Tokyo Apartments Put Up for Sale Decline After Building Flawsby and
The probe threatens a recovery in Tokyo's residential market
Average price per unit fell from the highest level since 2000
Fewer apartments were put up for sale in Tokyo after flaws were found in hundreds of buildings with falsified construction data, threatening to cut short a home-price rally.
The number of apartments in Tokyo and surrounding areas offered in October dropped 6.5 percent from the same period last year after sales of about 10 properties were postponed to after November, said Tadashi Matsuda, a researcher at the Real Estate Economic Research Institute.
The scandal may derail a rally in the residential market in Tokyo and surrounding areas, where the average price per apartment have been on the rise since late 2011, according to the Real Estate Economic Research Institute. The average price per unit fell to 53.6 million yen ($434,000) last month from 59.5 million yen in July, which was the highest level since at least 2000, the data showed.
The discovery last month that data on foundation piles had been falsified at an apartment building that had tilted in Yokohama near Tokyo sparked a widespread investigation of other projects. The probe discovered 266 cases where similar data had been altered by workers at Asahi Kasei Corp., the Tokyo-based subcontractor on the Yokohama development, and another 546 projects are still under inspection.
Separately, Asia Pile Holdings Corp., at Tokyo-based company that manufactures piles for construction and performs foundation work for contractors, said it has found cases of data manipulation.
Wait and See
The complex structure of the construction industry with layers of subcontractors poses a problem and the safety of large properties has now come into question, said Tomohiro Makino, the author of at least half a dozen books on topics including Japan’s housing market. Homebuyers will probably wait and see where this is going before making a decision, said Makino, who is also the chief executive officer of consulting firm Oraga HSC Inc.
Mitsui Fudosan Co., the seller of Yokohama building, and Asahi Kasei have pulled marketing activities such as TV commercials and advertisements, and Asahi Kasei’s real estate unit has delayed the sale of apartments. Shares of Asahi Kasei have dropped 20 percent since Oct. 13 when the data falsification started coming to light.
“In the short term, people may have concern about safety issues of apartments,” said Masahiro Mochizuki, a Tokyo-based analyst at Credit Suisse Group AG. “The developers will be more careful in terms of building projects going forward.”