Japan Economy, Housing & Lumber Shipments
Concurrent with a reversal in the depreciation of the yen, June saw Japan’s Nikkei stock exchange correct from the mid 14,000’s to the high 12,000 range. However, certain sectors are demonstrating signs of renewed activity. Exports advanced 3.8% in May. The dramatic fall in the value of the yen over the past six months is also boosting tourism. May witnessed a 31% increase in foreign visitors to Japan. Hotel occupancy rates in Tokyo jumped to 88% – the strongest performance in 10 years.
Commercial and residential real estate in metropolitan areas is also bouncing back. Real Estate Investment Trusts invested more in the first 5 months of 2013 than in all of 2012. REIT funds are eyeing large redevelopment projects in Tokyo’s Shinagawa, Shibuya and Toranomon districts. As a case in point, Japan Rail is reportedly planning the redevelopment of 200,000 square meters of rail yards in the Shinagawa district as a precursor to building a new maglev line that will eventually link Tokyo with Nagoya. MLIT has recorded an increase in both commercial and residential land values in large metropolitan areas. Commercial office rents are forecast to increase 5 to 10% this year in Tokyo’s prime real estate districts. As for the residential markets, Mitsui Real Estate is expecting a 30% rise in condominium sales this year and Sumitomo Forestry experienced a 26% rise in orders for the month of April. The key factors cited for the increase of homes sales include rising mortgage rates, increasing consumer confidence and the implementation of a consumption tax hike in April of 2014.
Housing Starts Summary
Total housing starts for April increased by 5.8% to 77,894 units, thereby posting the 8th consecutive monthly rise. The gains were however uneven as single family starts advanced 17.5%, but condominiums fell 22.0%. Overall wooden starts increased 17.9% to 43,761 units. Two by four starts posted a 25.9% gain to 9,912 units. Among 2×4 starts owner occupied custom homes gained 30.3% to 3,158 units; rentals 26.1% to 5,473 units and spec homes increased 14.9% to 1,271 units. MLIT revised its seasonally adjusted annual starts forecast to 939,000 units.
Japan Softwood Exports Update
Posting the strongest results since 2007, Canadian softwood lumber shipments to Japan advanced 9% to 876,304m3 between January and April 2013. In addition, thanks to strengthening prices the value of softwood exports to Japan increased 15% to $253.4 million during this same time frame.