Real Estate Market in Japan

Transcription

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

2 2 Real Estate Market in Japan Past and Now Opportunity Unique Features of Japan

3 3 Real Estate Market in Japan Past and Now Opportunity Unique Features of Japan

4 Past and Now 4 Past Impact of global economy Rent decreased and vacancy rate increased Population decline Lower fund performance than expected before

5 Past and Now 5 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

6 Past and Now: Rental market Past : Rent decreased and vacancy rate increased Now : Rent decreases and vacancy increases have slowed down 6 25,000 ( 円 / 坪 ) (JPY/tsubo/month) Asking rent per tsubo and Vacancy rate (Office, Tokyo central 5 wards, monthly) Vacancy rate [RHS] 22,901 JPY/tsubo (Aug. 2008) 8.9% 10% 8% Japanese unit 1 Tsubo = sqm = sqf 20,000 Average rent [LHS] 17,529 JPY/tsubo (Oct. 2004) 6% 4% 16,675 JPY/tsubo (Sep. 2012) 2% 10,000 JPY/Tsubo/month = EUR/sqm/month = USD/sqf/year = GBP/sqf/year 15, % Source: Miki Shoji Co., Ltd.

7 Past and Now: Market cycle (office) Cycle of Tokyo Office Market 7 Average asking rent [JPY / Tsubo] 15,000 14,000 13, /3 2.0%, 14, /3 2.0%, 12, /3 3.8%, 14, /3 3.6%, 14, /3 4.5%, 13, /3 5.9%, 13, /3 6.1%, 13, /3 5.4%, 13, /3 6.9%, 13, /3 7.6%, 13, /3 3.2%, 12, /3 High rent Low Vacancy rises with higher rent Rent rises with lower vacancy Low 4 3 Cycle 8-9 years 1 2 Vacancy Rate Rent declines with higher vacancy current Vacancy declines with lower rent High 12,000 0% 1% 2% 3% 4% 5% 6% 7% 8% Vacancy Rate [%] Source: CBREVacancy rates and average rents in Tokyo CBD March 2001 March 2012

8 Past and Now: Market cycle (office) 8 Rent decreases have also slowed Rent DI (properties managed by Xymax, Tokyo 23 wards) ) % ( 合 60 Ratio of increased rent (%) 割た Rent increased from the 40 し year before 昇上 20 All the rental contracts -20 ) % (-40 合 Ratio of decreased rent (%) 割た-60 Rent decreased from the し year before 落 -80 下 All the rental contracts % 60% % 50% % 26% 48 83% 17% 66 84% 6% 78 54% 32% 22 2% 98% -96 6% 88% 年 2004 年 2005 年 2006 年 2007 年 2008 年 2009 年 2010 年 2011 年 20% 62% 上昇した割合 Increase 下落した割合 Decrease 成約賃料 Taking Rent DI DI (= increases decreases) ほとんどの Increased in ビルで上昇 nearly all buildings 上昇した Decrease ビルが多い< Increase 上昇と下落 Decrease が同程度 = Increase 下落した Decrease > Increase ビルが多い ほとんどの Decreased in ビルで下落 nearly all buildings Source: Xymax Real Estate Marketing Institute

9 9 Real Estate Market in Japan Past and Now Opportunity Unique Features of Japan

10 Opportunity 10 Opportunity in 2013 by sector 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

11 Opportunity 11 Legal Final Maturity of CMBS (in JPY millions) 1,400,000 1,200,000 1,000, , , , , Compiled by Sumitomo Mitsui Trust Research Institute Co., Ltd. based on data by Japan Securities Dealers Association

12 Opportunity 12 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

13 13 Real Estate Market in Japan Past and Now Opportunity Unique Features of Japan

14 Unique Features of Japan 14 Unique Features Dominated by small and medium companies Large volume of small and medium size buildings Stable performance of Medium-sized office buildings

15 Unique Features: Medium-sized office buildings 15 Office Buildings in Tokyo CBD 25,000 Total: 22,022 buildings (tsubo) 15,000,000 Total: 12,671,256 tsubo 20,000 15,000 Small and medium buildings 10,000,000 10,000 5,000 Large buildings 5,000,000 below 50 tsubo 0 Number of Buildings size of typical floor plate tsubo tsubo over 200 tsubo 0 Net Rentable Area Compiled by Xymax Real Estate Marketing Institute based on Public statistics

16 Unique Features: Medium-sized office buildings Number of Companies (including private business establishments) 4,210,000 companies Companies in Japan 16 Number of Employees (including private business establishments) 40,130,000 employees Large 12,000 (0.3%) Large 12,290,000 (31%) Small and Medium 4,198,000 (99.7%) Small and Medium 27,840,000 (69%) 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 Source: Statistics of business establishments and companies (2006), Ministry of Internal Affairs and Communications

17 Unique Features of Japan 17 Unique Features more Two-year lease contract Earthquake protection

18 Unique Features: Two years leases 18 Occupancy Period of Offices Managed by Xymax Year 11 and up Distribution of 4,306 tenants as of April (year) Average Occupancy Period (as of April each year) Year (years) Year Year Year Year Year Year Year Year Year Source: Xymax Real Estate Marketing Institute

19 Unique Features: Earthquake protection 19 Tenants places greater emphasis on seismic safety Purpose of relocation (Interviews with tenants of buildings managed by Xymax, Tokyo 23 wards) 40% 35% (n=47) 2011-(n=54) 30% 25% 20% 15% 10% 5% 0% 増員人 減削トスコ 善改備設 化強震耐 合統点拠 るよにし壊り取物建 善改地立 減員人 合統営経 了終間期借定 他のそ 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 Source: Xymax Real Estate Marketing Institute

20 20 Tokyo s office market is still attractive But it is a very unique market For your investment success, you need a good partner

21 21 Thank you.