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TOKYO: Mitsui Fudosan Co, Japan's biggest property developer, reported a 19.7% rise in operating profit for the April-June quarter helped by a recovery in apartment sales but it kept its annual forecast slightly below analysts' consensus.
Japan's property market, struggling to regain strength after the global financial crisis, was hit again by the March earthquake as companies postponed planned expansion while would-be homebuyers delayed purchases to assess the outlook.
Japan's big developers including Mitsubishi Estate have recently run down inventories of unsold apartments left over from the global property crisis. But that was not enough to help offset weak office leasing as Tokyo's office vacancies remain near record highs.
Mitsui, which earns nearly three-quarters of its profit from office and building leasing, said operating profit totalled ¥21.97 billion (RM832.22 million) in the first three months of this business year, up from ¥18.4 billion a year ago.
The company left unchanged its annual forecast of a ¥115 billion profit for the year to March, down from ¥120.1 billion last year. The annual outlook compares with an average ¥120.7 billion profit forecast by 24 analysts polled by Thomson Reuters I/B/E/S.
Tokyo's office market, the world's second largest, faces a rocky road as a number of big office buildings are expected to open this year and next.
The massive supply could further weigh on an office market already struggling with falling rents after the global financial crisis while the major earthquake in March dulled corporate interest in expansion.
The average office vacancy rate for Tokyo's five central wards stood at 8.81% in June, down 0.07 percentage points from May but still close to its post-war record of 9.19% marked in March, according to data from office broker Miki Shoji.
More than 3.3 million square metres of office space — nearly the size of New York's Central Park — is expected to be added to supply in 2011 and 2012, threatening to compound vacancy worries.
Shares of Mitsui Fudosan, which owns a 54-storey office building on Manhattan's Avenue of the Americas, have lost about 11% since the start of this year, underperforming a 2.9% fall in the benchmark Nikkei 225 average during that period.
Before the announcement, Mitsui Estate shares ended down 0.9% at ¥1,439. Rival Mitsubishi Estate, set to announce results on Friday, fell 1.7% to ¥1,390, while Tokyo's benchmark Nikkei average fell 1.5%. — Reuters
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