News Archive : Japan Real Estate

Friday, November 25, 2005

REITs Become Preferred Exit for Private Funds

2005年11月25日
膨張不動産マネー(下)投資の出口、間口広がる。
2005/11/25, 日経金融新聞

五勝五敗――不動産投資信託(REIT)の初値が公募価格を上回った場合を「勝ち」とすると、今年度上場はこんな成績になる。新規株式公開(IPO)銘柄同様に高い初値がついていたREITも、最近は銘柄選別が進んでいる。

ファンド系苦戦
 特に苦戦しているのが、不動産私募ファンド各社が設立母体のREITで、成績は一勝三敗。クリード、アセット・マネジャーズ、ダヴィンチ・アドバイザーズといったファンド大手系が「敗者」になって、業界に衝撃が走っている。

 「新興勢力の不動産ファンド系REITは質が落ちるとの見方が広がった」(準大手証券アナリスト)から。第一世代と言える三井不動産など大手不動産会社系REITに比べ知名度が劣るうえに、組み込まれた物件の築年数が古く、一棟あたりの価格も十億―四十億円と小粒だ。

 二〇〇〇年ごろより増え始めた不動産私募ファンドは不動産金融の主役。その資産残高は今年六月までの一年半で二・五倍の三兆三千億円(住信基礎研究所調べ)にまで膨れあがった。運用期間は三―五年が普通。昨年ごろから償還期限を迎え、物件の転売で投資回収を進めるファンドがぐっと増えてきた。

 投資回収の「出口」戦略として、これまで最も確実と見られてきたのが、自社が設立するREITへの転売だった。公募価格割れに見られる系列REITの変調は「私募ファンドが系列REITへ安易に物件を流して質を落としているとのイメージが広がった」(不動産ファンド幹部)のが一因であるだけに、ファンドは出口戦略の軌道修正を迫られている。「出口戦略を再構築できないと、ファンドへの資金流入に響く」(有力アナリスト)状況だ。

 だが、ファンド各社に危機感は希薄。新たな売却の受け皿として外資勢が台頭しているからだ。

 「日本で不動産投資をしたいので意見を聞きたい」。不動産ファンド大手ケネディクスの本間良輔社長を、欧米の投資銀行の幹部が相次いで訪問した。その多くが日本に拠点を設ける方針という。「高利を狙わず、運用利回りが三―四%で長期保有を考える外資が出始めた」(本間社長)。安値で大量に買い短期間で売却益を得るのが普通だった外資の変化で、ファンドにとって格好の「出口」が出現した。

 不動産ファンド大手シンプレクス・インベストメント・アドバイザーズは今年六月、豪州の投資銀行バブコック・アンド・ブラウンにビルを約三十億円で売却した。新宿駅西口のこのビルは入居していた家電量販店さくらやが移転したが、たちまちパチンコ店が後を埋め稼働率は落ちなかった。

 バブコックは四月に豪州で日本の不動産に限定して投資するREITを上場したばかりだが、資産規模を現在の四倍強の二千億円にまで引き上げる計画。景気回復で安定した稼働率が期待できる日本は「長期運用が可能なオフィスビルや商業施設が多い」(不動産投資部)との評価だ。

 出口戦略の再構築で外資についで注目されるのが、付加価値路線。アセット・マネジャーズは、オフィスビルの建つ複数の土地を買い上げ、物件開発を可能にする「地上げ型」ファンドを設立している。

 投資先は銀座、青山など東京、大阪の一等地。売却先は不動産開発会社などで「取得価格の五倍で売却できることもある」(青木巌社長)。

償還時期延期も
 物件の売却を急がず、償還時期を延期する動きも出始めた。投資家向け利回りが一八%にもなるファンドを持つクリードは出資者から「優良物件はREITに売らずに私募ファンドで運用し続けてほしい」と求められている。

 同社は運用期間、資産額を自由に変えられる百億円規模のファンドを設立する考え。賃料収入にうまみがある物件が多かったり、売却を遅らせた方がより売却益が見込める場合は、運用期間を延ばす方式。出口を先に延ばすという「出口戦略」とも言える。

 住信基礎研究所の井上淳二上席主任研究員は「不動産市場が急激に冷え込む可能性はないが、多様な出口戦略を用意する必要がある」と指摘する。不動産金融をけん引する不動産ファンドは、膨張を続けながらも、中身が変化し続けている。

Architectural Scandal Deepens

Aneha falsely listed as designer of 3 condos
The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051122TDY02009.htm

First-class architect Hidetsugu Aneha's office in Ichikawa, Chiba Prefecture, was falsely named as the designer of three condominium buildings in legal documents, The Yomiuri Shimbun learned Monday.

The three buildings in Funabashi in the prefecture were among 21 buildings in Tokyo and Chiba and Kanagawa prefectures whose mandatory structural strength analyses were falsified by Aneha.

The three buildings were developed and constructed by SunChuoHome in the city.

The Construction and Transport Ministry said Aneha's actions may be punishable under the Architects Law.

Mikio Akiba, head of Akiba Sekkei architecture firm, made a contract with SunChuoHome to design the buildings. However, Aneha's office was listed as the designer of the buildings on official documents in accordance with the Building Standard Law.

Akiba said he has known Aneha for about 10 years. About six years ago, the two began working on development projects for SunChuoHome, with whom Akiba had done business previously. Akiba described the relationship as "teamlike."

As a result of talks with SunChuoHome, Akiba made a contract to design the buildings. However, because he did not have a first-class architect's license, he was not legally eligible to be listed as the designer. So he asked Aneha to allow him to use his name.

Two years ago, Akiba was introduced by Aneha to eHomes Inc. in Shinjuku Ward, Tokyo, which certifies construction applications on behalf of local governments. The firm recently was discovered to have approved falsified earthquake resistance certificates and other documents on most of the 21 buildings.
(Nov. 22, 2005)
Architect fudged figures in same report
11/23/2005
The Asahi Shimbun
http://www.asahi.com/english/Herald-asahi/TKY200511230108.html

The architectural office at the center of a scandal over newly constructed buildings with unsafe earthquake standards submitted an official report on an 11-story apartment complex filled with inconsistencies that any expert could easily have picked up, industry insiders say.

The office of architect Hidetsugu Aneha, 48, not only set unusually low estimates for earthquake stress but also used different figures for parts of the structure covered earlier in the report.

The Asahi Shimbun obtained a copy of the office's structural strength report for the Grand Stage Higashi-Mukojima condominium complex in Tokyo's Sumida Ward. The figures led to inadequate safety standards for the building.

The report, which runs to 302 pages, was compiled in August 2003.

In a statement Monday, the Ministry of Land, Infrastructure and Transport said that Grand Stage Higashi-Mukojima had only 31 percent of the necessary earthquake resistance as required by the Building Standards Law. It said the structure would likely collapse if an earthquake of upper 5 on the Japanese intensity scale of 7 hit.

Thirty-six households reside in the condominium complex.

Throughout the report, different figures are used for earthquake stress, or the level of force applied to the building during a temblor.

In the first part of the document, earthquake stress is calculated for different parts of the building according to floor space and height of the structure.

For example, a force of 35 kilonewtons is estimated for columns on the 11th floor in the event of an earthquake. A newton is a unit of force named after Sir Isaac Newton.

According to several architects who specialize in structural strength calculations, 35 kilonewtons is not problematical in itself.

However, in the latter half of the report, a different figure is used for the same parts of the building.

In the part of the report that covers calculations for cross-sections of the structure to determine the size and number of columns to use, the same column on the 11th floor has an estimated earthquake stress figure of just 16 kilonewtons.

In some sections, the figures used are about half those mentioned earlier in the report.

The architects who reviewed the report said calculations based on lower earthquake stress figures would naturally lead to a decline in the overall strength of the structure.

The structural strength report says there are 16 columns, each with a diameter of about 25 millimeters, used for the first floor of the building. However, an architect who reviewed the report said a building of that size would need at least 20 columns on the first floor, each with a diameter of between 29 and 32 millimeters.

The architect said the building would not be able to withstand a medium-sized earthquake with the specifications given in the structural strength report.

Calculations for structural strength reports are normally done using software approved by the minister of land, infrastructure and transport. The software used by Aneha's office in Ichikawa, Chiba Prefecture, had ministry approval.

However, an architect said there are ways to falsify reports even when using approved software.

This can be done by compiling two structural strength reports, the first one using approved earthquake stress figures included in the software and the second one using earthquake stress figures at much lower levels.

The next step would be to combine the two reports, which is apparently what Aneha did for the Higashi-Mukojima residential complex, the architect said.

At the same time, the architect said that a careful reading of the entire report would have uncovered the fact that different figures were used for the same parts of the building.

On Friday, eHomes Inc., the building inspection company that failed to discover the falsification of the structural reports, blamed clever tactics employed by Aneha's office for its inability to discover the problems.(IHT/Asahi: November 23,2005)


Contractors to demolish 13 suspect housing blocks
The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051124TDY01004.htm

Three contractors involved in the construction of 22 metropolitan buildings built using falsified structural-integrity data have decided to demolish 13 housing blocks the government fears may collapse if hit by a temblor registering upper 5 on the Japanese seismic intensity scale of seven.

At press conferences held in Fukuoka and Tokyo on Tuesday, Hideaki Shinohara, 40, president of Hakata Ward, Fukuoka-based real estate company Shinoken Co. and Susumu Kojima, 52, president of Huser Management Ltd., said they would reimburse costs incurred by those who had to be evacuated, but were divided on the idea of buying back the condominiums.

Shinoken was responsible for the construction of four questionable buildings in Tokyo, while Huser built seven of the residential buildings in Tokyo and Kanagawa Prefecture.

Shinohara said his firm would demolish two buildings in Minato Ward and one in Shinjuku Ward, Tokyo, and that he would consider whether to tear down or reinforce a building in Shibuya Ward, Tokyo.

Huser President Kojima said his company would rebuild the four apartment buildings in Chuo, Sumida and Koto wards and Inagi, Tokyo, as well as three in Yokohama, Kawasaki and Fujisawa in Kanagawa Prefecture.

On Wednesday, Sun Chuo Home Co. of Funabashi, Chiba Prefecture, said it would demolish two 10-story buildings and a nine-story building--a total of 177 units in the city.

Managing Director Keiji Kudo of the real estate company made the announcement during a briefing in Funabashi to the residents, during which he also offered his apologies to them.

He told the meeting, organized by the Funabashi municipal government, that his company had thought of reinforcing the three condominiums but that emergency inspections of their earthquake-resistance had led to the conclusion that they needed to be pulled down.

Kudo added he had yet to determine when the demolition work would start, but that he wanted residents to leave their apartments by the end of January.

On Wednesday, Kojima held a closed briefing for residents of the nine-story condominium that holds 24 units in Inagi, Tokyo, only to anger them.

Residents later told reporters that the president effectively retracted his Tuesday pledge to rebuild the condominium by saying his company was also looking into the possibility of proceeding with structural reinforcement.

Meanwhile, five licensed architects from the Funabashi municipal government inspected Sun Chuo Home No. 15, a 10-story condominium in Minatomachi, the first administrative action of its kind since the revelation of the construction scam.

The building's earthquake-resistance level stood at only 31 percent of the Construction and Transport Ministry's mandated standard.

4 hotels close over safety fears

Four hotels in Aichi, Mie and Shizuoka prefectures suspended operations on Wednesday to check the safety of their buildings after their operators found that the buildings' earthquake-resistance data had been prepared by Aneha.

The four hotels are Meitetsu Inn Kariya in Kariya, Aichi Prefecture, run by Meitetsu Realestate Co. affiliated with the Nagoya Railroad (Meitetsu) group; Sanco Inn Kuwana-ekimae in Kuwana in Mie Prefecture, and Sanco Inn Shizuoka in Shizuoka, both run by Sanco-Real Co, an affiliate of the Mie Kotsu (Sanco) group; and AZ Inn Obu in Obu, Aichi Prefecture.

The operators said it was not known whether structural strength data had been falsified, but they had asked inspection firms to check whether the facilities could withstand strong earthquakes.

The hotels will remain closed until safety checks are completed. Third-party inspections would last one or two weeks, the hotels' operators said.

The operators also said guests with reservations at the hotels would be referred to nearby hotels, mostly run by the same groups.

(Nov. 24, 2005)

4 hotels to shut until quake risk is determined
11/24/2005
The Asahi Shimbun
http://www.asahi.com/english/Herald-asahi/TKY200511240135.html

Operators of four multistory hotels outside Tokyo said Wednesday they were suspending operations until the safety of their buildings could be determined.

They said they could not rest easy because disgraced architect Hidetsugu Aneha was among those responsible for calculating the structural strength of the buildings when they were constructed.

Aneha's office was involved in the structural strength reports for at least 80 buildings in six prefectures. Land ministry officials say some of those buildings are not strong enough to withstand a moderately powerful earthquake.

The hotels that suspended operations are the 138-room Sanco Inn Kuwana-Ekimae in Kuwana, Mie Prefecture; the 196-room Sanco Inn Shizuoka in Shizuoka Prefecture; and in Aichi Prefecture, the 162-room Meitetsu Inn Kariya in Kariya and the 120-room Az Inn Obu in Obu.

The operator of the Meitetsu hotel said a private-sector expert it commissioned to re-examine the quake resistance calculations found areas that may fail to meet even minimum safety standards.

Operations at the other hotels are also suspended until the safety of the structures can be assessed, although no definitive risk has been proved.

The Kuwana hotel said it will allow guests unable to find other accommodation to stay. The area's hotels are full because of a golf tournament.

In Tokyo, two Keio Presso Inn hotels suspended operations earlier.

On Tuesday, the Ministry of Land, Infrastructure and Transport said it will compile a unified set of standards to be applied when local municipalities order buildings that are at risk from temblors to be demolished or repaired.

The ministry decided on the step because standards differ from one municipality to another. Officials reasoned that residents in the apartments at risk should not be worried further.

A benchmark of 1 describes strength that will withstand a temblor of upper 6 on the Japanese seismic intensity scale of 7. Structures will be graded in proportion to the benchmark. A reading of 0.5 means that there is a danger the structure will collapse in an earthquake of upper 5 on the seismic scale.

Those classified as between 0.3 and 0.2 in quake resistance will be ordered torn down.

Of the 14 completed buildings in which Aneha, 48, was involved, the ministry said Monday that 12 were rated at 0.5 or less in quake-resistance levels. One was classified with a 0.56 reading.

Realtors or developers that sold apartment complexes deemed defective have decided to rebuild some of them.

Shinoken Co., a Fukuoka-based real estate company that sold four defective condominiums in Tokyo based on Aneha's falsified quake-resistance calculations, announced Tuesday it will tear down an apartment block in Minato Ward with 18 units and another in Shinjuku Ward with 47 units by the end of the year. Both structures are at risk of collapsing in an earthquake of around upper 5, officials said.

Huser Co., which had a hand in the construction of 12 apartment complexes in which Aneha falsified data, plans to rebuild seven. The company said it does not intend to address residents' demands to return the money they paid.

"That would require 15 billion yen, rendering the company powerless," Huser President Susumu Ojima told a news conference Tuesday.

He said rebuilding the seven complexes would cost about 5 billion yen.

Sun Chuo Home Co. plans to demolish its two completed, but defective apartment blocks and pay up to 300,000 yen as moving expenses.(IHT/Asahi: November 24,2005)

Builder of shoddy structures folds with 13.8 billion yen in debt
The Japan Times
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nn20051125a3.htm

KUMAMOTO (Kyodo) Kimura Construction Co., the builder of dozens of defective condominiums and hotels with falsified quake-resistance data provided by a scandal-tainted Chiba-based architect, said Thursday it will soon file for bankruptcy.
Moriyoshi Kimura, president of the contractor based in Yatsushiro, Kumamoto Prefecture, told reporters here that his company will file the bankruptcy applications in court next week at the earliest.

Kimura Construction, founded by Kimura himself in 1963, suspended its operations Tuesday after one of its checks was not honored by its lender Monday, according to credit investigators.

"The falsification scandal was a bolt out of the blue," the 73-year-old Kimura told a news conference, his first public appearance since the fiasco came to light. He broke down as he read a prepared statement about the pending fate of the company.

The firm had an estimated 13.8 billion yen in liabilities at the end of October, the investigators said.

Earlier this month, architect Hidetsugu Aneha, of Ichikawa, Chiba Prefecture, admitted he falsified quake-resistance data for a number of building projects in recent years, sending shock waves through a country prone to earthquakes. Kimura Construction is believed to have constructed many of the defective buildings based on falsified quake-resistance data.

The builder emphasized lower costs and faster construction to win condo and hotel construction bids in the Tokyo area and posted 12.7 billion yen in sales for the year that ended in June, a private credit research agency said.

But on Thursday, Kimura denied that his firm had ever pressured Aneha, but added that he had nothing but anger toward the architect's office.

"The confirmation documents had been approved, and we trusted them 120 percent," he added.

Kimura said he concluded his company will not be able to continue operating because of a plunge in its credit after the shoddy construction was revealed and after the check was dishonored.
The Japan Times: Nov. 25, 2005
http://www.yomiuri.co.jp/dy/national/20051125TDY03003.htm

Who checks the checkers? System allowing architect to pick lax inspectors ofbuilding plans
Tatsuhito Iida and Hirofumi Inaba Yomiuri Shimbun Staff Writers

A system in which architectural firms can choose the agency that checks their building plans enabled an architect to get falsified structural integrity data approved on 22 buildings.

Under a deregulatory measure taken by the government six years ago, private firms were allowed to undertake inspection services for building plans. The number of such inspection firms has risen sharply following a boom in condominium construction.

Under the new system, those needing their building plans checked could choose an inspection agency that would pass their plans--a systemic problem exposed by the recent scandal over architect Hidetsugu Aneha's falsification of structural integrity data on such matters as earthquake resistance.

Under the Building Standards Law, contractors are supposed to choose an agency to check building plans to ensure the structures meet safety requirements. But proxy agencies also are allowed to conduct such checks.

In many cases, therefore, the selection of inspectors has been virtually entrusted to architects.

Commenting on eHomes Inc., the inspection agency that approved falsified data provided by Aneha, the 48-year-old architect said, "When I asked the company to check plans [containing false data], they passed them, so I continued asking them to check my plans."

The president of a developer that built 12 apartment buildings using false design data said, "I didn't care who checked the construction plans."

He added, "I was surprised that [eHomes] checked them so quickly."

Concerning the entry of private companies into the inspection service business, a senior Construction and Transport Ministry official said: "We had hoped that companies that conduct accurate and speedy inspections would be highly evaluated as a result of competition among private companies. But in reality, it was found that agencies that conducted strict inspections were avoided, and those that quickly passed plans were more popular, making big profits. The system didn't work properly."

Safety inspections used to be conducted only by local government-approved architects.

They were required to have a first-class architect's license, with practical experience in construction management and to pass certain examinations. Heads of local governments were responsible for appointing them to authorize building plans.

But in 1999, private companies became eligible to provide inspection services.

A then senior official of the ministry's Housing Bureau recalled, "Although there was concern over whether safety would be ensured under the new system, we had to allow the private sector's entry as part of deregulation efforts."

A member of the government's task force for administrative reform even called for the inspection system by those qualified architects to be abolished, arguing they had vested interests.

To qualify as an inspection agency, a private firm needs to fulfill various requirements, such as having a certain number of qualified inspectors. Depending on their business area, either the construction and transport minister or a prefectural governor examines the firm's qualifications and awards it its designation.

Qualification requirements for inspectors are equivalent to those of architects authorized by local governments. To be qualified, architects need to pass a state examination after gaining work experience.

Only 20 percent to 30 percent of applicants pass the exam. Those qualified have a duty to protect privileged information and could be subject to bribery charges, just like government employees.

At the launch of the new system, there were 21 such inspection agencies. But boosted by a boom in condominium construction, particularly in major cities, the number has grown by up to 30 every year.

Last fiscal year, the number of construction plans checked by private agencies exceeded that of plans checked by public inspectors.

"It takes time and labor for inspection work to be undertaken thoroughly. Private agencies charge more than government bodies. It was beyond our expectations that the number of private agencies would increase this much," a senior construction ministry official said.

Administrative bodies, however, are responsible for overseeing inspection agencies. Under the construction standards law, authorities can order agencies to submit operational reports and can conduct on-the-spot inspections without prior notice.

An official of the ministry's Housing Bureau said on-the-spot inspections were supposed to be conducted once a year. But an official of a Tokyo-based inspection agency said government officials had conducted inspections only once in two years, after giving prior notice.

Construction and Transport Minister Kazuo Kitagawa has expressed his intention to urgently review the inspection system under which private firms are allowed to conduct inspections, saying, "The system itself is necessary, but the way it has been operated is problematic."

(Nov. 25, 2005)

Starwood Capital Group Acquires Le Meridien Hotels & Resorts Portfolio

Starwood Capital Group Acquires Le Meridien Hotels & Resorts Portfolio
24.11.2005 14:27:00

GREENWICH, Conn., Nov. 24 /PRNewswire/ -- Starwood Capital Group Global, L.L.C. ("Starwood Capital"), a closely held real estate investment firm based in Greenwich, Connecticut, today announced that its controlled affiliate, in a 50/50 joint venture with an affiliate of Lehman Brothers ("Lehman"), has acquired the owned and leased hotel portfolio of Le Meridien Hotels and Resorts ("Le Meridien"). Within the same transaction, Starwood Hotels & Resorts ("Starwood Hotels") has acquired the Le Meridien brand, management and franchise business from Le Meridien. Starwood Hotels has also entered into management agreements for the owned and leased Le Meridien properties to be acquired by Starwood Capital and Lehman with such hotels continuing to be operated under their current flags. Starwood Capital and Lehman anticipate selling several agreed upon hotels unencumbered by brand affiliation in the near future.

The owned and leased portfolio is made up of 32 luxury, four/five star hotels located primarily across Europe but also in North America, Africa, and South America. With properties in business, leisure, and resort markets, it includes such assets as the Hotel Eden in Rome, Italy, the Le Meridien Dona Filipa and Le Meridien Penina Golf & Resort properties in the Algarve, Portugal, and the 1,025-key Le Meridien Etoile in Paris, France. Overall, the portfolio consists of over 8,000 hotel rooms in 16 countries. Barry Sternlicht, Chairman and CEO of Starwood Capital, said, "This acquisition will allow us to capitalize on an ongoing recovery in the European full-service lodging sector as many of the assets in this portfolio are located in strategic European markets. I also believe this transaction is an excellent strategic fit for Starwood Hotels and that Starwood Hotels' operational expertise could improve the performance of these assets on behalf of the real estate owners. It is rewarding to see this transaction consummated after almost two years of complex negotiations."

Japan to charge architect who falsified data

Japan to charge architect who falsified data
>By Mariko Sanchanta in Tokyo
>Published: November 22 2005 14:45 Last updated: November 22 2005 14:45

http://news.ft.com/cms/s/a98cdf48-5b65-11da-b221-0000779e2340.html

Japan's land ministry says it is preparing to file criminal charges against an architect who admitted falsifying data regarding the structural soundness of 21 buildings in central Tokyo, 13 of which could collapse in the event of a strong earthquake.

The revelations, which emerged over the past few days, have deeply rattled the Japanese public, who believed that Japan's buildings were now earthquake-proof and its building regulations the most stringent in the world, following the devastating Kobe earthquake a decade ago that killed 6,500 people.

The existence of other structurally unsound buildings could surface in coming weeks, as Hidetsugu Aneha, the architect concerned, took part in the planning of at least 194 buildings since 1996, including houses, steel structures and temples.

Following a government check, it was found that 13 of the 21 buildings in Tokyo could collapse if an earthquake struck with an intensity of upper 5 on the Japanese seismic scale of 7.

Television reports showed residents - some tearful - beginning to move out of the buildings involved, which have to be rebuilt. The Keio Presso Inn, a Tokyo hotel that is among the 13 structurally unsound buildings, closed its doors on Friday.

The land ministry is also considering filing criminal charges against a construction company and other architectural firms involved in building the 13 structures.

According to Japanese media reports, Mr Aneha has admitted that he falsified the data on the 21 buildings because he was under pressure to have them built quickly and at low cost.

“There is still overcapacity in the construction industry in Japan, and margins are not recovering,” said Yoji Otani, construction analyst at CSFB. “There is enormous pressure placed on prices.”

Mr Otani estimates that around 15-25 per cent of the buildings in Tokyo would likely collapse in the event of a strong quake.

The falsified data emerged after a routine audit by eHomes, a Japanese company commissioned by the government to routinely check the structural safety of buildings. The government handed these audits to the private sector after the Kobe earthquake, in which scores of buildings were reduced to rubble.

Thursday, November 24, 2005

Funds Continue to Pour into Japanese Real Estate

膨張不動産マネー(上)過熱の陰に変調あり――流入10兆円、選別色も。
2005/11/22, 日経金融新聞, 1ページ, 有, 2773文字

 不動産への資金流入が膨張を続けている。国内外の不動産私募ファンド、不動産投資信託(REIT)による不動産の取得額は十兆円規模に達し、東京の地価が反転する原動力になった。だが、借り入れ依存度が上がるなど危うさも垣間見える。(張勇祥、財満大介)=不動産ファンドは2面「ミニ辞典」参照
低下する利回り
 東京ディズニーランドの真横。高級ホテルが乱立する一角に四百室を超える大型ホテルの建設が始まっている。鹿島に建設を依頼したのは不動産ファンド。「ホテルの事業者に転貸することで、安定した収入が見込める」と説明。高級レストランは設けず、室料も近隣のライバルより低くするという。ファンドがディズニーリゾートのホテル戦争に加わる。
 千葉県のゴルフ場や沖縄県のチャペル、箱根の旅館、グアムのホテル。今年に入り、ファンドによるリゾート物件の取得が相次ぐ。賃料が安定している都心のオフィスビルは値上がりで利回りが低下、より高利を求めて地方都市のオフィスに向かったファンド資金が、さらに景気の波をかぶりやすいリゾート物件にまで食指を動かしている。
 REITの運用資産は九月末で三兆円を突破。国内と海外の不動産ファンドの運用額もそれぞれ三兆円を上回るもようで、市場性のある不動産に向かう投資資金はすでに十兆円規模に達した。借り入れを活用して一〇%超の利回りをうたうファンドが多く、低金利に飽きたマネーが不動産市場に向かっている。
 資金流入に伴い、賃料収入を物件価格で割った利回りは低下している。日本不動産研究所の調査では東京・丸の内、大手町のオフィスビルの期待利回りは四・四%。調査対象、手法の違いはあるが、利回りは一九九九年に比べ一・九ポイント低下した。都心の優良物件はファンド間の奪い合い状態で、三%台が珍しくない。
 地価底入れが東京ばかりか地方にも波及し始めているにもかかわらず、値下がり物件を整理する動きも少なくない。オリックス不動産投資法人は一日付で七物件を一括売却したが、仙台市や水戸市などの小型ビル四棟で売却損が発生した。長期にわたり入居率が低迷していた物件だ。同法人は「十億円未満の小型物件を売却し管理効率を改善する」と説明するが、物件次第では賃料上昇は到底見込めないとの指摘もでている。
借り入れに依存
 ファンドの借入比率が上がっていることを警戒する声もある。ファンドは一般に、投資家の出資と金融機関からの借り入れを組み合わせ資金を調達する。住信基礎研究所の推計ではファンドの借入比率は昨年末は六割台だったが、今年に入り七割を超えた。低金利が続くなかで、借り入れを増やすほど、出資への配当率を高くしやすいからだ。
 いくつかの変調の芽がでているが、不動産投資ファンド大手のダヴィンチ・アドバイザーズが一兆円のファンド組成を表明するなど資金流入の流れは変わってはいない。ただ、「不動産投資は選別色を帯び始めた」(みずほ証券の石沢卓志チーフ不動産アナリスト)。
【図・写真】工事が進むディズニーリゾートに建設中のホテル(千葉県浦安市)
海外投資家、地価下支え
持続性は不透明
 不動産市場への海外マネーの流入が止まらない。資金は都心から郊外に向かい、最近ではシンガポールの不動産投資会社、キャピタルランドが傘下のファンドを通じ千葉・船橋のショッピング・モール「ビビット・スクエア」を買収した。日本で投資を強化する。
 海外投資家のすそ野も広がっている。これまでは米系が多かったが、アジアの不動産会社、米系ヘッジファンド、豪州の投資家の動きも活発だ。
 背景には積極的な要因と消極的な要因がある。
 積極的な要因は賃料の上昇期待。生駒データサービスシステムによると、二十三区の賃料は二〇〇七年に十五年ぶりに上昇に転じる見通し。主要五区の空室率が四・六%まで低下し、賃料が貸し手優位で決まりやすくなってきた。賃料が上がれば不動産の生み出す収益も増加が見込めるので、投資熱が強まっている。
 消極的な要因は欧米に比べた割安感だ。米国の住宅価格は右肩上がりで上昇、今年六月末時点は一九八〇年の三・六倍。ところが九月末にマンハッタンでラグジュアリーに分類される住宅価格が前年を七%近くも下回った。一方、日本の住宅地価は十四年連続で下げピーク時の六七%となったものの、都区部は〇・五%の上昇に転じた。
 UBS証券の沖野登史彦氏は「海外投資家は下げが予想される米英の比率を下げ、日本の比率を上げている。消去法的な日本買い」と分析する。
 ただ、市場の長短金利が上がれば不動産の魅力は薄れ、売却が広がりかねない。中国で魅力的な投資先が増えれば、日本売り・中国買いが起きる可能性もある。海外マネーは地価を押し上げているが、永続するわけではない。マネーの論理が不動産価格を左右しやすくなっており、かつての右肩上がりを夢見ると大やけどする恐れが大きい。(編集委員 太田康夫)
銀行、リスク管理に動く
融資の急拡大、金融庁が警戒
 「リスクとリターンの管理は適正ですか」。今夏、西日本地域のある地方銀行の担当者は、検査に訪れた金融庁の係官の厳しい口調に驚いた。話題は不動産向けのノンリコースローン。物件から十分な賃料収入が上がっているか、テナントの入りはどうか、契約文書に不備はないか、土壌汚染のリスクは――。矢継ぎ早の質問に「急速に積み上がる不動産融資への警戒姿勢を感じた」と担当者は話す。
 不動産に流れ込む銀行マネーは急速に拡大している。住友信託銀行が、過去の不動産証券化の実績をもとに試算した全国の不動産の取引量は約二十兆円。うち十兆―十二兆円程度が銀行借り入れで賄われているという。大企業向け融資が伸び悩んでいる銀行が一気に不動産融資に動いた。
 その多くはノンリコースローン。大手銀六グループの貸出残高は今年三月末で四兆二千億円。みずほグループ、中央三井信託銀行では約一兆円に達する。地方銀行でも残高が一千億円を超えるところが出てきた。不動産ファンドの投資プロジェクト向けがほとんどだ。
 一方、競争激化で貸出金利から調達コストを引いた利ざやは縮小。三、四年前には二%程度が主流だったが、今は〇・五%を切ることもある。大手銀関係者は「ライバルが増え、入札で落ちることも増えた」と話す。
 過当競争で収益に見合わないリスクを取っていないか――。監督当局が監視を強める理由もそのあたりにある。金融庁検査が背中を押す形で、銀行も融資期間を短くしたり、賃料の引き上げ条項を契約書に盛り込むなど、リスク管理に動き始めた。
 ▼ノンリコースローン 返済原資を担保資産に限定する融資。事業が失敗し、銀行が担保処分では全額を回収できなくても、借り手企業に残額の返済を求めないので「非そ及(ノンリコース)型融資」と呼ばれる。

Beast of the East lives! - Hedge funds are buying Japan again. Should you?

Beast of the East lives!
Hedge funds are buying Japan again. Should you?
November 21, 2005: 11:29 AM EST
By Andy Serwer, FORTUNE editor at large

NEW YORK (FORTUNE) - Provocative investing advice often comes from surprising sources. Like Dan Quayle.

When the former Veep was recently asked which Asian market he was most sanguine about, Quayle, now a chairman of hedge fund Cerberus, pointed to potential pitfalls of China and India (such as a fragile banking system in the former and a lack of highly developed infrastructure in the latter) and remarked, "I say keep your eye on Japan."

Dan Quayle isn't alone. In case you haven't noticed, the Japanese stock market has been on a tear. The Nikkei 225 is up over 20 percent year to date and just cracked 14,000 for the first time since 2001. The index has nearly doubled since bottoming out in early 2003.

I know, I know. People with a speck of gray in their hair are rolling their eyes right now. They've heard that song before: "The Japanese economy is beginning to turn around. Better get in on the action before it's too late." Yes, probably no market has produced as many head fakes, false bottoms, and badly burned investors as Japan over the past decade or so.

Ever since its real estate/banking bubble burst 15 years ago (with the Nikkei topping out at an incredible 38,916 in late 1989), Japan has been on a protracted slide. The decline was in fits and starts, though, with market seers incessantly predicting recovery just around every corner -- prognostications that turned out to be false time after time.

Could this be the turn that really was? "I've put money there," says the head of one of the nation's biggest and most successful hedge funds, whom I'll call Mr. Big. "There are plenty of reasons to be optimistic. So many of the old guys who ran the country into the ground are no longer on the scene. I still think it's early in the game."

In fact, much of the run-up in the Nikkei is because of players like Mr. Big. "There's been a little buying by institutional investors in Japan," says longtime Japan watcher Richard Katz, editor of the monthly newsletter Oriental Economist Report, "but most of the action has come from foreign investors."

There may not be many believers at home, but both Katz and Craig Phares, a managing director at Nomura, acknowledge there is a spate of heretofore unseen positive signs. Such as:

* Government reform. Prime Minister Junichiro Koizumi was elected on a reformist ticket and has made some strides, particularly in his efforts to privatize Japan Post, which runs 25,000 post offices and has some $3 trillion in assets.

* Better banking. Craig Phares says nonperforming loans "have really been cleaned up over the past two years." He sees real loan growth for the first time in seven years.

* Robust real estate. Prices are rising after 15 lackluster years, particularly in Tokyo, where Katz says there's a noticeable increase in the number of construction cranes on the outskirts of the city.

* Economic growth. The economy is expected to grow 2 percent to 2.5 percent this year, Katz says, heady stuff for Japan. Between 1997 and 2002 there was close to zero real GDP growth.

* Rational ratios. Because profits have been gradually rising at companies like Canon and Toyota and the market went nowhere for years, Japanese price/earnings ratios are finally approaching levels comparable to those of other world markets.

The outlook for Japan is not all cherry blossoms and sake, though. "We don't have a boom in consumption yet," says Katz. "The rise in corporate profits has come out of workers' hides. Also, this is an economy that still needs to make big productivity gains."

But for now, at least, the Nikkei is red-hot, outperforming the S&P 500 by ten percentage points over the past two years. So is this the beginning of a true Japanese revival or just another good-sized blip? Well, they said gold and oil would never rise again, and both did with a vengeance.

Sometimes you have to expect the unexpected. How about Quayle for President in 2008? Nah, that's one bet I can't see panning out.

----------------------------------------

Andy Serwer, editor at large of FORTUNE, can be reached at aserwer@fortunemail.com


Find this article at:
http://money.cnn.com/2005/11/21/news/international/japan_fortune_112805/?cnn=yes

Singapore's Mapletree, Japan's Itochu In Strategic Alliance for Logistics and Industial Real Estate

Yahoo! Singapore - Finance
Monday November 21, 3:13 PM

PRESS RELEASE: Mapletree, Itochu In Strategic Alliance

The following is a press release from Mapletree Investments Pte. Ltd.:

Singapore, 21 November 2005 - Mapletree Investments Pte Ltd (Mapletree) is delighted to announce that it has formed a strategic alliance with Japan's Itochu Corporation to collaborate in logistics and industrial real estate projects in Asia for mutual benefit.

Mr Hiew Yoon Khong, CEO of Mapletree, said: "We view this alliance as yet another significant strategic milestone. For us to be a leading Asian real estate entity, it is not enough to bank just on our knowledge in real estate, finance and deal structuring, and on our ability to spot and time market opportunities."

"We also need to augment our skills in these areas with strategic tie-ups such as the one with Itochu, to broaden our business networking to source and secure the best deals possible, and to match investors to creatively structured real estate investment products. Our alliance with Itochu allows the both of us to use our collective skills, knowledge and experience in all these areas to our mutual benefit," Mr Hiew added.

Japan presents a potentially huge market for Mapletree's logistics and industrial businesses. This alliance with Itochu enables Mapletree to jump start its market penetration in Japan and at the same time gain access to Japanese investors who may be interested in investing in its various funds. In addition, this alliance will provide Mapletree access to Japanese logistics operators who are already operating across Asia and are growing rapidly.

Brief description of Itochu

Itochu is a leading Japanese trading conglomerate with global reach. Its seven divisions comprise:

Finance, realty, insurance and logistics

Textile

Machinery

Aerospace, electronics & multimedia

Energy, metals and minerals

Chemicals, forest products & general merchandise

Food distribution

Itochu's logistics arm provides domestic and international logistics support both internally to its six other divisions and externally as a third-party logistics (3PL) service provider to its broad-based network of clients from 80 countries globally, including retailers, pharmaceutical and food manufacturers, convenience and large-scale department stores. Although many of its customers are Japanese, its client base also includes international players operating in the seven fields of its business.

Areas of cooperation & benefit

The collaboration with Itochu fits in with Mapletree's two-pronged growth strategy for its industrial and logistics initiatives in Asia: growth in the near term through direct acquisitions and in the medium term through potential pipelines from development projects.

Direct acquisitions - More Japanese companies, including Itochu, are adopting an asset light strategy; they want to divest their brick-and-mortar assets in order to raise capital to fund their business expansion. Mapletree will be able to harness this growing trend with the help of Itochu, by gaining access to this pool of Japanese vendors to propel the growth of Mapletree Logistics Trust (MapletreeLog) and its industrial fund. As a start, MapletreeLog is exploring the potential of acquiring an Itochu-owned logistics facility in Tokyo and the acquisition of other Japanese assets facilitated by Itochu. With their network and reach into the Japanese corporate world, Itochu will also be able to facilitate deals with Japanese logistics clients operating elsewhere in Asia.

Development - There are other spin-off opportunities which the alliance can also take advantage of. The alliance will dovetail the expansion plans of these Japanese vendors - whenever feasible - by being their strategic real estate partner. The ability of the alliance to provide a one-stop, integrated real estate solution should stand the partnership in good stead.

As part of the one-stop convenience to Itochu's clients, Mapletree can develop build-to-suit (BTS) and other ready-built industrial and logistics facilities with Itochu as a partner. The partnership will cooperate in the development, management, marketing and leasing of such facilities. When the facilities become income generating, they will create medium term pipelines for Mapletree's logistics and industrial initiatives.

In Vietnam, the alliance is assessing the feasibility of developing BTS and ready built warehouses in Mapletree's exclusive logistics park in the Vietnam-Singapore Industrial Park I and II. Mapletree is also in active negotiations in similar collaborative deals in China and Japan.

Real estate fund management

Mapletree and Itochu are both keen to expand their real estate fund management business. The alliance allows for the cross fertilization of skills and market knowledge, to further sharpen Mapletree's ability to structure and manage the listed and unlisted funds. Mapletree is currently managing listed REIT, MapletreeLog through its wholly owned subsidiary, Mapletree Logistics Trust Management Ltd. and is in the process of building a portfolio of industrial assets across Asia. Itochu currently has a closed-end logistics investment fund and is exploring launching phase two of the fund in the near future. Itochu also has several other residential real estate funds under management.

_____

Copyright (c) 2005Dow Jones & Company Inc. All rights reserved.

Copyright (c) 2005 Yahoo! Pte Ltd. All Rights Reserved.

Toranomon Capital Announces Hospital Investment Fund

病院を対象とした不動産ファンド事業を展開、虎ノ門キャピタル

2005年11月22日 11時23分

虎ノ門キャピタル(本社:港区)は、病院の経営再建策の一環として、病院の土地・建物を対象とした不動産ファンド事業に乗り出す。2005年2月に病院再生事業を手がける新会社の虎ノ門キャピタルメディカを設立し、すでに経営コンサルティング業務を手がけている。

経営再建を目指す病院の土地・建物を買い上げて、そのまま病院側に賃貸する。病院側にとっては、金融債務の圧縮やバランスシートの改善を進めることができる。不動産の取得価格は医療事業のキャッシュフローで評価する。経営改善を進めるなどで病院の収益力を高め、一定の賃料収入を確保する考えだ。複数の病院の土地・建物を取得し、100億円程度の規模になった時点でファンドを組成して投資家を募る。全国の病院を対象としており、取得する不動産の価格は1物件当たり5億〜15億円程度になる模様だ。

Foreign Investors Pouring Money Into Japan Property Market

November 22, 2005
Foreign Investors Pouring Money Into Japan Property Market

TOKYO (Nikkei)--Overseas investment continues to flow into the Japanese real estate market, bolstering land prices in the country.

Now, however, foreign investors are beginning to take an interest in suburban properties in addition to those in central Tokyo. Capital Land, a Singapore real estate investment firm, recently acquired the Vivit Square shopping mall in Funabashi, Chiba Prefecture, through an affiliated fund and intends to further increase investment in Japan.

The nationalities of overseas investors are also growing increasingly diverse. Asian real estate companies, U.S. hedge funds and Australian investors, among others, are rushing to join American real estate investment firms in purchasing land in Japan.

There are both positive and negative factors behind the influx of foreign capital. The positive factor is expectations of higher rents. Real estate research firm IDSS Co. expects office rents in Tokyo's 23 wards to rise in 2007 for the first time in 15 years. With the vacancy rate in the five central wards having declined to 4.6%, landlords are regaining the upper hand in lease negotiations, company officials said. Higher rents will raise the return on investment in property, fueling the boom.

The negative factor is the perceived undervalued state of Japanese real estate in relation to land in Europe and the U.S. Housing prices in America at the end of June stood 3.6 times the level in 1980 after a long sharp climb. In late September, however, prices of luxury residences in New York's main borough of Manhattan plunged nearly 7% from a year earlier.

In contrast, Japanese land prices in residential areas this year have fallen to 67% of their peak after dropping for 14 straight years, though prices in the capital's 23 wards have turned higher, rising 0.5% from the previous year.

"Overseas investors are lowering the weighting of U.S. and U.K. properties in their portfolios in expectation that their prices are heading south, and are instead increasing their investment in Japanese real estate," said Toshihiko Okino, an analyst for UBS Securities Japan Ltd.

The sustainability of overseas interest in Japanese real estate is uncertain, however. A rise in short- or long-term interest rates could trigger land sales by eroding the allure of property investment. And if investors find Chinese properties more profitable, they will quickly shift money to them by unloading their Japanese holdings.

-- Translated from an article written by Yasuo Ota, senior Nikkei staff writer

(The Nikkei Financial Daily Tuesday edition)

ANALYSIS: Property Funds Steer Money Into Resort Facilities

Tuesday, November 22, 2005
ANALYSIS: Property Funds Steer Money Into Resort Facilities

TOKYO (Nikkei)--With investment capital continuing to flow into property, the holdings of such assets by Japanese and overseas real estate investment trusts (REITs) and unlisted investment funds total about 10 trillion yen, exerting upward pressure on land prices in Tokyo.

There is also a looming danger of these funds increasing their reliance on loans from banks as a fundraising source.

Construction of a large hotel with more than 400 rooms has started near Tokyo Disneyland. A real estate fund contracted out the work to Kajima Corp, with its fund manager saying, "We can expect a stable stream of income from subletting the hotel to a hotel operator." The fund plans to set lower room rates for the hotel than those offered by other resorts surrounding the amusement park.

This year, funds have actively bought resort properties, such as golf courses in Chiba Prefecture, chapels on Okinawan islands, hotels in Hakone -- a time-honored resort area in Kanagawa Prefecture -- and facilities in Guam.

Because investment returns from office buildings in central Tokyo that produce stable rental revenues have been faltering due to the higher prices of those buildings, funds have begun pouring money into buildings in regional cities, seeking to rake in higher returns. They are now looking to resort properties as a potential income source, despite the fact that these properties are vulnerable to economic ups and downs.

Rock-bottom interest rates have also prompted a flow of money into the property market. A total of about 10 trillion yen has already been injected into promising real estate, including more than 3 trillion yen in REITs as of the end of September and slightly more than 3 trillion yen in domestic and overseas real estate funds, respectively.

In line with active investment in real estate, the yields on such investment, which are measured by dividing rental revenue by the purchase price of properties, have been on the decline.

According to a survey by the Japan Real Estate Institute, the expected rate of return on investment in office buildings in Marunouchi and Otemachi -- Tokyo's main business districts -- stood at 4.4% at the end of October 2005, down 1.9 percentage points from the levels seen in 1999.

Although the impact of land prices bottoming out in Tokyo have started spilling over to prices in regional areas, not a few investment firms are moving to sell properties whose prices have slumped.

Orix Jreit Inc. for instance, sold seven properties on Nov. 1, incurring capital losses on the sale of four small buildings in Sendai, Miyagi Prefecture and Mito, Ibaraki Prefecture. These buildings had long suffered low occupancy rates.

Explaining the reason for the sales, an official at the investment firm said, "We want to improve our management efficiency by getting rid of small properties worth less than 1 billion yen."

Some properties have little prospect for increasing their rents, industry observers said.

Investment funds usually procure money from both investors and financial institutions. However, the recent tendency indicates they are relying more on bank loans. Estimates by STB Research Institute Co. show that 70% of their fund procurement this year has comes from borrowings, from slightly more than 60% at the end of last year. This is because increasing the ratio of bank loans amid historically low interest rates makes it easier for funds to raise their dividend yields to investors, an observer said.

Despite some changes emerging in the property market, funds are continuing their brisk investment in the sector. Takashi Ishizawa, chief real estate analyst at Mizuho Securities Co., said, however, "Investors have grown more selective in choosing properties."

-- Translated from an article written by Yusho Cho and Daisuke Zaima, Nikkei staff writers.

(The Nikkei Financial Daily Tuesday edition)

Govt To Ease Rules On Noncash Inheritance Tax Payments

November 22, 2005
Govt To Ease Rules On Noncash Inheritance Tax Payments

TOKYO (Nikkei)--The government has decided to relax regulations on inheritance tax payments made using real estate or securities to make it easier to keep small and midsize businesses within a family, government sources said.

The government hopes to enforce the new rules on such noncash tax payments from fiscal 2006.

Under the new regulations, in-kind payments using unlisted stocks would be permitted. Currently, only listed stocks, as well as other securities and properties that can easily be sold, such as residential land, are accepted.

The change is also expected to allow farmland, mountainous property and forests to be used as in-kind payments as long as they are mortgage-free.

Because the current economic recovery is being fueled primarily by large companies, the government feels it is essential to nurture smaller businesses to attain further growth. The change in the inheritance tax rules is seen as a way to address this issue.

The Japan Chamber of Commerce and Industry and some other quarters have expressed concern that if the current regulations are left intact, fewer people will be able to pay the inheritance tax needed to take over a business from an older relative.

Inheritance tax payments totaled about 1.1 trillion yen in fiscal 2003, of which 230 billion yen, or roughly 20%, was made through in-kind payments. Of the 115,000 people who paid inheritance taxes that year, about 4,800, or 4%, made in-kind payments.

(The Nihon Keizai Shimbun Tuesday evening edition)

Global Direct Real Estate Investment Set to Jump by 20% in 2005, Reaching US$550bn

Global Direct Real Estate Investment Set to Jump by 20% in 2005, Reaching US$550bn
Asia Pacific experiencing strongest growth, with value of first half 2005 transactions at 45% higher than same period in 2004

Source: Jones Lang LaSalle
Wednesday, November 23, 2005 03:03 PM IST (09:33 AM GMT)

Global direct real estate investment of US$237 billion was recorded in the first half of 2005, 18% up on the first half (H1) of 2004; and is estimated to jump to an all time record of approximately US$550 billion (20% increase on 2004) by the year end. This is according to a Jones Lang LaSalle report titled “Global Real Estate Capital - The Search For Opportunity Intensifies”.

Asia Pacific is undoubtedly experiencing the strongest growth as it catches up on the other larger, more developed regions, with the value of Asia Pacific transactions in H1 2005 being 45% higher than H1 2004. Europe remained the key destination for cross-border activity, being dominated by intra-regional purchase activity in H1 2005. Notably, cross-border investment reached US$52 billion (a 21% increase on H1 2004) as all regions saw higher transaction volumes.

Guy Hollis, International Director in Jones Lang LaSalle’s International Capital Group explains, “Direct real estate investment continues to undergo rapid globalisation. The prolonged low interest rate environment, improving property fundamentals, ageing populations and increasing pension savings are driving an unprecedented weight of capital, which in turn is compressing yields in many international property markets.”

“Pressure continues to mount to find higher returns wherever they become available. In Asia Pacific, the search for higher returns is likely to accelerate growing volumes in emerging Asian nations, driving improvements in market transparency and liquidity. Global investors are also increasingly exerting significant influence on local investment markets through competition with domestic and regional players. For this reason, investors cannot afford to disregard international investment opportunities which are increasingly providing relatively significant returns and strong diversification characteristics for property portfolios,” Mr Hollis adds.

Amongst the Asia Pacific economies, Japan which accounts for the largest amount of commercial real estate stock in the region, continued to dominate both total and cross-border transaction volumes. With the Japanese economy moving into a growing phase, we are witnessing strong net capital inflow by inter-regional investors (see chart below), with more than half of the investment in this country put into the industrial sector.

Mr Hollis says, “While Japan dominates today, India and China are both growing target destinations for investment and have the potential to be major destinations for global capital in the future. We believe that as property transfers between institutional players continue to build, capital inflow and outflow from these two investment hot spots will expand rapidly, creating further cross-border investment opportunities.”

Despite its low transparency, the value of Chinese transactions recorded in H1 2005 is over two and a half times higher than the full-year 2004 total and based on current negotiations by foreign groups, total inter-regional transactions in 2005 could be as much as six or seven times the total deal flow in 2004. Most notable is the far wider geographic scope of Chinese transactions, with several joint ventures between foreign and local investors acquiring shopping malls across the country. Investing in new-found locations presents transparency challenges but allows investors to achieve significant scale quickly and to tap into the projected rapid growth in Chinese consumer spending. Similar transaction volumes are expected to continue, increasing market penetrations and access in 2006 and beyond.

With the emerging Real Estate Investment Trusts (REITs) sector in Asia, a number of countries are restructuring local property and tax regulations to accommodate increased cross-border flows, encouraging investments into and out of the region and driving liquidity and market transparency. Singapore to date has been the most aggressive country in encouraging REIT development, allowing wider geographic coverage than available to other Asian REITs, in addition to a zero tax rate on REIT dividends. The first Hong Kong REIT will be listed shortly while other Asia countries have either relaxed or are considering REIT structures. The highly developed domestic Japanese REIT market continues to grow rapidly and expand its coverage beyond the Tokyo office sector. While many eyes are on China, transparency still has some way to improve before a domestic REIT market can emerge.

Australian investors are expected to be very active cross-border players in H2 2005, particularly due to the highly liquid and large public real estate market in Australia, which provides a relatively cheap cost of capital. Major Australian listed and institutional investors are actively pursuing opportunities in major European and North American markets, as well as the emerging Asian markets. A small domestic market, combined with an extensive and long-established compulsory retirement savings scheme, indicates that Australian investors will continue to be a major source of global capital.

Other global highlights in the report include:

-- US, UK and France most traded markets - The relatively sizeable and transparent office markets of US, UK and France were the most traded individual markets by global investors, with relatively balanced purchase and sales activity in both the US and UK.

-- North America was again the dominant source of global capital accounting for 53% of all transactions (of which 92% were domestic) in H1 2005. Investors from the Middle East, Germany, the UK and Singapore were also significant sources of global capital and all ‘net’ purchasers in H1 2005.

-- Strong appetite for UK retail and hotel assets - Global investors also showed strong purchase activity in UK retail and hotel assets over H1 2005, recording more than 60% of all cross-border hotel transactions. Intra-regional hotel investors were particularly active in the UK, led by significant investment by Irish interests. Intense competition for UK retail between domestic, regional and global investors continues to push yields even lower.

-- France was a target for US and Middle Eastern money - France experienced an overall net inflow into the office sector driven by US and Middle Eastern investors.

Mr Hollis concludes, “We anticipate the frenzy of global real estate activity continuing to the end of the year, based on the strength we’ve seen so far, combined with the usual pattern of real estate transactions that tend to be skewed towards the second half of the calendar year. Looking ahead, investors still perceive that there are strong risk-adjusted returns to be made in commercial real estate over the next few years on the basis of improving leasing conditions and further yield compression driving performance.”

About Jones Lang LaSalle

Jones Lang LaSalle is the world’s leading real estate services and money management firm, operating across more than 100 markets around the globe. The company provides comprehensive integrated expertise, including management services, implementation services and investment management services on a local, regional and global level to owners, occupiers and investors. Jones Lang LaSalle is also the industry leader in property and corporate facility management services, with a portfolio of 895 million square feet under management worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse real estate money management firms, with approximately US$29 billion of assets under management.

Jones Lang LaSalle has over 45 years of experience in Asia Pacific. With over 9,600 employees operating in over 30 markets across the Asia Pacific region, the company’s team of experts is uniquely qualified to provide the quality advice needed for making quality decisions.

Media contact details

Guy Hollis,
Jones Lang LaSalle,
+852 2846 5596 (Hong Kong),
guy.hollis@ap.jll.com <mailto:guy.hollis@ap.jll.com>

Sukhvinder Kaur,
Jones Lang LaSalle,
+91 (011) 5149 1006,
sukhvinder.kaur@ap.jll.com <mailto:sukhvinder.kaur@ap.jll.com>

Banks Improving Risk Control Of Real Estate Loans On FSA Warning

November 22, 2005
Banks Improving Risk Control Of Real Estate Loans On FSA Warning

TOKYO (Nikkei)--Banks are moving to strengthen risk control measures to cover their growing lending for real estate projects, as the Financial Services Agency has begun sounding the alarm about such loans.

Bank loans used for real estate transactions, especially investment projects by real estate investment funds, are ballooning. Sumitomo Trust & Banking Co. estimates, based on real estate securitization data, that of about 20 trillion yen worth of property transactions conducted nationwide, 10-12 trillion yen worth of deals are covered by bank lending.

The trend reflects the banks' increasing willingness to extend loans for real estate projects, given the stagnation in lending to large companies.

Most of the loans are nonrecourse loans for which banks cannot demand repayments beyond the value of a borrower's assets if the borrower goes under.

The top six bank groups had 4.2 trillion yen in the outstanding balance of real estate-related loans at the end of March this year. The Mizuho Financial Group and Chuo Mitsui Trust and Banking Co. saw about 1 trillion yen each. Even among regional banks, some had more than 100 billion yen in the balance of such loans.

Meanwhile, the spread between lending rates and fund-raising costs are narrowing on increasingly stiffer competition among banks, falling to below 0.5% compared with about 2% four years earlier.

Amid these circumstances, the FSA is stepping up its surveillance on banks out of a concern that they are taking unreasonably high risks amid the cutthroat competition.

In response, banks are also taking their own risk control measures, such as shortening lending terms and including in loan contracts provisions allowing them to call on borrowers to raise the rents of properties in which they have invested.

(The Nikkei Financial Daily Tuesday edition)

Local Property Tax Revenues To Drop Y420bn In FY06: Government

Thursday, November 24, 2005
Local Property Tax Revenues To Drop Y420bn In FY06: Government

TOKYO (Nikkei)--Revenues from local property taxes will total about 9.53 trillion yen for fiscal 2006, down 420 billion yen from the current year, according to government projections obtained Wednesday by The Nihon Keizai Shimbun.

The Internal Affairs Ministry estimate represents the sum of urban planning taxes and fixed-asset taxes on residential land, both of which are collected by municipalities. The size of the year-on-year decline is second only to the 460 billion yen drop-off in fiscal 2003. While urban land prices are no longer declining in some areas, an upturn in property tax revenues at the local level is expected to take a while longer.

Real estate appraisals, which are used to forecast property tax revenues, will be revised in fiscal 2006 as part of a triennial review process. Land prices continue to fall in many regions outside major urban areas, and the decline in the cost of building materials is lowering the appraisal value of residences. As a result, property owners are projected to pay less in related taxes.

The Internal Affairs Ministry calculates that slumping land prices will account for about 80 billion yen of the revenue decline, with the lower appraisal values reducing revenues by roughly 350 billion yen.

Fixed-asset tax revenues are forecast to decline 360 billion yen to around 8.36 trillion yen, with revenues from city planning taxes -- which are assessed on properties within urban planning zones -- estimated to decline 60 billion yen to about 1.17 trillion yen.

Municipalities collect nearly 20 trillion yen in taxes, with the two property tax categories accounting for about half of the revenue. The decline in land prices has reduced fixed-asset tax revenues by around 1 trillion yen since fiscal 2000. And for the next four to five years, the Internal Affairs Ministry sees lower land prices reducing overall property tax revenues by about 50 billion yen per year.

(The Nihon Keizai Shimbun Thursday morning edition)

Biometric systems popular with condo buyers

Biometric systems popular with condo buyers

By JUNKO SUZUKI
Kyodo News

With crime rising, an increasing number of condominiums are being equipped with biometric security systems able to identify people by scanning their faces, fingerprints or other physical characteristics.

Biometric technology is currently used at nuclear power plants, research institutes and other facilities requiring high security. Now condominiums touting their enhanced safety features are incorporating the technology to attract singles and two-income families.

Japan General Estate Co. began selling condominiums in 2004 whose entrances come equipped with automatic locks and a biometric security system that identifies residents by scanning their irises.

Irises, like fingerprints, are unique to each individual. The system works by taking a photograph of the iris of the person seeking entry and comparing it with the irises of residents stored on the system to make an identification.

The real estate developer took notice of biometric security systems early on. In the latter half of the 1990s, it sold condominiums equipped with locks that used fingerprint scanners to identify residents. But the systems had trouble identifying fingerprints if the person being scanned had dry skin, which led the company to suspend sales of such condominiums.

"Identification is smooth with the iris. (Even) if you are holding baggage in both hands, you do not have to produce a key. It is very convenient," said Kazuaki Hatsuzawa, an employee of the company's building department.

Japan General Estate is currently selling 38 blocks of condominiums equipped with the biometric security systems in 28 locations in Tokyo and Kanagawa Prefecture. So far, it has sold or placed on the market around 4,200 such condominiums.

Meiwajisyo Co. plans to install a security system that identifies people by the pattern of blood vessels in the palms of their hands in a condominium block to be completed in Chigasaki, Kanagawa Prefecture, in March.

The man in charge of the development said the condominiums are aimed at double-income families and singles. "Sales are targeted at crime-conscious people, and the response (to the system) has been large," he said.

Daikyo Inc., Orix Real Estate Corp. and other developers are constructing condominium blocks with biometric systems and the number of these buildings is expected to continue to increase.

The systems, however, aren't perfect. People are sometimes denied entry due to differences between the iris or blood vessel pattern on file and those scanned at the entrance.

The Japan Times: Nov. 22, 2005
(C) All rights reserved

Developers wed something old, new

Developers wed something old, new

Central Tokyo is undergoing an office redevelopment boom that in part includes restoring structures from the Meiji to Showa eras and sometimes incorporating them into new high rises, and making replicas of historic buildings, including famous Western-style ones.

Helping the effort is an easing of construction rules by the Tokyo Metropolitan Government that allows developers to increase floor space to enable them to build higher structures if historical buildings are preserved or restored as part of the site.

One example in the Marunouchi district near JR Tokyo Station is the Industry Club of Japan building, located on a corner next to the 30-story head office building of Mitsubishi UFJ Trust and Banking Corp.

The brown building, a representative structure of the Taisho Era (1912-1926), is still used by business leaders.

Mitsubishi Estate Co., in charge of redeveloping the Marunouchi district, said it was able to increase the floor space to build the head office of the financial institution by preserving the Industry Club of Japan building on the site.

"I enjoy seeing the old building when I go out for lunch," a 30-year-old woman who works in the head office said.

In the Nihombashi district in Chuo Ward, where a number of financial institutions are located, a 39-story structure has opened next to the Mitsui Honkan (main building), which is a designated important cultural asset.

It was built by Mitsui Fudosan Co. and houses a foreign-affiliated luxury hotel and offices of major businesses. By preserving the Mitsui building, the developer was also able to increase floor space.

To promote redevelopment in central Tokyo, the metropolitan government allows such increases for buildings near structures designated as important cultural assets or regarded as historically important if they are to be preserved.

In addition to preserving old structures, replicas of razed buildings of historical significance are being constructed.

Mitsubishi Estate will raze three buildings near the Imperial Palace, including a Mitsubishi Corp. structure, and rebuild the Mitsubishi No. 1 Building.

Construction will run from fiscal 2006 to 2009.

The Mitsubishi No. 1 building, designed by British architect Josiah Conder, was built in 1894 and demolished in 1968.

The large-scale redevelopment taking place across central Tokyo, including in the Roppongi and Shiodome districts in Minato Ward, is fueling rivalries and concerns of an office glut.

Developers in Marunouchi and Nihombashi are apparently trying to give these areas a competitive edge to attract more people through the preservation and restoration of historical structures.

"If increases in floor space are permitted, real estate companies will also be positive toward redevelopment," said Shigeru Ito, a professor of city planning at Waseda University, adding that other local governments should ease construction regulations to redevelop their areas.

The Japan Times: Nov. 23, 2005

Mizuho's Ishizawa on J-REITs

みずほ証券チーフ不動産アナリスト石沢卓志氏――活況呈する不動産投信(トピックス)
2005/11/24, , 日経金融新聞, 4ページ, 有, 1017文字

 最近、不動産投資信託(REIT)による不動産取引が、東京都心部などで地価の高騰を引き起こしているとの見方が強まっている。しかし、筆者は、不動産投資の活発化は、むしろ不動産価格の安定につながると考えている。
 バブル経済期には、不動産関連のデータは、一般にはほとんど公表されていなかった。このため、オフィスビルを借りる企業は、ビル会社や仲介事業者が示す賃料相場をうのみにするしかなく、実態よりも高い賃料で賃貸借契約を締結するケースもあった。
 これに対して現在は、不動産投資の活発化によって、不動産関連のデータベースが整備されてきた。REITの決算では、個別ビルの賃貸事業収支が公表されるので、このデータを分析すれば、かなりの精度で賃料相場を推計することができる。
 東京・大手町エリアの場合、バブル経済期のピークである一九九二年には、坪当たり賃料が十万円を超えるビルが複数あった。一方、現在の大手町エリアの賃料水準は、REITの公表データから推計すると、三万円台半ばが一般的である。このように賃料相場が容易に把握できるようになると、現況よりも著しく高い賃料でビルを借りる企業はなくなると考えられる。
 今年九月末時で、大手町エリアのオフィス空室率は〇・三%に低下し、実質的に空室ゼロの状態となった。オフィス需要が強いのに、オフィス賃料が上昇しない状況は奇異に感じられるかもしれないが、バブル経済期の賃料水準が異常だったのであり、貸し手と借り手の情報格差が縮小した現在の方が、正常な状態と考えることができる。
 現在、不動産価格の評価方法は、オフィス賃料などをもとに、不動産事業の収益性から算出する収益還元法が主流となっている。最近の不動産評価額は、市況回復などを反映して上昇傾向が強まっているものの、オフィス賃料が安定すれば、急上昇する可能性は低下すると考えられる。
 オフィス賃料等のデータベースが充実すると、周辺相場よりも賃料水準が高いビルは、その理由をテナントに説明する義務が出てくる。この説明責任を果たす必要から、今後はテナントサービスの向上に力を入れるビル会社が増えると予想される。
 現在、REITとして上場を計画しているファンドには、住宅を運用対象とするものが増えているので、賃貸マンション市場のデータも整備が進むことになろう。
 このように、不動産投資の活発化は、不動産価格の安定とともに、執務環境や住環境の向上を促す原動力になる。

Monday, November 21, 2005

Japan's Recovery Flashes a Warning to World's Bond Investors

Japan's Recovery Flashes a Warning to World's Bond Investors

Nov. 21 (Bloomberg) -- The prospect of a durable economic recovery in Japan has bond investors wondering if global yields are heading north.

The emergence of the world's second-largest economy from 14 years of stagnation has pushed up Japanese bond yields and share prices. Japanese investors, the biggest international holders of U.S. Treasuries, may bring more funds home unless yields outside the country also continue to rise, traders and investors say.

``If interest rates can rise in Japan, where they have been suppressed by global disinflation for more than a decade, they can rise anywhere,'' said Tony Crescenzi, head bond market strategist at New York brokerage Miller Tabak & Co.

Losses in Japanese bonds, and a resulting rise in global yields, would be felt beyond the fixed-income market. Mortgage rates worldwide would shoot up, possibly undermining home prices in countries such as the U.S. and U.K., where real estate prices have soared. Higher borrowing costs and a decline in property values would slow economies and crimp profit growth, weighing on stock markets.

The yield on Japan's benchmark 10-year bond reached a one- year high of 1.63 percent on Nov. 7. Yields in Japan's government bond market, the world's largest, bottomed at 0.43 percent in 2003. Comparable government securities in the U.S. yield 4.50 percent, while German bunds, a European benchmark, yield 3.53 percent. Bond prices fall as yields rise.

Central banks worldwide can influence whether yields rise. Bank of Japan Governor Toshihiko Fukui said on Nov. 18 that a policy change is possible next year after four years of keeping Japan's benchmark interest rate near zero.

Policy Shift

European Central Bank President Jean-Claude Trichet said on Nov. 18 the ECB is ready to raise rates, for the first time since 2000. Interest rate futures show the U.S. Federal Reserve's series of increases will extend into next year to curb inflation.

For now, equity investors are betting on growth. The Nikkei has risen 35 percent from its 2005 low in May and reached a five- year high on Nov. 18. The U.S. 10-year note's yield is up about 0.6 percentage point from its 3.89 percent low for the year in June. It may reach 5.50 percent in the first quarter next year, said William Kohli, who manages $7 billion in bonds at Putnam Investments in Boston.

``As the Nikkei moves up in price, it signifies growth in the Japanese economy,'' said James Caron, an interest-rate strategist at Merrill Lynch & Co. in New York. ``That will signal higher yields in Japan, which will make them at the margin less net buyers of U.S. Treasuries.''

Reading the Signs

In the past five years, every 3,500-point increase in the Nikkei has predicted a percentage point increase in the U.S. 10- year note's yield, Caron has found.

Treasury traders, for their part, view Japanese government bonds as the canary in their coal mine. In July 2003 and April 2004, yield surges in the Treasury market produced two of the worst months on record for investors. In both cases, and in others, the Japanese government bond market fell days before the Treasury market did.

Japanese government bonds ``have historically led most big downtrades'' in the Treasury market, said Glen Capelo, a trader at RBS Greenwich Capital in Greenwich, Connecticut, who has sold or traded Treasuries for 18 years.

Rising yields in Japan already have begun to curb the appetite of Japanese investors for Treasuries and other foreign bonds. Japan's holdings of Treasuries peaked in August 2004 at $699.4 billion. The total stood at $687.3 billion in September of this year, Treasury Department data released Nov. 16 showed. Japanese investors are the biggest foreign holders of U.S. government obligations.

Dollar

Japanese investors have another reason to shun U.S. bonds -- the prospect that the dollar may lose value against the yen, making investments in Treasuries worth less in yen. The dollar has gained 16 percent gain against the Japanese currency this year, nearing a two-year high, leading some bondholders to speculate that the U.S. currency is due for a decline.

The cost of contracts protecting against a possible drop in the dollar wipes out the yield advantage that Treasuries have over Japanese government bonds, said Shinichi Takayama, who helps manage about $84 billion at Dai-ichi Mutual Life Insurance Co.

``It would be better to keep money at home rather than sending it abroad,'' said the Tokyo-based money manager. He said he plans to buy Japanese government bonds in the coming months.

False Dawn?

Rising yields in Japan don't necessarily spell bad times for the U.S. market, where the Fed has raised interest rates 12 times since June 2004 and may stop early next year, said Sudesh Mariappa, who oversees $68 billion of global bonds at Pacific Investment Management Co. in Newport Beach, California.

``At that stage we feel that the bond market in the U.S. has probably peaked in terms of rates,'' he said. Forty institutions that manage more than $1.3 trillion expect Treasuries to rise by June 30, according to a weekly survey by Ried, Thunberg & Co., a research unit of ICAP Plc, the world's largest inter-bank broker. Investors in the survey have been negative on U.S. debt for four years.

Japan's economic recovery also may be a false dawn, Putnam's Kohli said. Renewed weakness there would push global yields lower.

Japanese five-year notes last week had their biggest weekly gain in two years on investor bets that pressure from Prime Minister Junichiro Koizumi would prompt the central bank to keep rates low. Koizumi said Nov. 14 that it was ``too early'' for the bank to change its deflation-fighting policy. The yen fell against the dollar, approaching its highest in more than two years.

Kohli says the latest evidence still indicates rising rates.

``The data out of Japan and Europe, while not exploding, is a much different environment than it's been the last three years,'' said Kohli. ``If we get into a situation where their central banks are hiking, that's going to be the driver of higher global rates.''

To contact the reporter on this story:
Elizabeth Stanton in New York at estanton@bloomberg.net

Last Updated: November 20, 2005 12:50 EST

Sunday, November 20, 2005

Japan : an emerging picture of growth

An emerging picture of growth
2005/11/19, The Japan Times, page 0, 770 words

Japan's economy in the July-September quarter expanded 0.4 percent from the previous quarter, or 1.7 at the annualized rate, in price-adjusted real terms, according to a preliminary gross domestic product (GDP) report from the Cabinet Office. That was the fourth consecutive quarter of positive growth, although the pace slowed compared with a larger GDP rise (3.3 percent on an annual basis) in the April-June period. The emerging picture is one of a solid expansion led by domestic demand, with two big engines of growth _ consumer spending and business investment _ following a firm trend.
The Bank of Japan appears poised to declare an end to deflation perhaps as early as next spring if the current expansion continues. The favorable economic outlook has pushed up stock prices, with daily trading volume exceeding the levels reached in the booming late 1980s. In fact, the economy is in the third expansionary phase since the collapse of the asset-price bubble in 1990, with key sectors of demand reinforcing each other in a long-running virtuous cycle.
There is no assurance, however, that this forward momentum will continue uninterrupted. One major concern is that the economy might slide back into a slump if, for example, the government's tax-increase policy dampens consumer confidence.
The current robust expansion is supported mainly by the corporate sector, which registered large profit increases in the first half of the fiscal year, April through September. The break-even point, at which sales equal costs, has improved markedly as a result of post-bubble efforts to reduce debt, capacity and payroll. This has made it possible to generate significant profits even if sales increase only slightly.
Contributing to the strong profit performance are steadily rising exports, which are sustained largely by the economic growth of major trading partners, particularly the United States and China. Businesses are investing more of their export profits in new machinery and equipment. Their improved bottom line is also translating into higher household income, thus encouraging consumers to spend more.
Exports, keeping up a favorable trend from previous quarters, increased 2.7 percent in the July-September period. Private-sector capital spending continued to rise for the sixth straight quarter. Consumer spending, which accounts for more than 50 percent of GDP, climbed 0.3 percent. Family incomes also rose gradually, thanks to stepped-up corporate hiring as well as prospective boosts in yearend bonuses (following hikes the year before).
However, there are causes for concern. The first is how economic trends in the U.S. and China will develop. In the U.S., damage from Hurricane Katrina is expected to have a limited impact on the domestic economy. With a housing bubble in the making, however, the Federal Reserve is keeping a tight rein on the money supply. The outgoing Fed chairman, Mr. Alan Greenspan, who has pursued a cautious monetary policy through dialogue with the market, is to be succeeded by Mr. Ben Bernanke in January. If inflationary expectations rise next year, the American economy will probably slow down. If that happens, Japanese exports will be adversely affected.
In China, with its economy continuing to expand at the breakneck speed of 9 percent or so, the negative side of high growth is becoming more pronounced. In urban centers such as Beijing and Shanghai, there is talk of a collapse of the real-estate bubble. Higher oil prices, if they are passed on to refined oil products, will likely cause inflation. China has grown into a world factory and market. If those concerns become real, Japan's economy will be hit as well, given the growing relationship of interdependence between the two countries.
Instabilities in the export environment are not the only concern. Here at home, the ongoing debate on future tax increases is a major factor contributing to wariness about economic prospects. The possibility cannot be ruled out that the economy might begin to stagnate if a major tax hike is introduced. In fact, a rise in the consumption tax a few years from now is considered unavoidable. Already the government is pushing for a range of tax hikes as if they were faits accomplis.
In 2006, half of the flat-rate tax cuts for national and local income taxes will be abolished, with the other half expected to go in 2007. Also in the works are increases in individual social-security contributions; if implemented, they will add an estimated Yen 3 trillion to the household burden. Higher taxes will likely throw cold water on the warming consumer sentiment. There is indeed a real possibility that the economy will slip back into recession if the government relies too heavily on tax increases as a means of reducing the budget deficit.

Structural Reports Falsified On 21 Buildings - Residents Flee, Fearing Collapse

Quake data falsified on 21 buildings / Chiba-based architect designed condos that could collapse in upper-5 tremor
2005/11/18 The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051118TDY02010.htm

A chartered architect falsified mandatory structural strength analyses for 20 condominiums and a hotel in Tokyo and Chiba and Kanagawa prefectures, the Construction and Transport Ministry said Thursday.

Two of the buildings might collapse in the event of an earthquake registering an intensity of upper 5 on the Meteorological Agency's scale of seven, officials said.

The Building Standard Law requires buildings to be capable of withstanding an earthquake with an intensity level of 6 or stronger.

In cooperation with the relevant local governments, the ministry has already begun briefings to residents of the buildings in question, touching on possible evacuation, large-scale repairs or even demolition and reconstruction.

Of the 21 buildings, 13 buildings with a total of 471 apartments and a hotel have been completed. Of the remaining seven, four are under construction and three have yet to be built.

Eleven buildings are in Tokyo--including two each in Minato, Chuo and Adachi wards and one each in Sumida, Shibuya, Koto and Shinjuku wards and Inagi. Six others are in Chiba Prefecture--five in Funabashi and one in Shirai. The remaining four are in Kanagawa Prefecture--one each in Yokohama, Kawasaki, Fujisawa and Sagamihara.

The architect is Hidetsugu Aneha, 48, holder of a first-class architect license and owner of the Aneha Architect Design Office based in Ichikawa, Chiba Prefecture. He designs medium-sized apartment buildings and handles subcontracted work on structural strength calculations.

According to the ministry, the numerical values of the external forces applied to the 21 buildings' pillars and beams written in structural analyses compiled between February 2003 and October this year were about half the actual values.

As a result, the buildings have been or are designed to be built with pillars and beams that are smaller and weaker than stipulated by the Building Standard Law, making them unable to withstand powerful earthquakes and typhoons. Some buildings have also been constructed with less reinforced steel than normal.

The strength of pillars and beams of one condominium in Kawasaki and another in Funabashi have been found to be about 30 percent of the required earthquake-resistance level, ministry officials said.

It is not yet known to what extent the buildings were affected by a strong earthquake that jolted Tokyo and its vicinity in late July and registered a maximum intensity of upper 5, the officials said.

The Building Standard Law obliges buildings to be built to withstand undamaged an earthquake measuring a lower 6 and to not collapse even in the event of a quake measuring an upper 6 or higher.

It has been normal practice to review the original designs when pillar and beam sizes and the volume of reinforcing rods have been found to be insufficient during strength calculations.

Aneha reportedly told the Chiba prefectural government that he was under pressure to cut costs, but declined to go into detail. The ministry will shortly file a complaint with criminal investigators against the architect for suspected violations of the Building Standard Law.

The falsification of structural strength data came to light during an in-house inspection by eHomes Inc., a Shinjuku-based firm certifying construction applications on behalf of local governments.

However, eHomes itself failed to detect the falsified calculations in the first place, ministry officials said.

The private sector was given the green light to certify construction applications in 1998 when the Building Standard Law was revised.

The ministry is now looking into certification results handled by designated firms to check for any other flaws. It also is checking whether the private sector certification system itself has any shortcomings.

(Nov. 18, 2005)

Scared and shocked, residents moving out as fast as possible
(IHT/Asahi: November 18,2005)
http://www.asahi.com/english/Herald-asahi/TKY200511180337.html
The Asahi Shimbun

Architect Hidetsugu Aneha's reputation lay in tatters Friday after he admitted to falsifying reports on the structural strength of 21 buildings in and around central Tokyo.

Residents of buildings designed by the 48-year-old Aneha were in shock after the Ministry of Land, Infrastructure and Transport dropped the bombshell that their units lack adequate earthquake-proofing and may not be strong enough to withstand a powerful jolt.

Some residents were so scared that they were making plans to move out as soon as possible.

And a business hotel in Tokyo's Chuo Ward that is fully booked announced it was suspending its services because it could not ensure the safety of its customers.

The ministry on Friday made public the names of two apartment complexes that were completed without meeting the required quake-proofing standards due to Aneha's falsified reports.

Though the building code requires structures to withstand earthquakes with an intensity of upper 6 or even 7, the highest reading on the Japanese scale, two of the buildings could collapse in an earthquake with an intensity of just upper 5. Ministry officials said the buildings in question were at most 70 percent of the standards for withstanding a major earthquake.

One of the buildings is a block of rental apartments in Funabashi, Chiba Prefecture.

The 10-story building is in a residential area close to city hall.

Jarred by the news, a 27-year-old company employee who lives on the ninth floor said: "I've just recently noticed a crack, about 30 centimeters long in the terrace wall. I'm very scared now."

He added: "What were they thinking when they were constructing the building? I bet building codes were the last thing on their minds; probably target dates and money. Not lives. It makes me so angry."

The man said the rent for a single room apartment is 70,000 yen. Most are single-member households.

A 23-year old woman who lives on the first floor moved in late March. As a survivor of the 1995 Great Hanshin Earthquake she is fully aware of how destructive temblors can be.

"I've just heard the appalling news," the woman said. "No one was thinking about the residents. I can't let this matter go."

Business hotel Keio Presso Inn Kayabacho in Tokyo's Chuo Ward said Friday it had decided to suspend business.

An official of Keio Corp., which owns the hotel, said: "It is no small matter. But as long as there is a safety concern for our guests, we felt we had no other choice."

The 260-room hotel that opened in August, boasting easy access from a subway station, was usually booked full on weekdays.

Grand Stage Kawasaki-Daishi, a condominium in Kawasaki, was identified by the ministry as being at risk.

A 32-year-old homemaker complained that she had even gone to the trouble of confirming the strength of the soil foundation with ward officials before moving in.

"I was so sure I had made the right choice. I don't know what to do now," she said. "I want the whole building redone."

A new 10-story apartment complex in Tsurumi Ward, Yokohama, was sold off in lots this past summer. Nineteen families now live there.

A 47-year old resident said: "My youngest child is going to take an entrance exam for a private junior high school soon. I am so worried now."

The family had moved in to the new and bigger place in September so that each of their two children could have their own rooms.

The woman said: "I always thought defective buildings were something that happened elsewhere. I never dreamed it would happen to us."


Architect faked structural data to 'cut costs'
2005/11/19 The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051119TDY02010.htm

ICHIKAWA, Chiba--"I was pressured by the buildings' owners and designers to cut the costs of parts," architect Hidetsugu Aneha told reporters at his office-cum-home here Friday morning, a day after it was discovered he had falsified data used to get his buildings certified as structurally sound.

During an hourlong discussion at his front door, Aneha, a licensed first-class architect, said he padded the data because he could get away with it.

When asked by one reporter if he intentionally doctored the structural analysis, Aneha, 48, replied, "If you look at the numbers, it's pretty obvious."

"I've been certified by eHomes Inc. since about 2003. I thought they were easy to take advantage of because even when they checked the numbers, some of the faked data slipped through," the architect said. "I didn't change the numbers for other companies because they stringently check the figures."

As for his motive, Aneha said: "I wasn't hard up for work or for money. But after I started doctoring the information, my actual workload increased, and as I tried to deal with that, I forgot about the people [affected]."

"I felt pressure [to change the data], but nobody, including the landlords, told me per se to alter the numbers," Aneha said. "As for the designs of the buildings, though, I'm completely responsible."

When asked if he thought his buildings would survive a major earthquake, Aneha said: "In a worst-case scenario, they could be completely destroyed. Even if that didn't happen, the pillars might bend or the building could collapse. People would get hurt."

But was he aware that his actions would put people's lives in danger? "Yes. I'm truly sorry for making the residents of these buildings worry," he said. "I think I bear some legal responsibility for this."

(Nov. 19, 2005)

ANEHA USED FALSE CONSTRUCTION DATA
Certifier hoodwinked on quake-proofing
The Japan Times: Nov. 19, 2005
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nn20051119a3.htm
By KAHO SHIMIZU
Staff writer

A Tokyo-based company that state-certifies construction applications said Friday it noticed no problems during its examination of faked applications by a Chiba-based architectural firm.

Kawasaki - This apartment building in Kawasaki Ward was found not to be quake-proof.

The assertion by eHomes Ltd. follows revelation Thursday by the Land, Infrastructure and Transport Ministry that Aneha Architect Design Office submitted false data on the structural strength of the Keio Presso Inn Kayabacho in Tokyo and 20 apartment buildings in the capital, and in Chiba and Kanagawa prefectures.

The frauds committed by Aneha were exposed by a recent in-house inspection by eHomes, which said it failed to detect the false calculations as Aneha was clever in hiding the fraud.

"We were unable to detect (the fraudulent data) during our normal screening process. We had to use different approaches to find out," eHomes President Togo Fujita told a news conference in Tokyo.

The company said it immediately reported the falsifications to the ministry when they were discovered.

The ministry has said two of the Aneha buildings could collapse if hit by an earthquake of an intensity level above upper 5 on the Japanese scale to 7.

It released the addresses of these two structures -- apartment buildings in Funabashi, Chiba Prefecture, and Kawasaki.

Under the Building Standards Law, a building must be designed not to collapse in the event of an earthquake with an intensity level of 6 or higher.

The strength of the support beams and pillars in the buildings in question are weaker than the standard set by the Building Standards Law, ministry officials said.

But ministry officials withheld the locations of the remaining 11 buildings already completed, saying they have yet to clarify how weak the structures actually are.

Some might be almost as strong as normal buildings, and disclosing their names and addresses might unnecessarily hurt property value, the officials said, adding that they will wait until the ministry completes recalculations of structural strength.

Of the 21 buildings in question, 13 apartment blocks with a total of some 471 units and the hotel, owned by the Keio Presso Inn Co. in the Kayabacho district in Tokyo's Chuo Ward, have already been completed, while four condominiums are still under construction. Work has not begun on the remaining three apartment buildings, ministry officials said.

Nine of the completed buildings, including the hotel, are in Tokyo, two others are located in Chiba and three in Kanagawa.

The ministry began contacting the owners and residents of the buildings to explain its plan to conduct seismic assessments and to warn them that they may have to vacate the buildings if they are considered dangerous.

The ministry Thursday also ordered local governments nationwide to check that their procedures to calculate buildings' structural strength are sound.

Falsifying quake-proof analysis is a violation of the Building Standards Law and the land ministry is preparing to file a criminal complaint against Aneha.

In cooperation with municipalities, the land ministry is also checking documents submitted on the 90 buildings handled by Aneha over the past five years, but they are finding it hard to locate them, officials said, adding that the fraud might have been prevented had the entities designated to inspect building strength demanded that Aneha submit the necessary documents and made appropriate inspections.

Keio Presso Inn Co., which operates seven business hotels in Tokyo, said Friday that it closed its Kayabacho hotel once it learned of the falsified calculations. Keio Presso officials said the 265-room hotel will not resume operations until the company is confident the building has passed a seismic assessment.

Keio Presso said it is now investigating whether the other six hotels have the same problem.

Quake-safety questions shut Tokyo hotel / Architect's false structuralreports force inn to close doors 3 months after opening
2005/11/19 The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051119TDY02009.htm

A hotel in Nihonbashi-Kayabacho, Tokyo, decided Friday to close indefinitely after discovering it was one of dozens of buildings falsely certified as structurally sound by a Chiba Prefecture-based architectural firm.

The Construction and Transport Ministry on Thursday said Ichikawa-based Aneha Architect Design Office had falsified documents certifying the structural integrity of 20 condominiums and the Keio Presso Inn Kayabacho.

Though it has not been confirmed exactly how unstable the hotel building is, the hotelier said, "We've decided to put the safety of our guests first and foremost."

The 14-story, 265-room hotel opened Aug. 5 and was the sixth in the Keio Presso Inn business hotel chain, founded in 2002 by Keio Corp. Group.

Touting its low cost and convenient location, the Kayabacho branch was full most days of the week.

Executives at the railway firm had been locked in discussions over what to do since they found out about the bogus certification Thursday. While they were able to confirm the Kayabacho hotel was one of the buildings in question, the danger to the building's occupants remains unclear.

Following a safety-first approach, the hotel's management on Friday morning placed notices throughout the inn notifying clientele it would be closing. Staff also have been working to contact its guests with pending reservations and helping them to get rooms elsewhere.

"I first found out about this when I got up this morning and found fliers from the hotel under my door," an Osaka businesswoman staying at the hotel said. "I'm relieved nothing happened, but who would have taken responsibility if there had been a huge earthquake?"

===

Architect firm filed false reports

A Tokyo-based firm certifying construction applications on behalf of local governments failed to notice certification papers submitted by Aneha had been falsified, a Construction and Transport Ministry investigation into the matter revealed Friday.

The bogus structural analysis certificates issued for the buildings by the Ichikawa, Chiba Prefecture, architect's office did not include certification numbers required to be printed on the documents, or the necessary ministerial seal that completes the certification.

Shinjuku Ward, Tokoyo-based eHomes Inc., which certifies construction applications on behalf of local governments, missed the amateur methodology used in forging the documents, leading the ministry to consider taking action against it for violation of the Building Standard Law.

Aneha used ministry-approved structural record software, according to the probe by the ministry and the Chiba prefectural government. Software users are required to enter information including the number of beams and pillars to be used in a building, as well as the ratio of external force the structure will be able to withstand.

If the results are up to code, an eight-digit certification number is printed in the upper left-hand corner of each page of the report.

However, because the number of rebars Aneha entered into the program was lower than required, the software deemed the buildings unsound. The architect's office then mixed uncertified documents in with papers that bore the proper numbers, and sent them to inspectors.

When Aneha sent the papers, it did not send with them the required ministry seal showing the software had certified the buildings. "Checking the documents for a seal and certification is quite basic. I can't imagine how they managed to miss it," said an official at the ministry's Building Guidance Division, which is questioning the inspectors.

When questioned by a Yomiuri Shimbun reporter, an eHomes official said, "Bogus data isn't very easy to detect."

(Nov. 19, 2005)

Structural problems in the building trade?
2005/11/29 The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/editorial/20051119TDY04006.htm

Properly constructed buildings are a prerequisite for living in this earthquake-prone archipelago, but a recent news report has cast doubt over the safety of buildings in this country.

It has been revealed that an architect of Ichikawa, Chiba Prefecture, who holds a first-class license falsified mandatory structural strength analyses for buildings in planning applications for 20 condominiums and a hotel in Tokyo, Kanagawa and Chiba prefectures.

Structural strength reports are important documents certifying the soundness of buildings in respect of criteria such as their ability to withstand earthquakes. The falsification of data in the analyses means the buildings in question were installed with insufficient rebar, and their columns and beams were not designed thick enough.

According to the Construction and Transport Ministry, 14 of the 21 buildings have already been constructed, and all 14 may fail to meet antiseismic standards. In particular, two condominiums--one in Kawasaki and the other in Funabashi, Chiba Prefecture--could collapse if an earthquake with an intensify of upper 5 on the Japanese seismic scale of 7 struck those areas.

In July, an earthquake with a maximum intensity of upper 5 hit the Tokyo metropolitan area. The hotel, in central Tokyo, that was one of the buildings whose structural strength was misreported, has been forced to shut down only three months after opening.

The ministry and local governments concerned must act to ensure the safety of those who live in or near the buildings in question.

===

A catalogue of errors

In the past five years, the architect at the center of the scandal has compiled structural strength analyses for about 90 buildings besides the 21 in question. Those who bought condominiums in that period must be feeling uneasy. It is a matter of urgency for buildings constructed following the submission of falsified data to be identified, and necessary measures taken, such as rebuilding and reinforcement.

The structural strength reports drawn up by the architect were so botched up that certificates indicating ministry-approved computer programs were used in the compilation of the reports were not attached to them.

As for the 21 buildings in question, the two ministry-designated inspection organizations conducted construction confirmation, a process to examine whether construction plans conform to relevant laws, including the Building Standard Law.

Yet the organizations failed to conduct these basic examinations properly and were unable to detect the falsification of the data. Such failures call into question the reliability of the inspection system.

We wonder why neither the architectural design firms that subcontracted the job of drawing up structural strength reports to the architect, nor the building contractors that constructed the buildings, nor the clients that commissioned the buildings questioned the construction data.

===

Rigorous probe needed

The ministry will bring criminal charges against the architect for violating the Building Standard Law. But those who purchased units in the condominiums in question were victims of the deceptive business practice of selling faulty housing.

The architect said he was pressured to reduce construction costs. A careful investigation should be carried out to determine whether the latest scandal reveals structural problems in the construction industry.

The central government set antiseismic standards so buildings can withstand major earthquakes. If practices such as falsifying data for construction blueprints are widespread, however, sizable damage could result from a major earthquake.

Private firms have been allowed to handle administrative procedures for construction confirmation since 1999. The ministry and other concerned entities should conduct a thorough check into whether the examination of construction plans is being conducted strictly, and whether there are other irregularities connected with the construction industry.

(From The Yomiuri Shimbun, Nov. 19)

(Nov. 19, 2005)

Developer tied to suspect condos / Ordered 12 buildings falsely certified by cost-cutting architect
2005/11/20 The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051120TDY02003.htm

A private developer ordered 12 of the 20 apartment buildings in the metropolitan area that were falsely certified as structurally sound by an architectural firm in Chiba Prefecture, The Yomiuri Shimbun has learned.

The developer also instructed six other architectural firms to use Aneha Architect Design Office, run by 48-year-old Hidetsugu Aneha, as a subcontractor to keep costs down, according to the Tokyo metropolitan government.

The firms, which are registered by the metropolitan government, were involved in the construction of the 20 apartment buildings and a Tokyo hotel. The hotel has decided to close indefinitely after discovering it was one of the buildings.

The developer based in Chiyoda Ward, Tokyo, builds and sells apartment buildings and has recently been stepping up its activities in and around the Kanto region.

Of the 12 condominiums, six were in Tokyo, four in Kanagawa Prefecture and two in Chiba Prefecture. Eight of them have been sold to customers.

Of the 21 buildings, Aneha evaluated the structural integrity of three of them as the original contractor and 18 as a subcontractor for the six architectural firms, according to the Construction and Transport Ministry. The ministry summoned representatives of the six architectural firms into the metropolitan government building Monday and Tuesday to hear from them directly.

The representatives reportedly denied involvement in falsifying documents, saying they had not realized data in the documents were falsified. Asked about why they used Aneha office as their subcontractor, they reportedly answered they had been told to do so by the developer.

In a document sent to the press Thursday, the developer said it was surprised to learn buildings it owned were on the list. A spokesman for the developer said the six architectural firms had ordered evaluations from Aneha of their own accord.

When asked by The Yomiuri Shimbun on Friday whether it had introduced Aneha to the six firms, a spokesman for the developer replied, "No comment."

===

Ministry to act in matter

The ministry is considering disqualifying Aneha as a first-class registered architect, sources said Friday.

On the basis of the Architect Law, the ministry will summon Aneha to the ministry Thursday to hear from him about the falsification of documents certifying the structural integrity of the buildings. After hearing his testimony, it will decide how to deal with him after obtaining the approval of the Central Examination Committee for Architects.

The ministry is to make an urgent inspection beginning Monday of all local government-overseen building-confirmation applications as well as private firms certifying construction applications on behalf of local governments, to determine whether they properly examined documents on structural integrity.

Although the ministry has directed them to conduct in-house inspections, it decided to dispatch special teams to the local governments and firms to receive reports directly. The special team is empowered to conduct on-the-spot investigations.

Anxious residents hound bureaucrats
2005/11/20 The Yomiuri Shimbun
http://www.yomiuri.co.jp/dy/national/20051120TDY02008.htm

Bureaucrats were busy taking calls from anxious residents Saturday following news reports of falsified structural strength data for 21 buildings in Tokyo and in Chiba and Kanagawa prefectures.

In Funabashi, Chiba Prefecture, structural strength reports of five apartment buildings--including two that have residents--were falsified, it was revealed by the Construction and Transport Ministry on Friday.

Seven officials of the Funabashi municipal government's building guidance division came to work Saturday to respond to residents' inquiries. They were kept busy answering a spate of phone calls from residents from about 8 a.m.

The city government has not released the names and addresses of the buildings, except one in which its structural strength is only 30 percent to 70 percent of the earthquake standards given under the Building Standard Law.

"We can't say anything until after examining the buildings' structural integrity," a division official said, referring to the reason for not releasing the names of the four other buildings. Most people who called the division asked whether their homes were safe.

The Yokohama municipal government also received a number of phone calls from residents. City officials were quizzed by the callers who asked: "Should we move out from our apartment?" and "Is the building I live in all right?" One said, "I'm worried as I'm going to buy an apartment."

In Chuo Ward, Tokyo, where a 36-unit apartment building was listed as one of the 21 buildings certified with falsified data, ward officials were busy taking phone calls from residents, who asked them for more information than that provided in flyers informing about the false data.

However, a ward official said: "We've also been waiting for the result of a reassessment of the building's structural strength from the ministry. We can't say whether the building is safe or dangerous at the moment."

Officials dealing with the issue in other municipalities also were having a hard time. One of them asked, "How can we explain to residents when we don't have any data?" Another asked, "Should I just tell the residents to evacuate their apartments?"

(Nov. 20, 2005)

Debate rages in Aneha scandal / Who should shoulder costs of fixing condosnot built to code?
Hiroyuki Takataand Yukihiro Nagura / Yomiuri Shimbun Staff Writers
2005/11/20 Daily Yomiuri
http://www.yomiuri.co.jp/dy/national/20051120TDY03003.htm

Thirteen of the 20 apartment buildings in Tokyo and Kanagawa and Chiba prefectures for which architect Hidetsugu Aneha has admitted falsifying structural strength certificates have been completed and 400 families are living in them.

Debates are under way on what measures can be taken to bring the buildings up to code, and how residents--who are justifiably concerned--can be compensated.

The discussions also are looking to determine who should be blamed for the scandal and who will have to shoulder the costs of structural reinforcement and compensation.

"Basically, the first-class architect, who holds a government certified qualification and acted dishonestly, bears heavy responsibility," Tokyo Gov. Shintaro Ishihara said at a press conference Friday in reference to 48-year-old Aneha, of Ichikawa, Chiba Prefecture, who owns Aneha Architect Design Office.

But Ishihara went on to say the government also was to blame because it failed to properly oversee eHomes, the Tokyo private organization that checked documents filed by Aneha on behalf of the government.

"I think it [eHomes] didn't read the documents properly and was slack about issuing approvals," Ishihara said.

"As the government commissioned the task to the private sector, the government should have properly guided the private sector," he said.

"The government should be blamed for the scandal," he added.

But the government is reluctant to consider providing assistance to the condominium residents.

"Basically, it is an issue that occurred as a result of private economic activities," a senior Construction and Transport Ministry official said. "As it is clear that the cause of the scandal was a deliberate falsification of documents, it is difficult for the government to help them."

The government has asked local governments to provide public housing for the residents, but moving costs and rent likely will have to be paid by the residents themselves.

Commenting on the central government request that local governments house the residents, Ishihara said: "It's not like a natural disaster. The Tokyo metropolitan government can't accept the residents [in public housing] unconditionally."

"We'll study what we can do for them, but we can't give them priority because they're not likely to become homeless," the governor added.

The metropolitan government said it had little available public housing, stressing that currently there are 40 applicants for every public housing unit.

Provision for public housing for disaster victims are made under the Basic Law on Natural Disasters. But there are no laws and ordinances that can be applied to the Aneha case.

"If I have to give an analogy, I would compare it to becoming a victim of a crime. Even if the government wants to extend assistance, it can't take bold measures," a metropolitan government official said.

"But we are concerned what would happen [to the falsely certified buildings] if a strong earthquake were to strike," the official added.

The scandal is complicated because, in addition to the architect, eHomes and developers of the apartment buildings, among other private entities, may be culpable, and it is unclear how responsibility should be apportioned among them.

"Costs stemming from the falsification, including the costs of reinforcement work, should be paid for by them," another metropolitan government official said.

Under a law governing the quality of house construction, building contractors and real estate agents are responsible for repairing any defects in the basic structure of a new building that occur within 10 years of the date of completion.

If this law is found to be applicable in the Aneha case, residents can seek redress from the developers and other related parties.

Construction and Transport Ministry is reportedly ready to file a criminal complaint against Aneha on suspicion he violated the Building Standards Law. The ministry is also reportedly considering plans to take disciplinary action against eHomes .

Some of the residents of the buildings said they also were thinking about filing a civil case against Aneha.

===

Safeguards easily flouted

Four processes are involved in checking the earthquake-resistance of condominiums and other buildings:

-- Preconstruction examination of documents.

-- Interim inspections carried out during construction.

-- Daily supervision of construction.

-- Inspection upon completion of construction.

After the preconstruction examination of related documents, the building contractor obtains construction approval from a local government. Since 1999, private companies have been permitted to do this task on behalf of local governments.

In the Aneha scandal, eHomes carried out preconstruction examinations for 20 of the 21 buildings that were falsely certified.

The company failed to notice the structural strength reports submitted by Aneha did not bear certification numbers indicating a building has been designed properly under the Building Standards Law when using government-approved software.

Aneha, who provided the falsified reports, said the falsification is easy to detect if one does a simple calculation, but eHomes failed to spot it.

The interim inspections and inspection upon completion of construction provided no safeguards for the residents of the 13 completed apartment buildings because they were carried out by eHomes, which also inspected the hotel.

An industry source said a company that is unable to do carry out a preconstruction inspection would likewise be unable to perform interim and postconstruction inspections.

(Nov. 20, 2005)