Tokyo Property Market Poised to Rebound, By Finbarr Flynn and...

Tokyo Property Market Poised to Rebound,
By Finbarr Flynn and Takako Taniguchi

June 18 (Bloomberg) -- Tokyo’s property market is poised to rebound as overseas investors seek bargains in Japan’s biggest cities, said Kazuo Tanabe, president of Chuo Mitsui Trust Holdings Inc.

“Foreign buyers are showing a lot of interest in acquiring Japanese property,” said Tanabe, 63, who has led Japan’s sixth- largest listed bank by assets for three years. “We are seeing more deals as prices bottom out, and investors think that it’s time to buy.”

Chuo Mitsui, which specializes in asset management and real estate, is forecasting a return to profit this year as credit markets thaw and demand for property-related services increases, Tanabe said in an interview in his Tokyo office yesterday. The company posted a loss of 92 billion yen ($955 million) in the fiscal year ended March 31.

Average commercial land prices in Japan dropped 4.7 percent to a three-year low in 2008, according to the land ministry. Property transactions being negotiated now are up as much as 30 percent on last year, said Tanabe. Japan’s real-estate prices fell last year as developers including Hiroshima-based Urban Corp. filed for bankruptcy as they struggled to procure funds and sell properties.

Chuo Mitsui’s bad loan charges increased 81 percent to 21.2 billion yen last year, as 33 listed Japanese companies went bankrupt in 2008, a postwar record, according to Tokyo Shoko Research Ltd.

Tanabe cited Nagoya, Osaka and Fukuoka as cities where property transactions are increasing.

Chuo Mitsui, which still owes the government 200.4 billion yen in public funds after a receiving state aid in 1999, will seek to repay the money within two years, Tanabe said.

The government provided the funds by acquiring convertible preference shares in the company. These are due to convert into common stock on Aug. 1.

Chuo Mitsui had a Tier 1 capital ratio of 8.74 percent as at March 31, down from 10.82 percent a year earlier.

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