Japan Economic Overview
As welcome relief to Japanese exporters, the yen continued to edge lower in March. Against the Canadian dollar, the Japanese yen has weakened from the 76 level in January to 83 in March. The improving profitability outlook for Japanese manufacturers has lifted the Nikkei 225 Exchange from the 8,400 level in January to over 10,000 in March. Other macro-economic indicators such as unemployment and consumption remained largely unchanged for March, however, inflationary pressures may be on the horizon.
In late March the Noda Cabinet will attempt to push through a consumption tax hike from 5% to 10%. In addition, public utilities will phase in power rate increases. Beginning April first Tepco industrial users will face a 17% hike and homeowners are expected to pay an additional 10% beginning this summer. Public utility providers require the increases to settle claims relating to the Fukushima Daichi nuclear disaster and to cover increased fossil fuel import costs.
Japan Real Estate Trends
The Ministry of Land, Infrastructure, Transportation & Tourism released a nationwide land price survey. Across Japan, land prices fell 2.6% in 2011 although the rate of decline has slowed compared with previous years. Results were mixed according to location. In 79 locations surveyed in Tokyo’s 23 wards land prices either remained the same or witnessed small increases. In Tokyo’s inland districts such as Tama, which are well insulated from a tsunami threat from Tokyo Bay, land prices trended upwards. Condominium developments offering seismic damper technology have also experienced brisk sales. Outside of metropolitan areas, regional land values continued to decline. The write down of land values in the Tohoku region impacted by the March 11th earthquake and tsunami played a significant role. In addition industrial real estate softened as a result of manufacturers shuttering domestic factories and moving them offshore.