Mori: Abenomics to Bolster Japan Real Estate

Mori: Abenomics to Bolster Japan Real Estate

Commercial News » Asia Pacific Commercial News Edition | By WPJ Staff | June 19, 2013 2:12 PM ET

Japan's real estate market would be one of the main beneficiaries of "Abenomics," if Prime Minister Shinzo Abe is successful in his attempts to grow the economy, Japanese billionaire Akira Mori said this week in an interview with the Bloomberg news service.

"The inflation target will naturally benefit real estate," said Mr. Mori, 76. "As the economy improves, Tokyo, with clean water and air, will gradually stand out as an attractive place to invest, luring foreign capital."

Mr. Mori said his Mori Trust Co., which currently manages 89 buildings in Japan, would consider buying more property if inflation rises under Mr. Abe's policies of increased government spending and reduced regulations.

"With Japan's aging population, we will find more demand returning to central Tokyo," Mr. Mori told Bloomberg. "Whether Abenomics will succeed will depend on the growth strategy. If Abe's growth strategy is going well, we may consider buying more."

Japan's economy grew at an annualized rate of 4.1 percent in the first quarter of the year, one of the first signs that Abenomics is having an impact. The Bank of Japan hopes to reach a 2 percent inflation rate by next year.

Last November Mr. Mori said his company would look to buy property for the first time since 2008. But Mr. Mori believes the future of real estate in Japan lies in the cities, not the suburbs. Tokyo's population is now 13.1 million, up 6 percent in the last decade.

"Real estate is no longer about holding it and hoping for the value to go up," Mr. Mori said. "It's about how to seek value by developing a property that is best suitable for that space. Prices can't be rising in places where there are no people."

Many analysts agree with Mr. Mori's interpretation. After sluggish years, analysts see signs Abenomics is helping to spur a rebound in property. Housing starts were up 7.3 in March from a year earlier, and prices were up 2 percent in April from 2012.

But Mr. Mori, whose company has survived several boom and bust cycles in Japan, sounded a cautionary note in his interview.

"For real estate, you can get as big as you want by borrowing more," Mr. Mori said. "But we have to choose the timing as to when we want to expand and when we want to stay put."

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