TOKYO
REAL ESTATE MARKET REPORT
VOL.10
Impact of the New
Koizumi Cabinet on the
Real Estate Market
On April 26, 2001,
a new cabinet was formed
under Prime Minister Junichiro
Koizumi with the goal
of pursuing thorough structural
reform.
Mr. Koizumi promises that
his cabinet will resolutely
enforce reform, and he
is strongly insisting
on the firm implementation
of emergency economic
measures and further reform.
1. Events Leading
up to the Start of the
New Cabinet
For the past several
decades, Prime Ministers
have usually been chosen
from the Liberal Democratic
Party (LDP). The LDP has
previously been controlled
by powerful factions of
the older generation politicians,
which in recent years,
has come under severe
criticism from the Japanese
public opinion.
The previous cabinet of
Prime Minister Yoshiro
Mori was formed by LDP
factions following the
unexpected death of Prime
Minister Keizo Obuchi.
This old power system
resulted in a major decline
in support for the LDP
among Japanese people.
The Mori cabinet was forced
into resignation due to
its failure to move ahead
with economic reforms,
along with repeated inappropriate
comments by Mr. Yoshiro
Mori.
Initially, Mr. Koizumi
was considered unlikely
to succeed as a candidate
for prime minister because
he lacked support from
the conventional LDP factions,
which opposed his strong
reform policy.
However, he was elected
with overwhelming support
by the grass-rooted LDP
members, reflecting Japanese
society’s disappointment
with old-style politics,
while desiring economic
recovery through structural
reform. |
2.Strong Approval
Rating
According to a
telephone survey conducted
on April 27 and 28 by
Kyodo News, the Koizumi
cabinet has an approval
rating of 86.3%, the highest
ever recorded. The new
cabinet members come highly
evaluated, including a
respected senior economist
and female representatives. |
3. Policies of the
Koizumi Cabinet
The greatest task
of the Koizumi cabinet
is to revive the Japanese
economy. In a speech given
in May, Mr. Koizumi outlined
the following three structural
reforms regarding the
economy and politics.
To finish disposing of
non performing loans within
the next two or three
years.
To develop a competitive
economic system.
To issue no more than
30 trillion yen of Japanese
goverment bond for financial
structural reform.
|
4. The Koizumi Cabinet’s
Plan for Non Performing
Loans (NPL) Disposition
Disposing of Non
Performing Loans(NPL)
is one of the Koizumi
cabinet’s top political
priorities.
Mr. Koizumi has established
an urban revitalization
headquarters within the
Government. This organization
is to promote urban redevelopment
and real estate liquidity
through the disposal of
NPL.
According to the Financial
Services Agency, the nation’s
136 banks held NPL totalling
31.8 trillion yen at the
end of September 2000.
The Financial Services
Agency has come out with
a plan to promote final
disposal of this NPL under
the strong leadership
of Mr. Koizumi. |
5. Impact on the Real
Estate Market
“Final disposal”
indicates the direct disposal
of collateral, rather
than disposal by way of
credit as in the past.
In other words, the method
of disposal will be changed
from “reserve fund
appropriation” to
“direct sale of corporation
and its properties”.
There will be a move toward
selling off businesses
and disposing of real
estate.
It is expected that many
properties will be coming
on the market due to the
movement progress.
In addition to the above
movement, there will also
be introduction of new
accounting system, which
will be applied to Japanese
companies beginning in
fiscal 2003.
Under the new accounting
system, fixed asset must
be evaluated as a fair
market value on the balance
sheet. In such a way Japanese
corporations will be forced
to change their administrative
policies in real estate.
Based on these market
conditions, it is expected
that more properties will
be available on the real
estate market compared
to the current stage. |
6. Business Opportunities
The current situation
presents excellent business
opportunities for Real
Estate investment.
In general, when Real
Estate is disposed of
in an involuntary manner,
properties tend not to
be in a good condition
or miss-managed. There
are many properties which
are not showing sufficient
performance, although
they may have plenty of
potential.
Tokyo Tatemono’s expertise,
acquired over a century
in the Real Estate Business,
can be used to identify
potential properties,
purchase them reasonably,
and sell them after creating
a high level of added
value.
During the next several
years, this kind of real
estate investment should
be present really a good
opportunity for Real Estate
investors to produce high
levels of return.
 |
The
above information, provided
as a service to our customers
and to the order readers
of this homrpage, is only
intended to be a general
discussion of issues concerning
real estate in Japan.
The opinions and information
expressed herein merely
represent the point of
view of the staff and
writers of the Tokyo Tatemono
Group and are not intended
to be interpreted as specific,
expert or legal advice
for any of the readers
of this homepage.
The Tokyo Tatemono Group
accepts no liability with
respect to the accuracy
or veracity of any of
the opinion or information
presented herein. The
reader is cautioned to
seek appropriate legal
or professional advice
prior to any involvement
in the Japanese real eatate
market. |
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