[97-3-13] Asian Money Boosts Prices In Japanese Property Market
URL : nikkeibp.asiabiztech.com
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March 13, 1997 (Japan) -- The headquarters of the National Railway Workers' Union is about to be reborn as a modern office building. On March 6, the 4,854 square meter plot on the south side of JR Tokyo Station's Yaesu exit was auctioned by the JNR Settlement Corporation. Winning the bid was the Japanese affiliate of a Hong Kong investment company, the Pacific Century Group.
Six companies participated in the bidding. Given prices of neighboring properties, the market price was thought to be between ¥40 billion and ¥60 billion. The winning bid, however, was ¥86.8 billion. Even the second-place bid exceeded ¥80 billion, greatly surpassing expectations.
The fact that a Hong Kong company won the bidding war shows the power of so-called "Asian money". This influence was also seen recently when a Singaporean investment company bought JR land in Shiodome.
Representative of Hong Kong's financial experts is Richard Li, chairperson of the Pacific Century Group. After establishing STAR TV, Asia's first satellite broadcasting service, in 1990, Li sold the company to Australia's News Corporation for US$775 million. He is using that capital to launch his current investment operations.
In a telephone interview, Li explained that he felt his group paid a fair price for the property. According to his plan, by the year 2001, the building will have four underground floors and 28 above-ground floors, with a total floor area of 54,000 square meters. Total investment in the property is scheduled to reach ¥120 billion, including land cost, a figure that may increase.
Li also said that "Compared to the bubble era, Japan's land prices have fallen 70 percent. We expect the Japanese economy to recover after five years, with the rental market stabilizing. We are optimistic that the deal will be profitable."
Interestingly, the Hong Kong company recently lost bids for Shinagawa and Shiodome properties. Last December, the company established a Japanese affiliate specifically to purchase first-class property in the downtown area. That aspiration that may have led to the high-priced bid.
Li denies that he regrets losing the previous bids and emphasizes that he is not investing in Japan because of Hong Kong's return to China or because of Hong Kong's high land prices.
As if to meet the aggressive pace of investment by Asian companies, the Japanese government is also starting to reconsider land policies. The Construction Ministry plans to relax capacity rates for mid-sized downtown apartment buildings, and the Liberal Democratic Party is addressing issues such as freezing property taxes.
Li revealed his plan to expand his operations by embarking on the development of hotel and high-quality residential housing.
Ultimately, Asian companies may help Japan's land prices stabilize. |
