed Assets”, was moderated by Stephen Blank, senior resident fellow, finance, with ULI, and featured Robert Peto, president, the Royal Institution of Chartered Surveyors, and Simon Terry, group CEO of Australian private equity real estate investment advisory firm MGPA.
New York City-based research firm Real Capital Analytics pins the current amount of total distressed commercial real estate in the U.S. at about $290 billion. Peto, for his part, pinned the level of distress at a similar level in Europe, where there is about 1.4 trillion euros in commercial real estate debt outstanding and about 150 billion euros in distress. According to Terry, the picture in Asia is a bit murkier given the lack of transparency in China’s real estate market, while in Japan there is about $170 billion in commercial real estate debt coming due in the next few years.
To date, however, banks have largely sat on that debt. Phenomenon like “extend and pretend,” where banks have opted to roll over troubled loans rather than recognize losses, has led to less opportunity than many investors imagined. In the U.S., about $90 billion in distressed debt has been dealt with. In Europe, Peto estimates that the total amount of outstanding commercial real estate has shrunk by as little as 20 billion euros since the market’s peak. “Almost nothing has been taken out,” he said. “There’s been no meaningful pay down.”
What’s enabled the situation to play out like this has been the fact that governments across the world have largely opted to save the banks. That, in turn, has enabled them to delay dealing with bad debt, according to Blank. Banks don’t have to mark their loans to market. That’s significant because a large percentage of commercial real estate that was financed at the market’s peak is now worth less than the mortgages arranged on the assets. If banks had to mark-to-market, the panel said, they wouldn’t have enough equity to cover the resultant losses.
Instead, banks are able to borrow money at near 0 percent interest rates. That money, in turn, is generating profits through trading desks or by buying government debt, such as Treasuries. This process is enabling banks to recapitalize and—the idea goes—enter into a position to resolve distressed situations as they build buffers of capital.
But Blank pointed to another factor delaying the resolution of distressed assets. He said that banks missed out on the upside after the Resolution Trust Corporation (RTC) bailout in the late 1980s. At the time, the government-created institution absorbed assets from liquidated savings and loans and other bad debt and then auctioned off assets. The buyers of those assets profited as assets recovered in the next real estate cycle. So banks are trying to hold on and wait for real estate values to recover so they don’t miss out on profits this time around.
As Peto put it, “Nobody is willing to put assets on the market. Banks can’t take hits to satisfy your need for cheap property.”
Another problem the panel identified was the fact that the market doesn’t understand what properties are truly worth. Peto talked about how even the concept of “distressed” assets is a bit of a misnomer. “A distressed sale is one where you are forced to the market and have to move the property in a short amount of time,” he said. If you have six months to prepare, market it and complete the sale, “then it’s not a distressed price, it’s the actual market price.”
Ultimately, none of the speakers saw the logjam of distressed assets getting resolved any time soon. Unless banks are forced to act, they will continue to dribble out properties and spread the pain as long as possible. In short, that “tsunami of distress” everyone talked about a few years ago is never going to materialize.
Wednesday, October 13, 2010
Tokyo and nine regional cities
Tokyo and nine regional cities
Presented here are overviews of Tokyo and nine major cities, including land price changes over the long-term and snapshots of major macroeconomic indices. For details of each city, click the red dots on the map below left.
(1) Land Prices
(2) Rental Office Market
(3) Population
(4) Retail and Household Income
(5) External Resources
(1) Land Prices - Recovery from the bubble burst
After the collapse of the bubble economy, the Japanese economy entered a period of stagnation called the "lost ten years." Looking at the fluctuations of the price change rates in commercial districts (sites for offices and retail stores), it is apparent that the three major metropolitan areas had particularly significant rises and falls from the late 1980s to the early 1990s in comparison to the national average. This tendency is particularly prominent in the Tokyo and Osaka regions.
Looking at the standard land prices of commercial districts, for which national averages reversed their declines in 2007, Fukuoka recorded the highest at 769,000 yen per m2 among the nine major cities, except Tokyo. It is followed by a similar value of 767,000 yen per m2 in Osaka. These are about one third of the price appraised in the wards of Tokyo, which was 2,036,000 yen per m2.
The standard land prices in commercial districts over previous years in Nagoya, Kyoto and the wards of Tokyo started to rise from 2005, while all of the nine cities reversed their declines from 2006 to 2007. In particular, Sapporo, Kyoto, Osaka, Fukuoka and the wards of Tokyo recorded increases of more than 10% two years in a row. The growth of land prices are saturating though, particularly in Nagoya and Kyoto.
Among the nine cities, Yokohama recorded the highest asking rent for offices, roughly 12,000 yen per tsubo, while Kyoto and Kobe recorded asking rents at the 11,000 yen per tsubo level, followed by the 10,000 yen per tsubo level of Osaka, Nagoya and Fukuoka (Tsubo equals to 3.3m2, or 36 ft2). Sapporo and Sendai dipped below the 10,000 yen per tsubo level. Standards in the five central wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) are close to reaching the 16,000 yen per tsubo level and the standard of Osaka was about two thirds of that.
The vacancy rates in the nine cities peaked in 2003 and have been declining since then in general. The vacancy rates in Yokohama and Nagoya drifted without exceeding 10% in 2003, the year which saw vacancy rates increase nationwide. Although the vacancy rates in the two cities had a downward tendency after 2004, they went up slightly in 2007. Meanwhile, the vacancy rates in Kyoto and Osaka, which exceeded 10% from 2002 to 2003, rapidly decreased and recovered to the 5% to 6% level in and after 2006. Although Sapporo and Sendai once exhibited a downward trend, they have remained at roughly the same level for the past year or two.
As of June 2008, Yokohama has a population of roughly 3.64 million, which is the largest among the nine cities. It is followed by Osaka with a population of roughly 2.65 million and Nagoya with a population of roughly 2.24 million. The smallest among the nine cities is Naha, which has a population of roughly 310,000.
When compared with the wards of Tokyo, the population of Yokohama is equivalent to roughly 42% of that of the wards of Tokyo, while the populations of Osaka and Nagoya are roughly 30% and 26% respectively.
The highest growth rate in the 2000 and 2005 comparison was the 4.5% recorded by Yokohama and Fukuoka, which was followed by the 3.8% of Naha and the 3.2% of Sapporo. The wards of Tokyo remained at 4.4%, roughly at the same level as Yokohama and Fukuoka. Osaka, which had a population that had been in continuous retreat, reversed its negative growth increasing by 1.2%.
(4) Retail and Household Income
In a comparison of the number and total retail space of large-scale retail stores with floor space exceeding 1,000 m2 in the nine cities, the largest number of stores is 361 in Osaka, followed by 336 in Yokohama and 335 in Sapporo. As for total retail space, Yokohama has the largest amount of space, exceeding 2.26 million m2.
The number of large-scale retail stores in Kyoto, which has a population roughly the same size as Kobe and Fukuoka, is only 138 and the total retail space is also small at roughly 750,000 m2.
The wards of Tokyo have 911 retail stores and the total retail space exceeds 4.69 million m2. In a comparison between Yokohama and the wards of Tokyo, the number of retail stores in Yokohama is roughly one third of the wards of Tokyo, while the total retail space in Yokohama is roughly half that of the wards of Tokyo.
In comparison to the previous year, each city remained at approximately the same level and there is little difference between cities. Sapporo, Nagoya and Kyoto slightly increased their totals over the previous year.
For investors who wish to learn about Japanese property market from the ground, a comprehensive handbook published by the Real Estate Companies Association of Japan may be helpful. “REAL ESTATE in Japan” is issued annually in English and offered online for free.
REAL ESTATE in Japan 
Those who want to check recent updates of rents and vacancy data may try “Office Market Report” published by CB Richard Ellis Research Institute. It is a quarterly report that covers metropolitan and regional cities. Note that the rents CBRE reports are asking rents, instead of actual closing rents which we offer proprietarily on the Closing Rent Survey page.
Office Market Report
The Association for Real Estate Securitization (ARES) provides online J-REITs information, by compiling public information regularly. "J-REIT View" abounds with outline of each REIT and statistic data, such as share price and dividend yields, updated weekly. "J-REIT Property Database" is comprised of indices and a database of REIT owned properties, based on the disclosed information. ARES also offers "Japanese Real Estate Market Overview", a webpage of its survey on cap rates, construction stats, etc.
The Association for Real Estate Securitization
The Japanese Real Estate Investor Survey, conducted semi-annually by a leading real estate appraisal institution Japan Real Estate Institute (JREI), provides expected cap rates of buildings in the Tokyo's central business districts, as well as regional cities. The report represents aggregated-base information of viewpoints and expectations, and does not reflect the actual transaction. However, it often referred as a key indicator for capturing market trends. The PDF files include English translation printed side by side with Japanese text.
The Japanese Real Estate Investor Survey
"Land Price Look Report" is the most recent effort of the Ministry of Land, Infrastructure, Transport and Tourism(MLIT) to improve transparency of the market. It represents an aggregation of the report on the quarterly trends in land prices of urban centers by local real estate appraisers. Quarterly changes are expressed by up and down allows on the map.
Land Price Look Report
(1) Land Prices
(2) Rental Office Market
(3) Population
(4) Retail and Household Income
(5) External Resources
(1) Land Prices - Recovery from the bubble burst
After the collapse of the bubble economy, the Japanese economy entered a period of stagnation called the "lost ten years." Looking at the fluctuations of the price change rates in commercial districts (sites for offices and retail stores), it is apparent that the three major metropolitan areas had particularly significant rises and falls from the late 1980s to the early 1990s in comparison to the national average. This tendency is particularly prominent in the Tokyo and Osaka regions.
Annual changes of standard land prices in commercial districts of metropolitan areas
Source: The Ministry of Land, Infrastructure, Transport and Tourism
During the bubble economy, surplus funds held in Japan due to the appreciation of the yen were directed to land investment. It was a time when the "land-price myth," which asserts that land prices will never go down, was widely believed. After the collapse of the bubble economy, few buyers showed interest in real estate properties for which prices kept falling. The recovery of land prices started only after drastic liquidation of bad loans by financial institutions. This process was helped by the general adoption of the DCF method, which enabled objective appraisal of real estate and the securitization of properties by the Asset Liquidation Law, which came into effect in 1998. The market was led by foreign-based funds such as Morgan Stanley and the recovery of the macro economy supported land prices.Source: The Ministry of Land, Infrastructure, Transport and Tourism
Standard land prices for commercial districts
Source: The Ministry of Land, Infrastructure, Transport and Tourism, 2007
Data shown in the above graph is based on the land prices for roughly 30,000 locations assessed by real estate appraisers appointed by the government every July. The survey is conducted for the purpose of taxation and there is some divergence from the actual transaction prices over the short-term.Source: The Ministry of Land, Infrastructure, Transport and Tourism, 2007
Looking at the standard land prices of commercial districts, for which national averages reversed their declines in 2007, Fukuoka recorded the highest at 769,000 yen per m2 among the nine major cities, except Tokyo. It is followed by a similar value of 767,000 yen per m2 in Osaka. These are about one third of the price appraised in the wards of Tokyo, which was 2,036,000 yen per m2.
The standard land prices in commercial districts over previous years in Nagoya, Kyoto and the wards of Tokyo started to rise from 2005, while all of the nine cities reversed their declines from 2006 to 2007. In particular, Sapporo, Kyoto, Osaka, Fukuoka and the wards of Tokyo recorded increases of more than 10% two years in a row. The growth of land prices are saturating though, particularly in Nagoya and Kyoto.
Annual changes of standard land prices in commercial districts
Source: The Ministry of Land, Infrastructure, Transport and Tourism, 2007
(2) Rental Office Market - Vacancy rate records the lowest in Tokyo Source: The Ministry of Land, Infrastructure, Transport and Tourism, 2007
Among the nine cities, Yokohama recorded the highest asking rent for offices, roughly 12,000 yen per tsubo, while Kyoto and Kobe recorded asking rents at the 11,000 yen per tsubo level, followed by the 10,000 yen per tsubo level of Osaka, Nagoya and Fukuoka (Tsubo equals to 3.3m2, or 36 ft2). Sapporo and Sendai dipped below the 10,000 yen per tsubo level. Standards in the five central wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku and Shibuya) are close to reaching the 16,000 yen per tsubo level and the standard of Osaka was about two thirds of that.
Asking rents of office buildings
Source: CBRE Research Institute, December 2007
The vacancy rate as of the end of 2007 was lowest in Yokohama at 4.2%, which was followed by rates at the 5% level in Osaka and the 6% level in Nagoya and Kyoto. While the actual standard rent of Kobe exceeds that of Osaka by roughly 1,000 yen per tsubo, the vacancy rate in Kobe is higher than 10%. The vacancy rate for the major five wards of Tokyo remains at the low level of 1.7 %.Source: CBRE Research Institute, December 2007
The vacancy rates in the nine cities peaked in 2003 and have been declining since then in general. The vacancy rates in Yokohama and Nagoya drifted without exceeding 10% in 2003, the year which saw vacancy rates increase nationwide. Although the vacancy rates in the two cities had a downward tendency after 2004, they went up slightly in 2007. Meanwhile, the vacancy rates in Kyoto and Osaka, which exceeded 10% from 2002 to 2003, rapidly decreased and recovered to the 5% to 6% level in and after 2006. Although Sapporo and Sendai once exhibited a downward trend, they have remained at roughly the same level for the past year or two.
Changes in vacancy rates of office buildings
Source: CBRE Research Institute, December
(3) Population - Centralization progress while Japan shrinks as a wholeSource: CBRE Research Institute, December
As of June 2008, Yokohama has a population of roughly 3.64 million, which is the largest among the nine cities. It is followed by Osaka with a population of roughly 2.65 million and Nagoya with a population of roughly 2.24 million. The smallest among the nine cities is Naha, which has a population of roughly 310,000.
When compared with the wards of Tokyo, the population of Yokohama is equivalent to roughly 42% of that of the wards of Tokyo, while the populations of Osaka and Nagoya are roughly 30% and 26% respectively.
Estimated populations
Source: published data of each municipal office, 2008
Looking at the changes in the population growth rates for every five years, cities in major metropolitan areas showed significant decreases in population as demonstrated by Nagoya, Osaka, Kobe, Naha and the wards of Tokyo, all of which recorded negative growth in a comparison between 1990 and 1995. The major reverse in growth between 1990 and 1995 in Kobe is due to the Great Hanshin-Awaji Earthquake.Source: published data of each municipal office, 2008
Changes in population growth rates
Source: Ministry of Internal Affairs and Communication, Statistics Bureau
In a comparison between 1995 and 2000, however, Nagoya, Kobe and the wards of Tokyo reversed their negative trends as their growth rates moved upward. In addition, all of the nine cities and the wards of Tokyo recorded increases in the 2000 and 2005 comparison. An apparent trend of centralization became common among the major cities, though population of the country is declining as a whole.Source: Ministry of Internal Affairs and Communication, Statistics Bureau
The highest growth rate in the 2000 and 2005 comparison was the 4.5% recorded by Yokohama and Fukuoka, which was followed by the 3.8% of Naha and the 3.2% of Sapporo. The wards of Tokyo remained at 4.4%, roughly at the same level as Yokohama and Fukuoka. Osaka, which had a population that had been in continuous retreat, reversed its negative growth increasing by 1.2%.
(4) Retail and Household Income
In a comparison of the number and total retail space of large-scale retail stores with floor space exceeding 1,000 m2 in the nine cities, the largest number of stores is 361 in Osaka, followed by 336 in Yokohama and 335 in Sapporo. As for total retail space, Yokohama has the largest amount of space, exceeding 2.26 million m2.
The number of large-scale retail stores in Kyoto, which has a population roughly the same size as Kobe and Fukuoka, is only 138 and the total retail space is also small at roughly 750,000 m2.
The wards of Tokyo have 911 retail stores and the total retail space exceeds 4.69 million m2. In a comparison between Yokohama and the wards of Tokyo, the number of retail stores in Yokohama is roughly one third of the wards of Tokyo, while the total retail space in Yokohama is roughly half that of the wards of Tokyo.
The number and the total retail space of large stores
Source: Toyo Keizai, 2007. Stores with retail space in excess of 1,000 m2
Sales turnover of large-scale retail stores (department stores and supermarkets) was the largest in Osaka among the nine cities, surpassing 1 trillion yen. It was followed by the roughly 930 billion yen in Yokohama and the roughly 800 billion yen in Nagoya. The total of the wards of Tokyo reached 2.85 trillion yen and the turnover of Osaka is equivalent to roughly one third of that.Source: Toyo Keizai, 2007. Stores with retail space in excess of 1,000 m2
In comparison to the previous year, each city remained at approximately the same level and there is little difference between cities. Sapporo, Nagoya and Kyoto slightly increased their totals over the previous year.
Sales turnover and the comparison with the previous year
Source: Ministry of Economy, Trade and Industry, 2006. Department stores with retail space of more than 3,000 m2. Supermarkets more than 1,500 m2.
As for the annual income of households consisting of two or more persons in each city, Yokohama recorded the highest annual income of 7.68 million yen, followed by 7 million yen in Fukuoka and 6.66 million yen in Nagoya. The lowest was the 4.25 million yen of Naha. The standard of Yokohama was roughly the same as that of the wards of Tokyo.Source: Ministry of Economy, Trade and Industry, 2006. Department stores with retail space of more than 3,000 m2. Supermarkets more than 1,500 m2.
Comparison of household income
Source: the Ministry of Internal Affairs and Communication, Statistics Bureau, 2006. Households of two or more persons
(5) External ResourcesSource: the Ministry of Internal Affairs and Communication, Statistics Bureau, 2006. Households of two or more persons
For investors who wish to learn about Japanese property market from the ground, a comprehensive handbook published by the Real Estate Companies Association of Japan may be helpful. “REAL ESTATE in Japan” is issued annually in English and offered online for free.
REAL ESTATE in Japan Those who want to check recent updates of rents and vacancy data may try “Office Market Report” published by CB Richard Ellis Research Institute. It is a quarterly report that covers metropolitan and regional cities. Note that the rents CBRE reports are asking rents, instead of actual closing rents which we offer proprietarily on the Closing Rent Survey page.
Office Market Report The Association for Real Estate Securitization (ARES) provides online J-REITs information, by compiling public information regularly. "J-REIT View" abounds with outline of each REIT and statistic data, such as share price and dividend yields, updated weekly. "J-REIT Property Database" is comprised of indices and a database of REIT owned properties, based on the disclosed information. ARES also offers "Japanese Real Estate Market Overview", a webpage of its survey on cap rates, construction stats, etc.
The Association for Real Estate Securitization The Japanese Real Estate Investor Survey, conducted semi-annually by a leading real estate appraisal institution Japan Real Estate Institute (JREI), provides expected cap rates of buildings in the Tokyo's central business districts, as well as regional cities. The report represents aggregated-base information of viewpoints and expectations, and does not reflect the actual transaction. However, it often referred as a key indicator for capturing market trends. The PDF files include English translation printed side by side with Japanese text.
The Japanese Real Estate Investor Survey "Land Price Look Report" is the most recent effort of the Ministry of Land, Infrastructure, Transport and Tourism(MLIT) to improve transparency of the market. It represents an aggregation of the report on the quarterly trends in land prices of urban centers by local real estate appraisers. Quarterly changes are expressed by up and down allows on the map.
Land Price Look Report 160 large-scale office building development projects currently in progress in Tokyo.
The map of Tokyo below represents 160 large-scale office building development projects currently in progress in Tokyo. The survey was conducted on buildings with more than 10,000 m2 of floor space that will mainly be used for offices in the 23 wards of Tokyo in April 2010, regardless of whether they would be used by their owners or leased to tenants. A total of 126 office buildings with a total floor space of at least 10,000 m2 are to be completed in Tokyo's 23 wards in or after 2010 for an aggregate total floor space of 7.6 million m2.
Click on the map to expand.
A total of 31 buildings with a total floor space of 1.1 million m2 will be completed in 2010. Thereafter, more buildings will be completed in 2011 and 2012, with more than 1.8 million m2 of floor space being supplied in 2012.
Construction plans for an additional 38 buildings were added to the data in the latest survey. Of those buildings, 25 will be completed by 2011. As was the case in the survey carried out one year ago, the construction of single buildings, which require shorter construction periods, was more active. Meanwhile, the buildings being completed in and after 2012 will mostly be large buildings with more than 100,000 m2 of total floor space. In our latest survey, plans for an additional six buildings came to light as parts of redevelopment projects.
Click on to expand
Click on to expand picture.
Click on the map to expand.
A total of 31 buildings with a total floor space of 1.1 million m2 will be completed in 2010. Thereafter, more buildings will be completed in 2011 and 2012, with more than 1.8 million m2 of floor space being supplied in 2012.
Construction plans for an additional 38 buildings were added to the data in the latest survey. Of those buildings, 25 will be completed by 2011. As was the case in the survey carried out one year ago, the construction of single buildings, which require shorter construction periods, was more active. Meanwhile, the buildings being completed in and after 2012 will mostly be large buildings with more than 100,000 m2 of total floor space. In our latest survey, plans for an additional six buildings came to light as parts of redevelopment projects.
Click on to expand
Click on to expand picture.
Tokyo Class A Buildings Rents Hitting Bottom Soon.
ASIA PACIFIC CONTINUES TO LEAD
GLOBAL OFFICE RENT REBOUND
EMEA region follows closely, with rents turning up.
More than half of the office rental markets in Asia Pacific either stabilized or moved into the growth phase during the second quarter (Q2) of 2010, demonstrating that the region continues to lead the global real estate recovery, according to CB Richard Ellis’ (CBRE) latest quarterly Global Office Rental Cycle report.
According to the rent estimates for model buildings envisioned by the institute for each major area, rents for the Marunouchi and Otemachi areas have already fallen to a level equal to that marked at the time of the "2003 problem," when there was an excess supply of office buildings.
In particular, the rent drop for Class A buildings in central Tokyo is significantly noticeable and the difference in rent compared with smaller buildings and buildings in the surrounding areas is rapidly diminishing.
The latest report points out the possibility of rapid growth in demand for Class A buildings, which now seem to be undervalued after rent adjustments, since there has always been strong demand from tenants for Class A buildings in central Tokyo.
Nevertheless, despite the fact that the rent for Class A buildings in such areas is nearing the bottom, the report did not revise the forecast that rents for large office buildings in broader Tokyo will not bottom out until 2011, as an overall recovery of office space demand is considered to take more time.
The report states that rents for small to medium-sized buildings and buildings in the areas surrounding central Tokyo may fall in an increasingly stronger downward trend for the time being.
Tokyo,Japan The Long Road to Recovery
GLOBAL OFFICE RENT REBOUND
EMEA region follows closely, with rents turning up.
More than half of the office rental markets in Asia Pacific either stabilized or moved into the growth phase during the second quarter (Q2) of 2010, demonstrating that the region continues to lead the global real estate recovery, according to CB Richard Ellis’ (CBRE) latest quarterly Global Office Rental Cycle report.
According to the rent estimates for model buildings envisioned by the institute for each major area, rents for the Marunouchi and Otemachi areas have already fallen to a level equal to that marked at the time of the "2003 problem," when there was an excess supply of office buildings.
In particular, the rent drop for Class A buildings in central Tokyo is significantly noticeable and the difference in rent compared with smaller buildings and buildings in the surrounding areas is rapidly diminishing.
The latest report points out the possibility of rapid growth in demand for Class A buildings, which now seem to be undervalued after rent adjustments, since there has always been strong demand from tenants for Class A buildings in central Tokyo.
Nevertheless, despite the fact that the rent for Class A buildings in such areas is nearing the bottom, the report did not revise the forecast that rents for large office buildings in broader Tokyo will not bottom out until 2011, as an overall recovery of office space demand is considered to take more time.
The report states that rents for small to medium-sized buildings and buildings in the areas surrounding central Tokyo may fall in an increasingly stronger downward trend for the time being.
Tokyo,Japan The Long Road to Recovery
Vacancy peak still to come, rental revenue to hit bottom in 2011.
Monday, October 11, 2010
Best 20 Deals -In Review 2009
Best 20 Commercial Real Estate transactions in Japan, based on proprietary data made in 2009. The Big Bertha being the Pacific Century Place Marunouchi Deal was the biggest (Hit for 6), not far behind was the AIG Otemachi Building. As big acquisition deals go, such as the Shiodome Building (#5), the Resona Maruha Building (#8) and the TOA headquarters (#13) resume in the end of the year, the real estate market is showing some signs of recovery with foreign funds on the hunt many are acquiring or ready to pull the trigger.
#1 SECURED Acquires Pacific Century Place Marunouchi for 140 Bil.
SECURED CAPITAL JAPAN announced on December 15 that it will be acquiring the office portion of Pacific Century Place Marunouchi. The acquisition price has not been revealed but it is estimated to be about 140 billion yen ($1.6 billion). This is the largest real estate transaction of 2009 in Japan.
#2 AIG Sells Otemachi Building for 115 Bil.
On May 11, AIG announced that it will sell the AIG Otemachi Building in Tokyo for approximately 115.5 billion yen (US $1.2 billion). The buyer is NIPPON LIFE INSURANCE. "The sale generated substantial interest from both Japanese and foreign investors, resulting in a very competitive bidding process," Edward Liddy, AIG’s Chairman and Chief Executive Officer said.
#3 NTT URBAN Obtains Leasehold for Land for 86 Bil.
On March 10, the Tokyo Metropolitan Bureau of Sewerage selected the NTT URBAN DEVELOPMENT group as the developer of an office and commercial building. The building will be developed above the Shibaura Water Reclamation Center in Shinagawa-ku, Tokyo.
#4 ASAHI LIFE Sells HQ to MITSUBISHI for 80 Bil.
In March 2009, ASAHI MUTUAL LIFE INSURANCE sold the Asahi Seimei Otemachi Building in Otemachi, Chiyoda-ku, Tokyo. The buyer is a special purpose company belonging to MITSUBISHI ESTATE and the price is slightly less than 80 billion yen (US $790 million).
#5 JRE Acquires 30% of Shiodome Building for 54 Bil.
JAPAN REAL ESTATE (JRE), a REIT, announced that it will acquire 30% quasi joint ownership of trust beneficiary interests in the Shiodome Building, located in Kaigan, Minato-ku, Tokyo. The acquisition price is 54.6 billion yen ($590 million) and will be delivered in January 2010. JRE already acquired a 10% ownership interest in the Shiodome Building in December 2008. Through this acquisition, it will own a 40% interest.
#6 HULIC Selling System Center for 46 Bil.
In April 2009, HULIC, a real estate company affiliated with MIZUHO FINANCIAL GROUP, announced that it will sell an information system center in Naka-Meguro, Tokyo. The property will be sold to its tenant, MIZUHO BANK.
#7 ACCOMMODATIONS FUND to Acquire 43 Bil.
Apartment Portfolio
NIPPON ACCOMMODATIONS FUND, a REIT of MITSUI FUDOSAN, announced that it will acquire 18 rental apartment buildings in Tokyo and local core cities. The total acquisition cost is 42.6 billion yen ($460 million) and this transaction by NIPPON ACCOMMODATIONS will be the first large-scale acquisition by a REIT in quite some time.
#8 MITSUBISHI Acquires Otemachi Building for 42 Bil.
Otemachi Development TMK, a special purpose company which MITSUBISHI ESTATE and other firms are shareholders in, decided in December 2009 to acquire 27% of compartmentalized ownership in the Resona Maruha Building, an office building located in Otemachi, Chiyoda-ku, Tokyo, from TOKYU REIT. The acquisition price is 42 billion yen ($470 million) and the property will be handed over in January 2010.
#9 DAIMARU Acquires Store in Osaka for 38 Bil.
On February 26, department store DAIMARU announced that it would acquire its rival’s flagship, the Sogo Shinsaibashi store in Osaka City for 37.91 billion yen (US $410 million). The store will be closed at the end of August and reopen as DAIMARU in November.
#10 KENEDIX Sells Building to CARLYLE for 34 Bil.
On June 30, major asset management firm KENEDIX announced its sale of KDX Toyosu Grandsquare, a large office building in Shinonome, Koto-ku, Tokyo. The buyer is a fund managed by the CARLYLE GROUP. The price was slightly less than 35 billion yen ($350 million).
#11 JPR REIT Acquires Olinas Tower for 31 Bil.
In June 2009, JAPAN PRIME REALTY (JPR), a REIT sponsored by listed developer TOKYO TATEMONO, added Olinas Tower to its operating assets. The office building in Sumida-ku, Tokyo, was obtained for 31.3 billion yen (US $320 million) from the sponsor and several other owners.
#12 KANSAI URBAN BANKING Selling Headquarters for 24 Bil.
On September 24, KANSAI URBAN BANKING CORPORATION announced that it would sell its headquarters building in Chuo-ku, Osaka City. The large office and retail building near the busy Shinsaibashi intersection will be sold to KEIHANSHIN REAL ESTATE for 24.4 billion yen ($250 million).
#13 Kojimachi Dev Site Sold for 23 Bil. a 39% Decline in Price
NIPPON TELEVISION NETWORK decided to acquire the building site of the TOA headquarters in Yonbancho, Chiyoda-ku, Tokyo, for 23.15 billion yen ($260 million). The seller is a special purpose company of real estate company SHOEI. The handover of the ownership is scheduled for March 2010.
#14 TOSHIBA Selling Parking Lot in Kawasaki for 22 Bil.
In March 2009, TOSHIBA decided to sell a 9,765 m2 parking lot adjacent to LAZONA Kawasaki Plaza, a large-scale commercial facility in front of JR Kawasaki Station. The buyer of the hourly parking lot is NREG TOSHIBA BUILDING, which is a consolidated subsidiary of NOMURA REAL ESTATE HOLDINGS.
#15 NOMURA REIT Reshuffles assets
In January 2009, NOMURA REAL ESTATE OFFICE FUND, a REIT, announced that it would acquire four office buildings in Tokyo including the Nomura Ueno Building. At the same time, it announced that it would sell three properties in Osaka, Sapporo and Hiroshima.
#16 ORIX JREIT Invests 18 Bil. Yen, Reshuffles Assets
In March 2009, ORIX JREIT acquired the ORIX Nishi-Shinjuku Building located in Shinjuku-ku, Tokyo and the Omiya Miyacho Building located in Saitama City. Both properties were acquired from ORIX REAL ESTATE and the total acquisition price was 18 billion yen (US $180 million).
#17 Mizuho Affiliate HULIC Acquires Building for 13 Bil.
In September 2009, HULIC, a real estate company affiliated with the MIZUHO FINANCIAL GROUP, acquired a rental office building in Kudankita, Chiyoda-ku, Tokyo. The Price is 13.5 billion yen ($140 million). The seller is a fund established by SIMPLEX INVESTMENT ADVISORS, an affiliate of GOLDMAN SACHS and AETOS CPITAL.
#18 Kuwait-backed ST MARTINS Acquires Apartment for 13 Bil.
In February 2009, U.K.-based ST MARTINS PROPERTY acquired a large-scale rental apartment building offering 281 residential units in the Tsukiji area of Tokyo. The acquisition price was 13 billion yen (US $130 million) and the seller of the property was DAVINCI ADVISORS.
#19 TOP REIT Acquires Kanda Building for 13 Bil.
TOP REIT decided to acquire the Sumitomo Shoji Nishikicho Building in Kanda-nishikicho, Chiyoda-ku, Tokyo. The price is 12.7 billion yen ($140 million) and the seller is major trading company SUMITOMO CORPORATION.
#20 PROLOGIS Builds Logistics Facility for 11 Bil. in Misato
Prologis announced its plan to sell ProLogis Park Misato II to an affiliate of GIC, the Government of Singapore Investment Corporation, for 12.5 billion yen ($138 million). The contract is scheduled to close in April 2009.
Sunday, October 10, 2010
Security is mostly a superstition
This video relates to both (Property Investment = Risk) and (Jazz = Improvisation) there fore it belongs in this Blog. enjoy.
"Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it.
Avoiding danger is no safer in the long run than outright exposure.
Life is either a daring adventure, or nothing." Just do it!!!
With out a doubt....the BEST most crazy sh*d on the net...I LOVE IT !!!!!!!!!!!! But im gunna stick to my Snowboard as my balls are 32% the size of his.. ( i just did a quick calc... )
"Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it.
Avoiding danger is no safer in the long run than outright exposure.
Life is either a daring adventure, or nothing." Just do it!!!
With out a doubt....the BEST most crazy sh*d on the net...I LOVE IT !!!!!!!!!!!! But im gunna stick to my Snowboard as my balls are 32% the size of his.. ( i just did a quick calc... )
Why is there so much interest in Japanese real estate?
Prices vs Rents
On Friday, The Economist revisited its 'fair-value measure for property' based on the ratio of Real Estate acquisitions to rents, which is similar notion to the price-to-earnings ratios used by stock market analysts to value companies.
It found that prices looked cheap only in Japan, where steadily falling property prices mean the price-to-rents ratio is 34% below its average since 1975. Switzerland's ratio is also less than its long-run average and possibly also in Germany.
But it said that in Britain, where prices are increasing again, Real estate still looks 'expensive':
Undervalued property markets
Source: The Economist
On Friday, The Economist revisited its 'fair-value measure for property' based on the ratio of Real Estate acquisitions to rents, which is similar notion to the price-to-earnings ratios used by stock market analysts to value companies.
It found that prices looked cheap only in Japan, where steadily falling property prices mean the price-to-rents ratio is 34% below its average since 1975. Switzerland's ratio is also less than its long-run average and possibly also in Germany.
It also estimates that even American Real Estate prices are now 3% below their fair value by the third quarter of 2009 - based on the S&P/Case-Shiller house price index - following big falls from the peak of 2006.
But it said that in Britain, where prices are increasing again, Real estate still looks 'expensive':
Overvalued property markets
Spain - 55%
Hong Kong - 53%
Australia - 50%
France - 40%
Sweden - 35%
Ireland - 30%
Britain - 29%
Canada - 20%
Italy - 15%
Hong Kong - 53%
Australia - 50%
France - 40%
Sweden - 35%
Ireland - 30%
Britain - 29%
Canada - 20%
Italy - 15%
Undervalued property markets
US - 3%
Switzerland - 9%
Germany - 15%
Japan - 34%
Switzerland - 9%
Germany - 15%
Japan - 34%
As The Economist admits, 'no valuation measure is perfect'. The data goes back different lengths for each country: 'If the average price-to-rents ratio is calculated from 1990 onwards, Spain's market is overvalued by 24%, rather than the 55% shown in the table (based on figures from 1975),' the report said. 'That would make both markets similarly overpriced.'
It's also worth noting that rents, which recovered slightly in 2009, are also likely to come under pressure in 2010 unless a strong economic recovery materialises.
Source: The Economist
Sun Not Rising on Japan's Flat Real Estate Domain
Business Monitor International reports the global economic recession impacted Japan severely and especially affected the real estate industry. A weak economic recovery is now under way, helped by government stimulus spending and tax reforms.
"We expect growth to remain weak, just managing to stay in positive territory, to reach about 1.2% year-on-year (y-o-y) in 2012 and 2013," the research group states.
However, the economy has racked up chronic fiscal deficits and a huge public debt worth around 200% of GDP. "The outlook is not bright, as the country moves from net saver to net debtor status," according to Business Monitor International.
The real estate market is also problematic. Japan's residential sector is suffering from record low levels of new construction.
According to the Japan Real Estate Institute (JREI), residential land prices have slid more than 40% from their 1991 peak and land prices in Japan's six largest cities fell 7.8% (9.2% in real terms) year-over-year (y-o-y) in H109.
The Tokyo office market has reached its highest vacancy level for six years. There were dramatic rental falls in Tokyo office space to late 2009: Tokyo (Inner City) rents plunged 23.3% y-o-y, while Tokyo (Outer Central) rents dropped 21.9% y-o-y. Osaka saw a similar tale of increases in vacancies.
In Tokyo, retail rentals dropped by about 50% y-o-y in 2009, and industrial rents were down by 10-20% y-o-y. In Osaka, retail rentals dropped by 15-20% y-o-y in 2009 and industrial rents were down by 10- 20% y-o-y. In Yokohama, rental rates for all types of commercial property fell by 20-30% y-o-y in 2009.
In the longer term, while the weakness in the economy and the lack of funding seem likely to keep housing prices under downwards pressure, demand, driven by population necessity, will pick up, requiring supply to meet it, according to the research group.
In general, commercial real estate rents and prices also seem likely to soften further, given the rising vacancy rates and the tendency for companies to downsize.
Also, "there is little scope for improvement in the industrial sector, given the likelihood that the economy will remain fairly stagnant over the next year or so. However, there are signs that retail property may be on the rebound, as a result of increasing consumer spending as the economy recovers," states Business Monitor International.
"We expect growth to remain weak, just managing to stay in positive territory, to reach about 1.2% year-on-year (y-o-y) in 2012 and 2013," the research group states.
However, the economy has racked up chronic fiscal deficits and a huge public debt worth around 200% of GDP. "The outlook is not bright, as the country moves from net saver to net debtor status," according to Business Monitor International.
The real estate market is also problematic. Japan's residential sector is suffering from record low levels of new construction.
According to the Japan Real Estate Institute (JREI), residential land prices have slid more than 40% from their 1991 peak and land prices in Japan's six largest cities fell 7.8% (9.2% in real terms) year-over-year (y-o-y) in H109.
The Tokyo office market has reached its highest vacancy level for six years. There were dramatic rental falls in Tokyo office space to late 2009: Tokyo (Inner City) rents plunged 23.3% y-o-y, while Tokyo (Outer Central) rents dropped 21.9% y-o-y. Osaka saw a similar tale of increases in vacancies.
In Tokyo, retail rentals dropped by about 50% y-o-y in 2009, and industrial rents were down by 10-20% y-o-y. In Osaka, retail rentals dropped by 15-20% y-o-y in 2009 and industrial rents were down by 10- 20% y-o-y. In Yokohama, rental rates for all types of commercial property fell by 20-30% y-o-y in 2009.
In the longer term, while the weakness in the economy and the lack of funding seem likely to keep housing prices under downwards pressure, demand, driven by population necessity, will pick up, requiring supply to meet it, according to the research group.
In general, commercial real estate rents and prices also seem likely to soften further, given the rising vacancy rates and the tendency for companies to downsize.
Also, "there is little scope for improvement in the industrial sector, given the likelihood that the economy will remain fairly stagnant over the next year or so. However, there are signs that retail property may be on the rebound, as a result of increasing consumer spending as the economy recovers," states Business Monitor International.
Subscribe to:
Comments (Atom)