Wave of Record-Setting Transactions Observed in September 2007
Tokyo - October 24, 2007 - The NIKKEI REAL ESTATE MARKET REPORT, an online media operated by Nikkei Business Publications, Inc. (Headquarters: Tokyo, President: Seiichi Oteru), recently carried out a fact-finding survey on large real estate deals in Japan, and released the top 30 deals based on price. It is based on roughly 8,000 transactions on commercial real estate made in this century.
Large Real Estate Deals exceeding One Billion Dollars Rapidly Increase over the Past Year
The number of large real estate deals exceeding USD 1 billion is rapidly increasing in the Japanese real estate market. Among the deals made over the past six years and nine months since January 2001, 14 cases exceeded USD 1 billion (calculated at JPY 117 per USD) in transaction price. Of the 14 cases, eight deals were made in the past one year.
In particular, a wave of record-setting deals was observed in September 2007. A major real estate developer Mori Trust and a fund management company DaVinci Advisors made the winning bid of JPY 231 billion (approximately USD 2 billion, 11,400 per ft2) to buy the Toranomon Pastoral Hotel. Tokyu Land acquired the Ginza Toshiba Building, located at major commercial district, for JPY 161 billion (USD 1.4 billion, 33,900 per ft2). Mitsubishi Estate and Heiwa Real Estate won with a bid of JPY 115 billion (USD 1 billion, 6,400 per ft2) for a plot of land in North-Shinjuku, Tokyo. Mitsui Fudosan acquired a 33% stake in Imperial Hotel Ltd. for JPY 86 billion (USD 740 million). All of these four deals were made with the aim of redevelopment in central Tokyo. In addition, U.S.-based ProLogis and Singapore-based GIC Real Estate acquired 17 logistics facilities of Matsushita Group for JPY 85 billion (USD 730 million).
The highest in price was a development area nearby Osaka Station
The top 30 deals based on transaction price are shown on the full version of this release. The highest in price was the land in the A and C blocks of Umeda North Yard, a development area stretching out from the north exit of JR Osaka Station. A joint organization formed by companies such as Mitsubishi Estate and Orix Real Estate won the tender in November 2006. The price is about JPY 310 billion (USD 2.7 billion, 10,800 per ft2), according to sources. The second highest in price was JPY 281 billion (USD 2.4 billion) for the 13 hotels of All Nippon Airways (ANA), acquired by the Morgan Stanley Group in April 2007. Toranomon Pastoral Hotel was the third highest transaction. Most of the buyers are major real estate developers, but acquisitions by fund management companies are also prominent.
"During the years surveyed, the long process of adjustment since the bursting of the bubble economy in the early 1990s came to an end, and the real estate market began to recover, starting with urban areas", says Taro Tokunaga, editor in chief of the NIKKEI REAL ESTATE MARKET REPORT. "Through this period, the real estate market continued to expand, supported by investment from overseas and the listing of REITs (Real Estate Investment Trusts) on stock exchanges. It is expected that the market will continue to expand with plans to sell large-scale government-owned plots."
About the NIKKEI REAL ESTATE MARKET REPORT: An online media by Nikkei Business Publications, Inc., which is a wholly owned subsidiary of the leading business newspaper publisher NIKKEI, Inc. It offers exclusive news on real estate deals and developments in Japan, as well as in-depth market analysis to the specialists. More information can be found at http://realestate.nikkeibp.co.jp/