Japanese property sales appear to be down

While some property sales firms in Japan are beginning to experience decreased profits this year, a property trust has been able to increase profit projections.

Condominium sellers in Japan appear to be having a tough time this year. Out of the 16 major development firms, three have had to make adjustments to their forecasts, lowering the profit projections for the end of March. In addition to these three, the property sales decline is forcing seven firms to expect declines in profit for the fiscal year.

While the individual price of condos actually rose in 2007 the income of consumers failed to keep pace. The ratio of condo sales to new units available reached a 16 year low of 52.7% in January which may cause even more companies to adjust their earnings forecast.

Most notable are the Towa Real Estate Development company as well as the Gro-bels Company. Towa has adjusted its earning from the initial projection of 15.5 billion yen to 13.7 billion yen (US$127 million). The Gro-bels company operating profit projections have gone down from 1.42 billion yen to just 900 million yen.

The third company make profit adjustments is the Nisshin Fudosan Company. Operating profit is now expected to fall by 9 percent to 6.1 billion yen. While no projections have been specified, the Azel Corp., Central General Development Co,. C's Create Co. and FJ Next Co are anticipating declines in operating profit.

One of the companies expecting growth this year is Babcock & Brown Japan Property Trust. BJT is showing a 2% growth for the previous six months. BJT primarily invests in Japanese Office, residential and retail spaces. BJT has had a great sales year and has been able to sell many of its properties above book value.

Managing Director Eric Lucas has stated that "We have not seen any evidence of a decline in the market and it exhibits a strong rental market," despite the concerns that Japan would reflect the US subprime lending crisis.