Sumitomo Realty Profit Doubles After Selling More Apartments

Sumitomo Realty & Development Co., Japan’s third-biggest developer, said first-quarter profit nearly doubled after the company sold more apartments.

Net income rose 95 percent to 22.2 billion yen ($231 million) in the three months ended June 30 from 11.4 billion yen a year earlier, the company said in a statement distributed through the Tokyo Stock Exchange today. Sales climbed 40 percent to 205.7 billion yen from the same period a year ago.

Sumitomo Realty and its competitor, Mitsubishi Estate Co. (8802), are benefiting from a surge in apartment sales ahead of the government’s plan to raise taxes. Completed condominium inventory in the Tokyo metropolitan area is at its lowest level since at least 2000, according to the Real Estate Economic Institute.

Japan plans to double the tax rate to 10 percent from 5 percent by 2015, in two steps. The first increase is scheduled to come in April 2014 when the tax is raised to 8 percent.

Mitsubishi Estate last week said profit rose 44 percent for the same period, citing an improvement in profitability of its residential business.

Operating profit for Sumitomo Realty’s residential business nearly tripled to 16.8 billion yen in the quarter from 6.6 billion yen in the same period last year. The company sold more than double the number of apartments, houses and land sites in the quarter from the same period last year. Operating profit for the leasing business was little changed at 24.4 billion yen, it said.

The Tokyo-based company kept its net income forecast unchanged at 68 billion yen for the year ending March 2014 on sales of 760 billion yen, it said.

Sumitomo’s shares were up 0.4 percent to 4,275 yen at the close in Tokyo.

To contact the reporter on this story: Kathleen Chu in Tokyo at kchu2@bloomberg.net

To contact the editor responsible for this story: Iain McDonald at imcdonald7@bloomberg.net

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