Property prices in Japan fall as more real estate businesses go bust
Property prices in Japan are continuing to fall in price with the retail sector particularly badly hit amid signs that developers are now struggling.
The latest monthly figures show total annual returns in the commercial sector down 0.9% while retail property fell 4% in a year. The residential market fared slightly better, falling 1.3%.
'The latest monthly indicator to July 2008 shows that annualised total returns have been falling in recent months. It is clear that capital growth in the commercial sector is falling,' said Toshiro Nishioka, managing director at IPD Japan.
'In particular, offices in local cities have seen negative capital growth for the first time since December 2004. The annualised three-month total return for retail is lower than that for residential for the first time in our data history,' he added.
The worsening figures come as developers and contractors reveal that they are now struggling with the financial downturn.
The latest figures from the Real Estate Economic Institute show that there are now just 203 real estate developers compared with 547 in 1995. And between January and September this year 425 real estate companies have gone out of business.
'The current bankruptcies have only just begun. There will be more and more,' said Akio Fukada, head of planning and research at the institute.
One Japanese contractor, Kajima, is pulling out of the UK after racking up huge losses on public funded contracts. It has posted losses of £124m in three years.
The company confirmed that is it winding down its construction and civil engineering operation in the UK after suffering losses on a number of projects including a housing scheme in Leeds and a £57m project to build the headquarters for the Health and Safety Executive in Merseyside.
'Apart from works required to meet the remaining obligations under existing contracts, the company's activities have now ceased in the UK,' a spokesman said.