Japan’s Top 2 Developers Post Profit Declines on Flagging Sales

Mitsui Fudosan Co. and Mitsubishi Estate Co., Japan’s two biggest developers, posted declines in fiscal first-half profits on declining housing demand following the March 11 earthquake.

Mitsubishi Estate’s net income dropped to 8.78 billion yen ($111 million) in the six months ended Sept. 30 from a year ago, while sales fell 7.6 percent to 398 billion yen, the company said in a statement to the Tokyo Stock Exchange today. Mitsui Fudosan’s profit slid 32 percent to 16.6 billion yen in the same period as sales sank 13 percent to 573.5 billion yen, it said.

Japanese property companies are seeing declining demand for condominiums amid an economic slowdown following the nation’s record earthquake in March. Mitsubishi Estate’s leasing and building business, the largest contributor to the firm’s profit, fell 18 percent, while Mitsui Fudosan recorded a 33 percent drop in sales of apartments, houses and residential landsites from a year ago, according to the companies.

Office rents in Tokyo have remained at a record-low level after the temblor that led to a nuclear disaster, while the Bank of Japan lowered its economic assessment for the first time in half a year this month, saying the pace of recovery is slowing and that consumer spending was stalling.

Mitsui Fudosan reported an operating loss of 790 million yen for its residential business for the fiscal first half, the Tokyo-based company said. Office vacancy at the Mitsubishi Estate, which owns about 30 buildings in Tokyo’s most expensive business district, rose to 4.6 percent as of Sept. 30 from 3.6 percent in March, while the number of apartments sold was less than half compared with the same period last year, the Tokyo- based firm said.

Mitsui Fudosan raised its net income forecast by 2.1 percent to 48 billion yen for the year ending March 31, while trimming it sales forecast by 2.9 percent to 1.36 trillion yen. Mitsubishi Estate kept its profit forecast at 55 billion yen for the year ending March 31, on sales of 977 billion yen.

Mitsubishi Estate’s shares dropped 3.2 percent to 1,349 yen at the close in Tokyo, while Mitsui Fudosan shares slipped 1.5 percent to 1,322 yen.

To contact the reporters on this story: Kathleen Chu in Tokyo at Kchu2@bloomberg.net; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net