Japan's property industry downgraded by Morgan

Source : The Business Times, May 29, 2008

Condominiums put up for sale in the Tokyo region dropped in April

(TOKYO) Japan's real estate industry was downgraded to 'in-line' from 'attractive' by Morgan Stanley, which cited credit tightening after the sub-prime market collapse in the US and a slowdown in the national condominium market.

Mitsui Fudosan Co and Mitsubishi Estate Co, Japan's two biggest developers, also were cut to 'equal-weight' from 'overweight' by Tomoyoshi Omuro, an analyst at Morgan Stanley.

The collapse of the sub-prime market in the US has made it harder for Japanese developers and funds to borrow.

Condominiums put up for sale in the Tokyo region dropped for an eighth month in April, as rising prices discouraged potential buyers.

'We believe office rent hikes ahead and higher margins on construction of new buildings are already in share prices for the three majors, leaving little good news to come,' said Mr Omuro in his report.

'Credit tightening due to sub-prime issues, correction in property prices and a worsening condo market must also be weighed.'

Mitsui Fudosan has gained 2.5 per cent and Mitsubishi Estate has risen 2.6 per cent so far this year, compared with a 7.4 per cent decline for the six-member Topix Real Estate Index. -- Bloomberg