Japanese property stocks, including Mitsui Fudosan Co. (8801) and Mitsubishi Estate Co. (8802), fell in Tokyo trading after the Bank of Japan refrained from enlarging its purchase of real estate investment trusts.
Mitsui Fudosan, Japan’s biggest developer by sales, fell the most in a week, declining 4.1 percent to 2,810 yen at the close on the Tokyo Stock Exchange. Mitsubishi Estate, the nation’s largest developer by market value, lost 4.4 percent, while Sumitomo Realty & Development Co. sank 5.2 percent. The Topix Real Estate Index slid 4.1 percent, the worst performer among the 33 industry groups that make up the benchmark.
The central bank, which has acquired 138.4 billion yen ($1.4 billion) of REITs since December 2010, said today in a statement it won’t expand its purchase of the trusts. The BOJ said in April it may increase the REIT purchase to 170 billion yen next fiscal year from a target of 140 billion yen.
“The selling is driven by disappointment from the BOJ’s decision to maintain the purchase amount,” said Mikio Namiki, an analyst at Mizuho Securities Co. in Tokyo. “The market had expected some expansion of the 30 billion-yen purchasing limit next fiscal year.”
The Tokyo Stock Exchange REIT Index that tracks 39 trusts rose 0.7 percent, after falling as much as 0.5 percent.
Bank of Japan Governor Haruhiko Kuroda, after the market closed, said there may be little room for the central bank’s REIT purchases because the size of the REIT market is not big. He was speaking following a two-day monetary-policy meeting.
The drop may not continue amid signs of a recovery in Japan’s property market, according to Deutsche Bank AG. Office vacancies in Tokyo fell for a third straight month in May to the lowest in more than three years amid a lack of new supply and more space being taken up as companies expand, according to broker Miki Shoji Co.
“The J-REIT market will probably recover from now on and the correction we have seen in J-REITs is pretty much over,” Yoji Otani, an analyst at Deutsche Bank, said in a telephone interview. The recovery in the property market as vacancies drop will sustain stock prices, he said.
REITs are expected to sell about 900 billion yen of shares, a record high, this year as the market picks up, Otani said.
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