Real Estate Market in Japan Ryuhei MORI Head of Global Marketing, - - PowerPoint PPT Presentation

▶
real estate market in japan
SMART_READER_LITE
LIVE PREVIEW

Real Estate Market in Japan Ryuhei MORI Head of Global Marketing, - - PowerPoint PPT Presentation

Nov 15, 2022 30 likes •248 views

Real Estate Market in Japan Ryuhei MORI Head of Global Marketing, Xymax Corporation Japan Investment Briefing 13 November 2012 | London Real Estate Market in Japan 2 Real Estate Market in Japan Past and Now Opportunity Unique Features

slide-1
SLIDE 1

Real Estate Market in Japan

Ryuhei MORI – Head of Global Marketing, Xymax Corporation Japan Investment Briefing 13 November 2012 | London

slide-2
SLIDE 2

Past and Now Opportunity Unique Features of Japan

Real Estate Market in Japan

Real Estate Market in Japan

2

slide-3
SLIDE 3

Real Estate Market in Japan

Past and Now Opportunity Unique Features of Japan

Real Estate Market in Japan

3

slide-4
SLIDE 4

Past and Now

  • Impact of global economy
  • Rent decreased and vacancy rate increased
  • Population decline
  • Lower fund performance than expected before

Past

Real Estate Market in Japan

4

slide-5
SLIDE 5

Past and Now

  • Proving long-term stability
  • Limited impact of earthquake
  • Rent decreases and vacancy increases have slowed

down

  • Population of major cities still continues to grow

Now

Real Estate Market in Japan

5

slide-6
SLIDE 6

6

Past and Now: Rental market

15,000 20,000 25,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (円/坪) 0% 2% 4% 6% 8% 10%

Asking rent per tsubo and Vacancy rate

(Office, Tokyo central 5 wards, monthly) Vacancy rate [RHS] 16,675 JPY/tsubo (Sep. 2012)

22,901 JPY/tsubo (Aug. 2008) 17,529 JPY/tsubo (Oct. 2004)

Source: Miki Shoji Co., Ltd.

(JPY/tsubo/month)

  • Past : Rent decreased and vacancy rate increased
  • Now : Rent decreases and vacancy increases have slowed down

Real Estate Market in Japan

Japanese unit 1 Tsubo = 3.30578 sqm = 35.58 sqf 10,000 JPY/Tsubo/month = 30.25 EUR/sqm/month = 42.15 USD/sqf/year = 25.94 GBP/sqf/year Average rent [LHS] 8.9%

slide-7
SLIDE 7

Past and Now: Market cycle (office)

Source: CBRE Vacancy rates and average rents in Tokyo CBD March 2001 – March 2012

Vacancy declines with lower rent

rent Vacancy Rate

① ② ③ ④

High Low

  • Low

High current

Rent declines with higher vacancy Rent rises with lower vacancy Vacancy rises with higher rent

Cycle 8-9 years 2.0%, 14,160 2.0%, 12,810 7.6%, 13,680 3.6%, 14,120 4.5%, 13,970 6.1%, 13,750 5.9%, 13,410 5.4%, 13,040 3.2%, 12,700 6.9%, 13,290 3.8%, 14,400

12,000 13,000 14,000 15,000 0% 1% 2% 3% 4% 5% 6% 7% 8% Vacancy Rate [%] Average asking rent [JPY / Tsubo] 2011/3

2010/3 2009/3 2008/3 2007/3 2006/3 2005/3 2004/3 2003/3 2002/3 2001/3 2012/3

Cycle of Tokyo Office Market

7

Real Estate Market in Japan

slide-8
SLIDE 8

20% 6% 2% 54% 84% 83% 74% 36% 25% 62% 88% 98% 32% 6% 17% 26% 50% 60%

  • 14
  • 14
  • 14
  • 14
  • 35
  • 35
  • 35
  • 35

48 48 48 48 66 66 66 66 78 78 78 78 22 22 22 22

  • 96
  • 96
  • 96
  • 96
  • 82
  • 82
  • 82
  • 82
  • 42
  • 42
  • 42
  • 42
  • 100
  • 80
  • 60
  • 40
  • 20

20 40 60 80 100

2003年 2004年 2005年 2006年 2007年 2008年 2009年 2010年 2011年

  • 100
  • 80
  • 60
  • 40
  • 20

20 40 60 80 100 上昇した割合 下落した割合 成約賃料DI

ほとんどの ビルで上昇 上昇と下落 が同程度 ほとんどの ビルで下落 下落した ビルが多い 上昇した ビルが多い

上 昇 し た 割 合 （ % ） 下 落 し た 割 合 （ % ）

Past and Now: Market cycle (office)

Rent DI

(properties managed by Xymax, Tokyo 23 wards)

Source: Xymax Real Estate Marketing Institute

Taking Rent DI （= increases – decreases) Increase Decrease Ratio of increased rent (%) Rent increased from the year before All the rental contracts Ratio of decreased rent (%) Rent decreased from the year before All the rental contracts

Decrease = Increase Decrease > Increase Decrease < Increase Decreased in nearly all buildings Increased in nearly all buildings

Rent decreases have also slowed

8

Real Estate Market in Japan

slide-9
SLIDE 9

Real Estate Market in Japan

Past and Now Opportunity Unique Features of Japan

Real Estate Market in Japan

9

slide-10
SLIDE 10

Opportunity

Real Estate Market in Japan

Opportunity in 2013 by sector

10

Sector Space Market Capital Market Office Bottomed out Concentrated on prime buildings Residential Relatively stable Dominated by REITs Retail Sluggish retail sales Wide gap between prime area and others Logistics Strong demand Severe competition Hotel Recovered Not many transactions

slide-11
SLIDE 11

Opportunity

Legal Final Maturity of CMBS

(in JPY millions) Compiled by Sumitomo Mitsui Trust Research Institute Co., Ltd. based on data by Japan Securities Dealers Association

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Real Estate Market in Japan

11

slide-12
SLIDE 12

Opportunity

  • Significant population growth of Tokyo expected
  • GDP growth of Tokyo expected
  • Property transactions will increase as large volume of

CMBS reach maturity in 2013 and beyond Investment Opportunity

Real Estate Market in Japan

12

slide-13
SLIDE 13

Real Estate Market in Japan

Past and Now Opportunity Unique Features of Japan

Real Estate Market in Japan

13

slide-14
SLIDE 14

Unique Features of Japan

  • Dominated by small and medium companies
  • Large volume of small and medium size buildings
  • Stable performance of Medium-sized office buildings

Unique Features

Real Estate Market in Japan

14

slide-15
SLIDE 15

Unique Features: Medium-sized office buildings

5,000,000 10,000,000 15,000,000 Net Rentable Area below 50 tsubo 50-100 tsubo 100-200 tsubo

  • ver 200 tsubo

(tsubo) Total: 12,671,256 tsubo 5,000 10,000 15,000 20,000 25,000 Number of Buildings Total: 22,022 buildings size of typical floor plate

Large buildings Small and medium buildings

Compiled by Xymax Real Estate Marketing Institute based on Public statistics

Office Buildings in Tokyo CBD

15

Real Estate Market in Japan

slide-16
SLIDE 16

Unique Features: Medium-sized office buildings

Companies in Japan

Small and Medium 4,198,000 (99.7%) Large 12,000 (0.3%) Number of Companies

(including private business establishments)

4,210,000 companies

Large 12,290,000 (31%) Small and Medium 27,840,000 (69%) Number of Employees

(including private business establishments)

40,130,000 employees

Source: Statistics of business establishments and companies (2006), Ministry of Internal Affairs and Communications Definitions of small- and Medium-size companies Manufacturer: capital less than JPY 300 million, or employees less than 300 Wholesaler: capital less than JPY 100 million, or employees less than 100 Retailer: capital less than JPY 50 million, or employees less than 50 Service: capital less than JPY 50 million, or employees less than 100

16

Real Estate Market in Japan

slide-17
SLIDE 17

Unique Features of Japan

Unique Features more

  • Two-year lease contract
  • Earthquake protection

Real Estate Market in Japan

17

slide-18
SLIDE 18

Unique Features: Two years leases

Distribution of 4,306 tenants as of April 2012

517 560 491 333 282 313 299 284 213 160 854 100 200 300 400 500 600 700 800 900 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 and up

Source: Xymax Real Estate Marketing Institute

Occupancy Period of Offices Managed by Xymax

Average Occupancy Period

(as of April each year)

(years)

5.50 6.00 6.50 7.00 2008 2009 2010 2011 2012

18

Real Estate Market in Japan

(year)

slide-19
SLIDE 19

Unique Features: Earthquake protection

19

Real Estate Market in Japan

Purpose of relocation

(Interviews with tenants of buildings managed by Xymax, Tokyo 23 wards)

Source: Xymax Real Estate Marketing Institute

Tenants places greater emphasis on seismic safety

0% 5% 10% 15% 20% 25% 30% 35% 40%

人 員 増 コ ス ト 削 減 耐 震 強 化 ・ 設 備 改 善 拠 点 統 合 建 物 取 り 壊 し に よ る 立 地 改 善 人 員 減 経 営 統 合 定 借 期 間 終 了 そ の 他

2009-2010(n=47) 2011-(n=54)

Increase of workers Cost reduction

Better seismic capacity, better building specifications

Consolidation of locations Building demolition Better location Decrease of workers Merger, management integration Expiration of fixed-term lease Other

slide-20
SLIDE 20

Tokyo’s office market is still attractive But it is a very unique market For your investment success, you need a good partner

Real Estate Market in Japan

20

slide-21
SLIDE 21

Thank you.

Real Estate Market in Japan

21