Current Japanese Real Estate Market 2010

Introduction

This report aims to provide an overview of the current Japanese real estate market from macro perspective and forecast of its short-term future by analyzing historical trends and correlations of key indicators which have influenced on the Japanese real estate market. Credit crunch revealed in 2007 and the following Lehman Shock caused turmoil in the world economy.

Japanese real estate market also faced rapid turn upon Lehman Shock that froze the market which seemed to have been over-earnest until then. Numerous real estate players, especially emerging companies, were pushed to bankruptcies amongst such market shrinkage. However, since the beginning of 2010, there have been some indicators that show the bottom of the downturn and sign of recovery in the Japanese real estate market.

The first part of the report provides an overview of data and current indicators that relate to, affect to, and show possible recovery of the Japanese real estate market. The second part provides facts and areas of focus which might be taken into account when investors consider for investment opportunities in the current and/or near-future Japanese real estate market.

Contents : Executive Summary

1. Signs of Market Recovery
   • Market Size - "No significant growth in value yet"
   • Debt Financing - "Recovered from the worst"
   • Capitalization Rate - "Showing stabilization"
   • Office Rent and Vacancy - "Entering the next cycle for recovery"
   • Correlation of Land Price, GDP Growth, and Outstanding Loan Balance -"Growth of GDP + recovery of debt financing = potential recovery of land price"
   • Recent Investor Survey - "Growing appetites for new investments"
2. Current Facts & Opportunities
   • Correlation of Land price and Investment from Foreign Investors -"Japanese real estate market: Becoming more suitable for core investors"
   • Volatility by Assets and Investment Area - "Tokyo B-class office buildings: More suitable for core investments"
   • CMBS - "Opportunities: Starting of new originations and disposition of assets from defaults of past CMBS loans"
   • J-REIT - "Slow recovery and still undervalued"

If you would like to obtain whole report, please contact at fasmktg@jp.kpmg.com